Alaska's University Cuts are Even More Short-Sighted Than You Think

Alaska Governor Mike Dunleavy shocked the state legislature last month when he vetoed over $400 million in state spending—a far steeper number than anticipated. Included in the veto was over $130 million in cuts to the University of Alaska. This comes as Alaska struggles to deal with a prolonged economic slump caused by low oil prices, forcing state lawmakers to make some tough decisions as tax revenue falls.

Lawmakers have since failed to override the governor’s veto. As a result, the university system may soon see an astonishing 41 percent cut to aid from the state, which will lead to layoffs and possibly outright closures of smaller campuses. The financial fallout from these cuts could be even larger as federal money and research grants fall through in response to staff and faculty cuts. The Anchorage campus, for example, could see 40 of its 105 degree programs eliminated. Moody’s dramatically downgraded the university system’s credit rating in response, which could further hamper the university’s finances down the road. 

Alaska’s case is extreme. Yet state universities nearly everywhere have seen substantial cuts to state aid in the aftermath of the Great Recession, putting further pressure on school budgets already strained by rising healthcare and pension costs. Some states have chosen to reduce their systems’ emphasis on research, and instead focus on teaching and career readiness, particularly at second and third-tier universities. 

As tempting as this may be, research-oriented universities produce long-run value for regional economic development. Research universities make regional economies more dynamic and resilient in the face of globalization, and create islands of economic activity in otherwise distressed parts of the country. For a struggling state like Alaska, this makes university cuts even more short-sighted than one might think.

Read the rest at the Niskanen Center.