University of Arizona response to $240M budget gap includes hiring freeze, spending restrictions
Dec 14, 2023, 10:07 AM | Updated: Dec 15, 2023, 6:50 am
(University of Arizona Photo)
TUCSON, Ariz. (AP) — The University of Arizona has become the latest school dealing with a sizeable budget problem.
In recent months, public and private colleges and universities across the country have announced mass layoffs, program eliminations and campus closures. The measures come in response to significant budget shortfalls as a result of declining enrollment, the end of federal COVID-19 pandemic funding and other factors.
Earlier this year, four of the 14 universities in the Big Ten Conference — Penn State, Nebraska, Minnesota and Rutgers — announced significant budget shortfalls, topping $100 million at two of the schools. West Virginia University reportedly was making cuts amid a $45 million budget deficit while Bradley University, a private school in Illinois, was addressing a $13 million budget shortfall representing 10% of its total operating budget.
To address its own $240 million budget shortfall, the University of Arizona unveiled an extensive financial recovery plan Wednesday night.
In a virtual meeting with the Arizona Board of Regents, university President Robert Robbins announced the resignation of the school’s chief financial officer and other steps to address cash flow issues.
“We will implement an immediate hiring freeze,” Robbins said. “We will freeze international travel. We will place restrictions on purchasing. We will defer nonessential capital projects and we will pause strategic investments.”
Robbins ticked off a number of things that led to the current situation, including a decentralized budgeting allocation process, an ineffective administrative structure, overspending and poor budget controls.
The university, which has nearly 50,000 enrolled students, fell 30 days short of the 140 days cash on hand the state Board of Regents required in the fiscal year that ended in June 2023 — a sign that its expenditures were outpacing revenues. The university forecasted 97 days cash on hand for the fiscal year that ends in June.
Robbins said the hiring and compensation freeze will save the university $16 million, the immediate purchasing restrictions will save $5 million and deferring nonessential capital projects should save $9 million.
Regents Executive Director John Arnold will serve as the schools chief financial officer and vice president of business affairs for the next few months. Lisa Rulney, who served as CFO since April 2019, resigned Wednesday from the job that paid her nearly $500,000 annually.
Regents Chair Fred DuVal said it was the fault of the board — the governing body of the state’s public university system — for not identifying problems sooner.
“Today we intend to take the first steps to turn the ship around at the University of Arizona and to assure our campuses, and the public, that this will not happen again in Tucson or at any of our state’s universities,” DuVal said.
Taking steps to increase financial oversight, the regents asked Robbins to hire outside experts to revamp the university’s budgeting and controls.
Robbins said the school will end its guaranteed tuition program starting in the fall of 2025 for all new students.
The school also will reduce financial aid for out-of-state students but won’t reduce need-based aid for Arizona resident students or merit-based aid for current or accepted students.
The financial recovery plan also impacts the university’s athletic department, which will raise ticket prices, maximize media rights contributions and reduce costs through centralizing administration functions, according to Robbins.
Robbins told the Faculty Senate earlier this month that the school loaned the athletics department $86 million in recent years, the Arizona Daily Star reported. Before that, the department had been self-sustaining, he said.
“Athletics is the most difficult part of the university’s budget. I also believe that athletics is a core part of the University of Arizona and key element to our long-term success,” Robbins said Wednesday night. “I have had many great meetings with the athletic department and we are committed to putting together a multi-year plan to bring their budget into balance.”