Legislature(2009 - 2010)HOUSE FINANCE 519

01/28/2010 09:00 AM House FINANCE

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09:08:03 AM Start
09:08:11 AM HB300 || HB302
10:29:29 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ Governor's FY11 Budget Overview: TELECONFERENCED
University of Alaska
HOUSE BILL NO. 300                                                                                                            
     "An Act making appropriations for the operating and                                                                        
     loan program expenses of state government, for certain                                                                     
     programs, and to capitalize funds; making supplemental                                                                     
     appropriations; making appropriations under art. IX,                                                                       
     sec. 17(c), Constitution of the State of Alaska; and                                                                       
     providing for an effective date."                                                                                          
HOUSE BILL NO. 302                                                                                                            
     "An Act making appropriations for the operating and                                                                        
     capital    expenses    of   the    state's    integrated                                                                   
     comprehensive mental health program; and providing for                                                                     
     an effective date."                                                                                                        
9:08:11 AM                                                                                                                    
Co-Chair  Hawker  explained  that the  University  budget  is                                                                   
managed  by a  subcommittee.  He  stated that  today's  House                                                                   
Finance Committee (HFC) meeting  recognizes the priority with                                                                   
which the  committee holds the  University within  the state.                                                                   
He noted  that the meeting  is held in  the format of  a full                                                                   
finance  committee  meeting  meaning   that  the  content  is                                                                   
recorded and  the meeting  is broadcasted. Following  today's                                                                   
meeting,  the subcommittee  will be scheduled  and called  by                                                                   
Representative    Fairclough   directly    to   pursue    the                                                                   
University's   budget.   One   change  this   year   includes                                                                   
incorporating the University's  Board of Regents (BOR) as the                                                                   
policy body behind the University.                                                                                              
9:11:31 AM                                                                                                                    
Acting  Chair Fairclough  commended  the members  of HFC  for                                                                   
encouraging the process within  this committee. She explained                                                                   
that today's meeting  includes a high level  overview and the                                                                   
subcommittee will address greater details later.                                                                                
MARY  K.  HUGHES, REGENT,  UNIVERSITY  OF  ALASKA,  expressed                                                                   
thanks for the leadership of the  committee as it allowed for                                                                   
a necessary process. The role  of the BOR is constitutionally                                                                   
mandated.  The board members  are gubernatorial  appointments                                                                   
and   confirmed  by   the   legislature.   She  insisted   on                                                                   
collaboration between the legislature and the BOR.                                                                              
9:16:02 AM                                                                                                                    
Ms. Hughes  noted that the BOR  functions as a  policy board.                                                                   
The board meets a minimum of nine  times each year, often for                                                                   
budget related  issues. The budget  process is  initiated one                                                                   
year prior to submission to the governor.                                                                                       
Ms. Hughes  shared  that she was  born on  Kodiak Island  and                                                                   
graduated  from West  Anchorage  High and  the University  of                                                                   
Alaska.  She  noted  that  she   was  appointed  by  Governor                                                                   
Knowles.  Her  name  was  presented  to  the  legislature  by                                                                   
Governor  Murkowski and  then  again by  Governor Palin.  She                                                                   
opined that  the gubernatorial  process is very  humbling and                                                                   
makes a person feel honored. She  stated that the BOR members                                                                   
are  thankful for  the  trust given  to  them. She  mentioned                                                                   
Fairbanks and her appreciation of the campus.                                                                                   
9:24:02 AM                                                                                                                    
Ms. Hughes  discussed the  University system. The  University                                                                   
is comprised of three units with  sixteen total campuses. The                                                                   
chancellors  are similar  to  municipal  mayors because  they                                                                   
control their  individual campus. The campuses  are community                                                                   
outlets. The directors are outstanding  leaders who report to                                                                   
the chancellors. In budget processes,  the chancellor decides                                                                   
how to prioritize.                                                                                                              
9:28:59 AM                                                                                                                    
Co-Chair Hawker reviewed the statements  regarding structural                                                                   
organization and  policy within the University.  He mentioned                                                                   
three  separately   accredited  units  known  as   the  Major                                                                   
Administrative  Units (MAU) that  comprise the University  of                                                                   
Alaska.   He  summarized   that   past  conversations   bring                                                                   
questions  about the autonomy  of the  units. He opined  that                                                                   
the autonomy  is tempered  as one  moves up the  hierarchical                                                                   
command  and control  structure.  The  level  of autonomy  is                                                                   
often  described as  open warfare  against  the campuses.  He                                                                   
asked  to  what  degree  the  autonomy  of  the  campuses  is                                                                   
exercised  and  healthy.    He  explained  that  he  receives                                                                   
multiple   calls  regarding  divisive   opinions  among   the                                                                   
administrative units.  This issue was the  foundational point                                                                   
behind the meeting today.                                                                                                       
9:31:49 AM                                                                                                                    
Ms.  Hughes  responded  that   the  University  has  separate                                                                   
accredited MAUs  and the way  in which a chancellor  portrays                                                                   
himself  or herself  depends on  personality and  experience.                                                                   
The  University wants  the chancellors  and their  respective                                                                   
groups  off campuses  to represent  their group  in a  strong                                                                   
decisive   fashion.  The   regents   attempt   to  help   the                                                                   
legislature prioritize appropriate  action. Because the needs                                                                   
of  the campuses  differ, there  will be  those who  disagree                                                                   
with  the priorities  expressed  by the  regents. She  opined                                                                   
that sometimes disagreement  is good and the  regent's job is                                                                   
to  prioritize and  bring requests  to  the legislature.  She                                                                   
gave a pertinent  example including the request  for only one                                                                   
capital  project  this  year to  simplify  the  process.  She                                                                   
explained   that   the   individual    chancellors   do   not                                                                   
collectively agree with the request.                                                                                            
9:35:16 AM                                                                                                                    
Co-Chair  Hawker  appreciated  the  passionate  response.  He                                                                   
expected   diversity  within   the   university  system.   He                                                                   
referenced Part  3 of a  Legislative Budget and  Audit (LB&A)                                                                   
report stating  that the University  lacks a coordinated  and                                                                   
cohesive   approach,  is   not  student   centric,  lack   of                                                                   
incentives   exist   for  MAUs   to   collaborate,   requires                                                                   
improvement in  efficiency and  effectiveness. He  noted that                                                                   
campuses are institution centric  versus student centric. The                                                                   
audit group  identifies best management practices  and states                                                                   
that  the  autonomy  lacks  the  collective  vision  and  the                                                                   
leadership  to   take  those  strong  diverse   opinions  and                                                                   
management  units and  effectively manage  them for  the best                                                                   
investment result.                                                                                                              
9:38:52 AM                                                                                                                    
Ms.  Hughes responded  that distance  education provides  one                                                                   
example,  but  with 16  campuses,  some disagreement  to  the                                                                   
approach  warranted   is  often  seen.  She   agreed  that  a                                                                   
coordinated effort  in distance learning has  been discussed.                                                                   
Distance  learning is  a large  item in  its popularity.  She                                                                   
mentioned  Karen   Purdue  as  the  central   health  program                                                                   
developer, leading  to the joke  that the University  needs a                                                                   
"Karen Purdue" for  the distance program. She  noted that the                                                                   
University  does understand  the  audit  and the  President's                                                                   
administration  agrees  with   the  audit.  She  stated  that                                                                   
legislative audits always help.                                                                                                 
9:41:30 AM                                                                                                                    
Co-Chair Hawker noted that the  discussion about the distance                                                                   
education  program  is  simply illustrative  of  the  greater                                                                   
issue of  the balkanization  of the  University. He  asked if                                                                   
this balkanization  delivers the highest quality  results for                                                                   
the investment made.                                                                                                            
Acting Chair  Fairclough suggested  that the topic  be tabled                                                                   
for a future meeting.                                                                                                           
Co-Chair Stoltze  observed the perceived  nostalgia regarding                                                                   
the centralized campus directing  affairs for the rest of the                                                                   
9:46:35 AM                                                                                                                    
Co-Chair Stoltze  mentioned that he had one  nephew attending                                                                   
the University of Anchorage who  only has one class on campus                                                                   
due to severe classroom shortages.                                                                                              
Representative  Gara  expressed  some frustration  about  the                                                                   
turf war within the University.  He opined that the campus is                                                                   
in  Fairbanks  is  a  flagship  campus.  He  appreciated  the                                                                   
legislative  liaison,  because in  the past  information  was                                                                   
gleaned only from  the regent's meetings. He  asked about the                                                                   
needs based  financial aid  program. He asked  if this  was a                                                                   
regent's proposal including an actual plan.                                                                                     
9:48:57 AM                                                                                                                    
Ms. Hughes explained that the  regents passed a resolution in                                                                   
support of needs-based  plan. She noted that  the regents are                                                                   
proponents  of  the  needs-based  plan.  One  resolution  was                                                                   
passed supporting the governor's plan.                                                                                          
Representative  Gara asked if  there was a  plan or  simply a                                                                   
needs-based concept.                                                                                                            
9:50:10 AM                                                                                                                    
MARK  HAMILTON, PRESIDENT,  UNIVERSITY  OF ALASKA,  responded                                                                   
that the  University would not  administer the  plan although                                                                   
they do support it.                                                                                                             
Representative  Gara remembered  one study  performed by  the                                                                   
University  known as  the  Lumina study  about  the cost  and                                                                   
implementation of a needs-based  plan. Mr. Hamilton responded                                                                   
that the study  was greater than six years  old. He explained                                                                   
that the study was not a plan,  but instead an exploration of                                                                   
Acting Chair  Fairclough noted  time constraints  for today's                                                                   
Ms.  Hughes stated  that  the University's  operating  budget                                                                   
reflects   the  regent's   desires   to  continue   assisting                                                                   
education  for  Alaskans  in   all  job  related  areas.  She                                                                   
expressed  that  especially  teacher   education  must  be  a                                                                   
priority. She  noted the governor's  budget and the  plan for                                                                   
$37.5  million for  the next  five years,  which pleases  the                                                                   
BOR. A large portion  of the funds will go to  the University                                                                   
of  Alaska  Anchorage  (UAA)   to  rehabilitate  the  science                                                                   
building, which  professors and staff vacated.  She noted the                                                                   
"blue book" or the "University  of Alaska Governor's Proposed                                                                   
FY2011" (Copy on File).                                                                                                         
9:54:50 AM                                                                                                                    
Ms. Hughes  explained that  the BOR decided  to agree  on one                                                                   
capital  request,  which  led to  some  disagreement  amongst                                                                   
campuses.  She remembered  the  December meeting  of the  BOR                                                                   
where five  members of the  community testified  with respect                                                                   
to the UAA sports  center. She noted that the  planning funds                                                                   
for the  UAA arena have  been available for approximately  18                                                                   
months. The BOR asked the university  planners to concentrate                                                                   
on design and  engineering studies. A site  has been selected                                                                   
and  a  subcommittee  appointed  to  finish  the  engineering                                                                   
design for the UAA sports center.                                                                                               
9:58:52 AM                                                                                                                    
Ms.  Hughes noted  that  the financing  is  aided by  private                                                                   
corporations  and this  financial plan  will be  part of  the                                                                   
committee's  work   product.  She  noted  that   Wells  Fargo                                                                   
presented another  issue. She explained that  the BOR learned                                                                   
from  the Integrated  Science  Building  that the  renovation                                                                   
project is not yet finished. The  regents believe that having                                                                   
community  support  is  very helpful.  She  stated  that  she                                                                   
wanted to provide  the committee with accurate  numbers and a                                                                   
good plan.                                                                                                                      
Acting  Chair   Fairclough  stated   that  a  discussion   on                                                                   
maintenance for  University buildings  will occur  during the                                                                   
subcommittee process.                                                                                                           
10:02:24 AM                                                                                                                   
Co-Chair  Stoltze  noted that  members  are  hesitant to  get                                                                   
involved  as it  might  hamper the  ability  to advocate.  He                                                                   
understood that  the members believed  that involvement  in a                                                                   
task force might  prevent the ability to act.  He stated that                                                                   
the  members   considerately   declined  the  invitation   to                                                                   
participate in the task force.  Ms. Hughes countered that the                                                                   
members  did not  decline  the invitation.  Co-Chair  Stoltze                                                                   
argued  that  the  mayor  and   other  prominent  individuals                                                                   
declined the invitation.                                                                                                        
Acting Chair Fairclough  noted that she would  prefer to look                                                                   
deeper into  the issue at a  future time. She noted  that the                                                                   
subcommittee  would  invest time  exploring  these  important                                                                   
10:04:38 AM                                                                                                                   
Mr. Hamilton  considered it an  insult to the members  of the                                                                   
BOR that  he has  worked with  for twelve  years, to  suggest                                                                   
that they are "interior centric."  He agreed that internecine                                                                   
warfare existed within  the University and he  stated that it                                                                   
was  because the  BOR  is successful  in  engaging their  own                                                                   
regional   representatives   and  overturning   the   express                                                                   
priorities of the BOR. The university  requires help from the                                                                   
legislature.  The various  regents have  every right  to talk                                                                   
with their  legislators  about their needs.  The BOR  clearly                                                                   
lays out  a priority, which  has been overturned  by regional                                                                   
activities.   The  result   is   that  80   percent  of   new                                                                   
construction  has occurred  in  Anchorage.  He commended  the                                                                   
committee  on getting  the BOR  involved for  the purpose  of                                                                   
education. He stressed that the  University is an institution                                                                   
of  goodness.   Many  wonderful  programs  come   before  the                                                                   
President and the BOR and some must be declined.                                                                                
Mr.  Hamilton   stated  that   the  current  status   of  the                                                                   
University is one of fiscal crisis.  Student head count is up                                                                   
4.3  percent, which  is  the largest  increase  seen in  many                                                                   
years.  Alaska native  student enrollment  is up 17  percent.                                                                   
First time freshmen are up 15  percent and the university has                                                                   
463 new Alaskan  scholars, the largest new group  seen in the                                                                   
history of  the University. He  mentioned that John  Pugh has                                                                   
provided  a tremendous  source of  information. He  commended                                                                   
the wonderful programs that allow  sufficient involvement and                                                                   
retention of students.                                                                                                          
10:08:26 AM                                                                                                                   
Mr.  Hamilton continued  that  funding of  the University  of                                                                   
Alaska by the  legislature coincided with his  arrival to the                                                                   
state. Since  then, the  number of  high school graduates  in                                                                   
the state attending  the University of Alaska  has risen from                                                                   
40  to 63  percent. Private  donations have  increased by  75                                                                   
percent. Federal  funding has  increased by $70  million. For                                                                   
the  last  12  years,  the  University  of  Alaska  has  been                                                                   
marginally  favored  by  the  legislature.  He  provided  the                                                                   
statistic that  47 percent of  University of Alaska  students                                                                   
graduated during  his time  as President and  that is  due to                                                                   
funding from the legislature.  He remembered that the initial                                                                   
request  was made  when oil  was $9  per barrel  and yet  the                                                                   
legislature chose  to invest. He opined that  the legislature                                                                   
made the right call.                                                                                                            
10:11:39 AM                                                                                                                   
Mr.  Hamilton projected  a 4  percent  gain in  the next  ten                                                                   
years. He  opined that the gain  might indeed be  greater. He                                                                   
provided  a  statistic from  1960  that  only 40  percent  of                                                                   
children were  born in the state.  Today the statistic  is 70                                                                   
percent providing  a more  stable population. The  University                                                                   
is well  situated  for continuing  research, especially  with                                                                   
the governor's budget for the life sciences building.                                                                           
10:14:16 AM                                                                                                                   
Representative  Foster  noted  that he  received  his  second                                                                   
degree  from  the  University  of Alaska.  He  commended  the                                                                   
efforts of the University on retention efforts.                                                                                 
Mr. Hamilton elaborated  about specific programs  that add to                                                                   
graduation potential.  Simply attending the  Regional Alaskan                                                                   
Honors  Institute (RAHI)  more than  doubles the  probability                                                                   
that  the  individual  will  graduate.   He  noted  that  the                                                                   
University  has 4300  Alaska  native students  attending.  He                                                                   
admitted that the retention rate  remains lower than desired,                                                                   
but has continued to advance for more than a decade.                                                                            
Mr. Hamilton addressed distance  education. He explained that                                                                   
the  courses  respond  to need  and  are  decentralized.  The                                                                   
question exists  about formalizing this form  of education at                                                                   
a  cost. The  BOR realized  the  priority prior  to the  LB&A                                                                   
audit. In  ten years  the University has  four times  as many                                                                   
student  credit   hours  delivered  by  distance   education,                                                                   
equaling a 400  percent increase in ten years.  He considered                                                                   
it  an honor  to work  with academe.  He stated  that he  has                                                                   
attended approximately 100 commencement  exercises. He highly                                                                   
recommended  the  committee  members  attend  a  commencement                                                                   
10:19:21 AM                                                                                                                   
Mr. Hamilton stated that the University  serves Alaska native                                                                   
students. Twenty percent of the  student body is comprised of                                                                   
Alaska natives.                                                                                                                 
Ms.  Hughes  asked  if  Ms Rizk  should  provide  the  budget                                                                   
overview. Acting  Chair Fairclough  stated that the  overview                                                                   
will be postponed.                                                                                                              
Representative  Kelly   expressed  profound  thanks   to  Mr.                                                                   
Hamilton.  He  believed  that   Mr.  Hamilton  was  the  most                                                                   
untraditional  candidate  to   be  placed  in  his  role.  He                                                                   
commended  Mr. Hamilton  for his work  with the  University's                                                                   
nursing program.                                                                                                                
Acting   Chair    Fairclough    echoed   the   comments    of                                                                   
Representative Kelly.                                                                                                           
10:24:30 AM                                                                                                                   
Acting Chair  Fairclough noted that the  "Governor's Proposed                                                                   
Fiscal Year 2011 Operating and  Capital Budget Request" (Copy                                                                   
on File) or  the "blue book" is the governor's  proposal. She                                                                   
expressed thanks  to the University for providing  the budget                                                                   
in   a  form   that  is   traditionally   addressed  by   the                                                                   
legislature.  The   "red  book"   is  found  online   at  the                                                                   
University system,  which is the regent's  overall submission                                                                   
to the  governor. She noted that  a short description  of the                                                                   
"red  book"  was  provided  in  the  committee  packet  which                                                                   
includes a high  level comparison allowing  committee members                                                                   
to have conversations about the issue.                                                                                          
10:26:53 AM                                                                                                                   
Representative Kelly  commended Co-Chair Hawker  for his work                                                                   
in compiling  this "blue  book" and  the gathering  of issues                                                                   
and pertinent information.                                                                                                      
Acting   Chair    Fairclough    echoed   the   comments    of                                                                   
Representative  Kelly.  She  thanks  the  President  for  his                                                                   
service  to  the  country  the  state.  She  noted  that  the                                                                   
university's loss will be mourned.                                                                                              
10:29:29 AM                                                                                                                   
Co-Chair Hawker stated that the subcommittee process will                                                                       
continue in a forum chaired by Representative Fairclough                                                                        
next Tuesday.                                                                                                                   

Document Name Date/Time Subjects
FY11 Bluebook.pdf HFIN 1/28/2010 9:00:00 AM
University of Alaska Overview
Overview UofA Budget Comparison.pdf HFIN 1/28/2010 9:00:00 AM