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Universities search for new funding to make up for decreasing state aid; long-term impacts unknown

July 11, 2019
By: Ellen Marrison

The state of Alaska is in the midst of a funding crisis that could devastate the viability of the University of Alaska, and recent research from a National Bureau of Economic Research (NBER) working paper shows that the loss of funding could have long-term impacts for the system. While highly ranked research universities have been able to adapt to declining subsidies by raising tuition, attracting out-of-state and international students, and sometimes raising funding from philanthropic sources, public universities outside of this top tier have not been able to replace lost dollars, say the paper’s authors.

In the NBER working paper, Public Universities: The Supply Side of Building a Skilled Workforce, John Bound, Breno Braga, et al., examine the impact of declining state support for public research universities on their educational and research functions. The authors note that the quantity of undergraduate and graduate degrees awarded have been affected by budget cuts, and express concern that “continued stagnation of state support for public universities will adversely impact the supply of skilled workers with undergraduate and graduate degrees to the workforce, along with the long-term research capacity which contributes to economic growth.”

Economic growth is part of the argument in maintaining funding for the University of Alaska system. Leaders there expect that 65 percent of Alaskan jobs will require post-secondary education by 2025, according to a story in the LA Times. Gov. Mike Dunleavy announced 182 line-item vetoes to the state’s FY 2020 budget, cutting the proposed state budget by almost $410 million, with nearly a third of the cuts ($130 million) coming from the University of Alaska system. The story notes that the system’s president said such a cut would be a blow that the system may not recover from and university leaders said that the system is “key to unlocking much-needed economic revitalization.”

Yesterday, the Alaska Legislature failed to override the governor’s budget vetoes and now has until midnight Friday to again consider veto overrides.

Alaskahigher ed, recent research