Dunleavy administration claims no constitutional duty to fund University of Alaska

This is a second in a series on misleading and inaccurate claims the Dunleavy administration is making to justify its attack on the university.

The shortest article in the Alaska Constitution, No. 7, deals with public schools, the University of Alaska, public health and public welfare.

Former Territorial Gov. Ernest Gruening addressed the Alaska Constitutional Convention on its first day, Nov. 8, 1955, and said that the most inspired of the actions that led Alaskans to write a Constitution was the selection of the University of Alaska in Fairbanks as the convention site.

“A university is really the keeper of the soul of a modern society and if this convention does not have and will not have a high inspirational quality it will not succeed. But it has that inspirational quality, and it will succeed,” said the former territorial governor and future U.S. senator.

I wonder what Gruening would have said about the soul of modern Alaska and the quality of inspiration had he been in Juneau last week to hear a representative of Gov. Mike Dunleavy claim that the state doesn’t have a constitutional duty to fund its state university.

Mike Barnhill, delegated by temporary budget director Donna Arduin to push for a 41 percent reduction in state general funds, a cut of $134 million, summarized his theory as, “Alaska Constitution establishes university, but is silent re funding.”

“The university in slides has made the point that because the university is established in the Constitution that makes it a core constitutional service,” he told a finance subcommittee.

“What I want to say to the committee is the Constitution is silent as to funding. It’s simply established. I would argue and happy to argue at length at another time and place that there’s no constitutional requirement for funding of the university.”

Anchorage Rep. Zack Fields thought that was the right time and place to argue. “That’s an absurd argument,” Fields said.

He said it is ludicrous to contend that the authors of the Constitution would establish the University of Alaska as the state university, without expecting the state to support it.

“I’m happy to engage. I don’t think it’s a ludicrous statement,” said Barnhill.

Elsewhere in Article VII in the Alaska Constitution, which Barnhill mistakenly said was Article VI, there is a requirement for the Legislature to “establish and maintain” a public school system. The section related to the university says the university is “established” and it doesn’t mention that it be maintained.

According to Barnhill, by not mentioning the need to maintain, the Constitution authors were telling future Alaskans that state support wasn’t required.

“It’s a moot point because we’re not talking today about eliminating funding,” Barnhill said. “I’m just pushing back, I hope gently, but maybe it’s perceived as more than gently, on the notion that funding is constitutionally required. Let’s say it’s an open question for purposes of discussion.”

Fields was right. This is absurd and ludicrous. It’s not an open question.

The Constitution doesn’t say that the university shall be maintained by the state because it explicitly grants authority to the Board of Regents to govern the university.

During the proceedings of the convention, which can be found here, check the statement on Page 2,792 by delegate Vic Rivers, who said the “the main point this article has is that constitutionally the University of Alaska shall be the only state university in Alaska.”

Rivers said the university could have a number of branches, but it would be all part of one system. He said the thinking was that instead of having multiple universities competing in the Legislature and elsewhere for funding, there would be a single state university. This was to unify the university, not to give ammunition six decades later to state officials to claim it was not a constitutional priority.

With this constitutional claim, the Dunleavy administration is guilty of state overreach in its attempt to downgrade the university, while never talking about taxes and tradeoffs, only the size of the Permanent Fund Dividend.

The top section of the same Barnhill slide, shown below, is also relevant here. He claims that the decision by Moody’s to downgrade university bonds was based on an “over-reliance on state funding,” but that’s not what the ratings agency said.

“Over reliance on state funding has been a concern in the life of the University of Alaska. They’ve been downgraded twice by Moody’s and in both cases, this is since 2015, Moody’s has made a point to saying the downgrade is because of over-reliance on state funding,” Barnhill told legislators.

Moody’s downgraded university bonds twice, most recently to A1 in 2017, but that action had more to do with the underlying financial stability of the state than anything else. That instability continues with the Dunleavy refusal to propose a balance fiscal plan.

“The downgrade to A1 reflects the university's material reliance on the State of Alaska with the resulting exposure to the fiscal and economic challenges of the state caused by low oil prices,” Moody’s said in 2017.

“With about half of UA's operating budget, including on-behalf payments for pension and other post-retirement benefits, derived from state funding, we expect increased operating pressure at the university as the state addresses its significant structural imbalance.”

That same announcement praised the university for “its essential market role as Alaska's sole public higher education provider, proactive university leadership initiatives to adjust operations to absorb state funding reductions, and a moderate debt burden relative to spendable cash and investments and revenues.”

The agency said a “material reduction of financial support” from the state could lead to more trouble. The bogus constitutional argument and the claim about Moody’s do not warrant a material reduction of financial support from the state.