Alaska Governor Mike Dunleavy, right, and John Davies, the chair of the state's university system, sign a budget compact on Tuesday.Mark Thiessen / AP

Standing before a room full of reporters on Tuesday, Governor Mike Dunleavy of Alaska let go of the podium he’d been gripping, spreading his hands wide as he announced the agreement he had reached with the state’s university system. He said the two sides of the negotiation had started “a little bit apart,” but they had worked toward the middle. The middle they’d arrived at was a $70 million budget cut to the university system spread over the next three years.

It seemed a small victory. In June, Dunleavy cut $130 million in state funding for the university—or about 40 percent of the system’s budget. A cut like that in one fell swoop was unprecedented. There were fears of layoffs and campus closures. The system’s Board of Regents declared financial exigency—essentially bankruptcy—to give itself room to more easily fire tenured faculty. The deal signed this week assuaged some of those fears, at least providing the University of Alaska with some clarity on its future. “This deal provides a great deal of certainty,” John Davies, the chair of the board, said during the press conference.

What is certain is that the university will still have a significant budget cut over the next three years. The improvement is that the bleeding from this cut can be more easily managed. “It won’t be painless, but it’s better manageable pain,” said Luis Maldonado, the vice president for government relations and policy analysis at the American Association of State Colleges and Universities. And there is still some uncertainty left in the wake of this deal, for both the school and its students. Typically, when colleges lose state support, some of the costs are transferred to the students by way of tuition increases. For prospective students who may be looking to attend the university, not knowing how much it will cost three years from now may seem a daunting prospect. “That complicates future planning,” Maldonado told me.

Dunleavy argued that various state-funded entities, including the university system, needed to better manage their spending in order to deal with the state’s ongoing budget woes—largely the result of its reliance on an uneasy oil market. The state universities were too reliant on state funding, he said, and this was a good opportunity for them to diversify their revenue streams. Denisa Gándara, an assistant professor at Southern Methodist University, thinks the suggestion is dubious.

The state recognizes that its reliance on oil is unsustainable, Gándara told me, and higher education is one of the best ways to prepare people for the non-oil-related jobs that will need to be created to fix that problem. And then there are the more practical things that a large budget cut—especially one that received national attention —does to a university’s reputation. Students may worry about the institution’s stability, which could lead to reduced enrollment, and “it may make it harder for [the school] to receive grants for research if there’s this perception that the universities don’t have the actual capacity” to take on that research, Gándara said.

The university system has the next three years to address these cuts, but as Amy Li, an assistant professor of higher education at the University of Northern Colorado, told me, doing so will suck time and resources away from the school, hampering its ability to accomplish things like improve graduation rates. Some research has shown that when state funding increases, so do graduation rates; Alaska may be a case study in whether the converse is true.

During the news conference, Dunleavy assured reporters that “the university is actually near and dear to my heart.” He ran down his bona fides: He attended the university, as did his daughters, and he even worked for the university for a time. The institution’s best years, he said, are ahead of it. “I look forward to making the University of Alaska a stronger university,” Dunleavy said. Stronger it may become, but Dunleavy’s cuts have certainly weakened the odds of that happening.

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