As Alaska’s public university system braces for a 41% cut in state funding, North Dakota University System Chancellor Mark Hagerott says the potentially “devastating” situation in that state should be a reminder for North Dakotans to stay invested in their university system.
“It reaffirms why we need to reinvest in our colleges, workforce, research, innovation and diversify our economy,” Hagerott said.
Last week, Alaska Gov. Mike Dunleavy, a Republican, used a line-item veto to remove more than $440 million from the state’s budget, including a $135 million cut to the Alaska university system. The pending budget cuts, which came days before the start of the new fiscal year, have been described as “devastating” and will come at human price unless the Republican-majority Legislature gets a three-fourths vote to override Dunleavy’s veto. As of late last week, a veto does not appear likely.
An estimated 1,300 people will likely lose their jobs and many academic programs will be shut down in the northern state. The Alaska system also likely will declare financial exigency by July 15, which will allow the system to more rapidly shut down programs and academic units and to start the unprecedented process of removing tenured faculty.
“It’s going to be devastating. The effects on programs, on the students, on staff and faculty are just going to be — it’s kind of unthinkable,” University of Alaska at Anchorage professor Scott Downing told the Washington Post.
The cuts likely will mean a reduction in student enrollment and tuition dollars -- another blow to the system in addition to the state cuts.
University of Alaska System President James Johnsen said the cuts will have a lasting impact on the system.
“Simply put, if not overridden, (last week’s) veto will strike an institutional and reputational blow from which we may likely never recover,” Johnsen said in a statement following the veto announcement.
Alaska’s economy, similarly to North Dakota, has a heavy reliance on oil production. In 1976, Alaska created the Permanent Fund Dividend, which provides annual checks to state residents based on the growth of the fund. The fund, which reportedly sits around $65 billion, is funded by oil revenues. How much residents receive each year varies.
In 2012, the checks were for around $878. Last year, the dividend was $1,600. But Dunleavy has campaigned to pay out a higher dividend and media reports state that, legally, Alaska residents should get a $3,000 check this year.
But while North Dakota also is reliant on oil revenues, Hagerott says the state has other protections in place for higher education and other state offices.
Hagerott points to the State Board of Higher Education, which he said basically functions as a fourth branch of government in the state.
“It’s less political. We still have to work with the Legislature, but we have this body that is independent,” Hagerott said of the board.
Having a unified board that looks out for the entire system with members who serve four-year terms means the board members are less susceptible to “the whims of one legislative session.”
North Dakota’s legislative and executive branches are also “pro-education,” Hagerott said. While the chancellor and Gov. Doug Burgum may disagree on what the governance structure should look like for higher education, Hagerott said the governor is in favor of diversifying the economy and prioritizing measures around skilled workforce development, which works with higher education and high schools.
North Dakota, like Alaska, collects funds from oil revenue. But unlike Alaska's Permanent Fund, North Dakota does not distribute Legacy Fund earnings directly to residents. Instead, the Legacy Fund has been allowed to grow and now has a balance of nearly $6 billion.
North Dakota also has a state income tax and property taxes, which provide additional dollars. Alaska, meanwhile, has no state income tax and no sales tax. Alaska's Republican-majority government has refused to look at other possible revenue streams, the Washington Post reported.
Still, North Dakota is not immune to large budget cuts. The North Dakota University System lost approximately a third of its state funding in the past few years. The cuts came with the loss of hundreds of jobs and the shuttering of programs, including sports teams.
During the most recent legislative session, lawmakers voted in favor of pay raises for state employees and invested state dollars in workforce development. While the Legislature did not restore the cuts from two bienniums ago, it accepted the SBHE’s needs-based budget without additional cuts.
Hagerott noted there are many lessons to take from Alaska’s current crisis. North Dakota students have a high propensity to go to college and residents care about what goes on in higher education, Hagerott said. Both are positives.
“Our culture very much cares what’s going on,” Hagerott said. “We need to remain focused on a transforming economy that will be about new jobs and new knowledge that will come out of the education system.”
But, he said, North Dakota can’t just stop at caring about what goes on in the system. The state has to support higher education as a way to move North Dakota forward and continue to diversify its economy.
“We need to continue to support higher education as an engine for innovation and adaptation,” he said.
Hagerott said the state needs to think about future generations, rather than just the next year’s budget or tax situation.
“We need to think across generations, think about our children’s children. That’s what education is. It’s an investment that pays for generations,” he said. “If you invest in education, invest in your people, you’re investing in North Dakotans who keep generating better salaries, better businesses and a better workforce.”