Juneau — University of Alaska system leaders told the House Finance Committee's University subcommittee on Feb. 10 that modest enrollment gains and improved freshman retention have helped stabilize the system but that rising health benefits, utilities and deferred maintenance continue to put pressure on the university budget.

"Our freshman to sophomore retention rate has hit a 5 year high. It's at 66.8," said Pat Pitney, president of the University of Alaska system, summarizing what she called recent progress in student retention. Pitney told lawmakers the system includes "3 universities and 11 community campuses that stretch from Ketchikan to Kotzebue."

Pitney and Alicia Kruckenberg, the university budget director, presented the Board of Regents' operating and capital requests and walked through how the university plans to cover nonstate costs. Pitney said the Board of Regents' operating request includes increases for compensation, delayed health‑benefit recovery and fixed costs; she said some parts of the board's request are in the governor's proposed budget while other parts are not.

"The recruitment, retention and graduation, this $55,000,000 in general fund support is not in the governor's budget," Pitney said, noting that the governor included most but not all of the board's operating request. Kruckenberg told the subcommittee the governor's budget covers roughly $24 million of the board's approximately $34 million operating request as shown in the university presentation materials.

Pitney described a number of enrollment and program highlights the university says will support workforce needs in Alaska. She said the Alaska Performance Scholarship cohort had an 89 percent first‑year retention rate and that passage of last year's APS legislation was linked to a 65 percent increase in applicants and enrollees this fall. She also noted a recent expansion of the WAMI medical program from classes of 20 to classes of 30 students in partnership with the University of Washington.

The university reported modest overall growth: headcount was up about 1 percent for the spring term and credit hours were up about 4 percent. Pitney cautioned that some of the change reflects an accounting or classification shift: roughly 1,200 students in an Anchorage teacher development program moved from being counted as credit to noncredit enrollments, a change that reduced reported credit headcount but did not alter revenue from those students.

Kruckenberg described how the university expects to raise roughly $11 million in additional unrestricted revenue to cover part of the nonstate share of fixed costs and compensation. "The first row would be $9,000,000 for tuition and fee revenue," she said, adding $2 million in indirect cost recovery as another source. The university also flagged a roughly $7 million anticipated increase in federal grant activity and about $6 million in other restricted and designated funds returning in FY2026.

Pitney warned of potential downside risk to federal research revenue from proposed federal changes that could affect indirect cost recovery. "Indirect cost recovery is about ... $50,000,000 for the university," she said. "Tremendous changes to indirect cost recovery would be a difficult gap to manage. We're watching it closely." The university did not provide an estimate of potential losses related to those federal rule proposals.

On capital priorities, Pitney said deferred maintenance remains the top request. She renewed the board's prior proposal for a steady, multiyear major‑maintenance fund, describing $35 million deposited annually into such a fund as the level that in the past stopped growth in the deferred‑maintenance backlog. The university also identified an $18 million state request to leverage a National Science Foundation grant for a replacement docking and warehouse facility at the Seward Marine Center, a mariculture expansion request, and a package of research and infrastructure items at UAF tied to its R1 research initiative.

Lawmakers asked about several specific items: Representatives pressed the university on data about Alaska Performance Scholarship matriculation (Pitney referred most requests to the Alaska Commission on Postsecondary Education for systemwide reporting), on the size of the WAMI applicant waitlist (Pitney said she would follow up), and on whether campus safety funding approved previously for UAA was vetoed (Pitney said that earlier campus safety funding was included for UAA and this request focuses on UAF and UAS). Representative Ballard asked about timing of collective bargaining and whether the university had negotiated before knowing the legislature's action; Pitney said tentative agreements for FY2026 include a 2.75 percent base increase for nonunion staff and faculty (with further increases in later years under the tentative agreement), and that the general fund portion of the tentative agreement for FY2026 would be $2.3 million (about $3.2 million total when other fund sources are included) and must still be submitted through the normal ratification and budget processes.

Pitney said the university's recruitment, retention and graduation work is backed by an ad hoc Board of Regents committee and an outside consultant, and that the system aims to shift from an "outreach" model to an active recruitment model, expand advising and enrollment management, and invest in high‑demand program capacity. She told the committee the university is seeking a mix of state general funds, nonstate earned revenue and philanthropic support for those efforts.

The subcommittee did not take formal votes on the university requests during the Feb. 10 briefing. The meeting was convened by Chair Representative Galvin at 9:03 a.m. and later recessed with a planned follow‑up session; the next subcommittee meeting was announced for Feb. 17 at 9 a.m. in Room 519.

Ending: The presentation materials and the university's supplemental request detail are available through the subcommittee packet; representatives asked the university to provide follow‑up materials on WAMI waitlists, ACPE data on APS matriculation, and a breakdown of the "corporate/nonprofit" receipts that led to higher than authorized university receipt spending in FY2024.