Budget update: Nov. 6
November 6, 2019
— by Dan White, chancellor
This week we will be welcoming the Board of Regents to vlog for their meeting
on November 7 and 8. Thursday is reserved for a BOR workshop on roles and responsibilities.
The workshop has a specific participant list, but is an open meeting and all are invited
to attend. The morning will be presentations about higher education governance and
the afternoon will be a facilitated discussion about the roles of the BOR, President,
Chancellors, and Governance.
On Friday, public testimony will be held from 8:00am-9:00 am. are brief presentations on Research and Athletics, and the BOR’s approval of the
FY21 budget request for submission to the Governor’s office. The meetings will be
held in Room 109 Butrovich Building. We expect that in line with the compact, which includes a $25 million reduction to state general
fund support in FY21
While there is not new budget news to share since my budget column last Friday, I
do want to take this opportunity to share some of my thinking about the budget in
advance of the November 21 Budget Forum.
First, we talk a lot about vertical and horizontal reductions. For those not familiar
with the terms, in a general sense, horizontal reductions spread a cut out across
a unit, while vertical cuts eliminate a specific part of a unit. Horizontal cuts can
be applied in many ways. For example, as has been my practice, Vice Chancellors have
been asked to meet a specific percentage reduction but have the freedom to allocate
the cuts within their divisions in horizontal, vertical or some combination of ways.
In this way, Vice Chancellors could make vertical reductions or give similar targets
to Deans and Directors, who may choose to pass the same percentage targets on to each
of their departments, or to make vertical cuts within their areas. A general reduction
of 10-15 percent, at this stage, does not mean that each and every department will
take the same cut. Instead, the intent is that units have something to begin building
scenarios around, while maintaining flexibility and allowing room for shared development
of strategy.
While it seems like a clear distinction, vertical and horizontal cuts tend to overlap.
For example, if a college is looking at a 10 percent horizontal reduction and learns
that one of their programs is selected for a vertical reduction, the clear position
of the dean would be to count that program elimination towards their 10 percent target.
I know that when similar questions come up at the system level, I advocate for the
same position as a university. As an example, when the system office consolidated
human resources to the system office, my request was that the reductions they took
be counted towards UAF’s horizontal (or “pro rata” as it is called) cut.
The horizontal/vertical question also speaks to the balance between empowering our
unit leadership to make decisions where they are most knowledgeable and best equipped
to navigate concerns, while recognizing that some decisions should and must be made
at an executive leadership level. I realize that there are tipping points and that
horizontal reductions reach a point where they are not sustainable. The expression,
“we must do less with less” turns from doing less as a department (horizontally) to
doing less as a university (vertically). At that point, the question becomes what
is it that we do as a University that we cannot do any longer. It is my belief that
there is nothing that we do anymore that does not have a direct benefit for Alaska,
serve Alaska’s students, and have a significant community constituency. A few examples
of decisions that I made this year that were vertical cuts (because they were made
at the executive level) but for which the savings were allowed to count horizontally
were the reduction of two large animal handling facilities (no more reindeer at the
farm), consolidation of facilities so that we could eliminate expensive temporary
structures, and demolition of structures.
We have also been talking about one-time actions. One-time actions are decisions that
can be taken for this year, such as spending from savings, selling property, or using
furloughs, that generate revenue or reduce costs for this year alone. When we met
some of the budget gap this year with reserves, those reserves went away. The gap
will still be there next year, when there are fewer reserves on hand. At first glance,
that does not seem very strategic. What it does, however, is provide time for better
decision-making processes. With an FY20 budget that was not final until several months
into the fiscal year, the one-time actions provided a bridge for this year and the
opportunity to plan ahead with analysis and input.
I wrote last week that we will be pursuing shared services as part of the overall
strategy for meeting the cumulative FY20-21 reductions. As a starting point, the UAF Guide to Shared Service Models (2014) (PDF) on the Office of Management and Budget process improvement webpage< includes a table comparing different models. Questions I would like to explore are:
Is it better to organize by function (proposals, travel, purchasing, etc.) or by area
(West Ridge business office, for example), or a hybrid with some functions in each
type? Which approach might provide the best service and the best experience for our
employees, while reducing costs? The models we use are up for discussion, and I hope
to hear your perspectives on the best structures to meet your units’ needs during
the November 21 Budget Forum.
The forum will be held at 1:00pm in the Wood Center Ballroom, and will be available
to join online. I look forward to seeing you there and hearing your thoughts, questions,
and suggestions.
Thank you for choosing UAF.