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University of Arizona updates financial plan to battle ongoing financial crisis

On Jan. 29, UA president Robert Robbins announced the new financial plan, which includes administration centralization and changes to financial aid

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The University of Arizona College of Medicine Phoenix building is pictured on Monday, Nov. 13, 2023, in Phoenix.

On Jan. 29, University of Arizona President Robert C. Robbins, held a forum to announce the next steps of their financial action plan, which aims to correct the expected budget shortfall of $177 million.

Robbins announced that the university will be "rightsizing" college and division budgets, "restructuring" administrative costs and "centralizing" certain functions, among other steps to balance the budget, in a letter to the campus today.

In November of 2023, UA announced a $240 million shortfall for 2023, which was later corrected to around $140 million. During the forum, Robbins announced that, without correction, the UA would face a projected $177 million shortfall for 2024.

According to the presentation, 75% of the units within the university reported forecasted overspending.

"We face our financial challenges due to decades-long budgeting practices, decentralized budget and operations models, lower-than-expected revenues, investment in strategic priorities, and increasing costs in Athletics, as well as external factors including the COVID-19 pandemic and rising inflation," Robbins said in the letter. "In addition, our revenues have not kept pace with rising costs in part due to tuition discounts to attract and retain exceptional students."

READ MORE: Students, faculty and officials voice concerns on University of Arizona's financial problems

The planned next steps were released as a university financial update. Robbins, interim Chief Financial Officer and former ABOR director John Arnold and Arizona Board of Regents Chair Fred DuVal presented them in the forum.

The most immediate step of the financial action plan is to centralize university functions, including financial reporting. After centralizing facilities management, the next priority is to centralize human resources and information technology operations by March 4.

The university will address administrative costs by working with Huron Consulting Group to "rightsize" high-level administrative positions. 

Also on the list of next steps are changes to merit-based aid for future non-Arizona resident students, something the university referred to as "rebalancing." The university assured that there would be no change to the need-based merit of non-residents and no change to merit or need-based aid for current students.

Arizona will eliminate the tuition guarantee program for newly enrolled students starting in Fall of 2025.

This decision was made due to the rapid growth in institutional financial aid in contrast to a lack of growth in tuition revenue.

Graduate and Professional Student Council President Jeremy Bernick said the update is "awful" and "infuriating" because they said the people most affected by the new policies will be people who "didn't actually do anything wrong."

"It seems like a solution of rightsizing will just create more stress and more work for an understaffed university," Bernick said.

The long-term goal is to completely replace the current budget model with a centralized budget model. This will occur after a 5% reduction planning assumption for all colleges and units. The target date for the new budget model is Jan. 1, 2025.

Also among the large-scale changes is a plan to restructure the athletics operations, including centralizing administrative functions and installing hard spending caps.

UA is currently on the lookout for a new athletic director, as well as hiring a new head football coach, Brent Brennan, after their head coach's contract was bought out by Washington. The university also hired multiple new coordinators and position coaches. 

All of these decisions happened during a hiring and compensation raise freeze implemented by Arizona in Dec. 2023 in one of its first responses to the financial crisis. 

Read more: ASU and Arizona are both in the market for an AD. How do the jobs compare?

Bernick said students and faculty were upset with the new football hires and said it felt like the university had a "two-tiered system."

"We're under the premise that there's a hiring freeze and a compensation freeze for all employees," Bernick said. "Our wealthiest state employees don't fall under that general rule that there should be no more hires because of the budget crisis."

Regarding personnel, the university announced it would delay the 2025 Salary Increase Program and "explore early retirement incentives for both faculty and staff."

The plan also referred to the controversial University of Arizona Global Campus. The UAGC, formerly the for-profit Ashford University, was procured by the university in 2023. Last year, it provided a net revenue of $47 million, though it is projected to bring in only $3.1 million in 2024. UA said it will work with a firm to improve UAGC efficiency. 

The financial update comes soon after Arizona Gov. Katie Hobbs sent a letter to Arnold and DuVal regarding the urgency of presenting an action plan. Hobbs is a regent on ABOR.

"The situation cannot afford any future missteps," Hobbs said in the letter. "The plan ahead must be implemented with purpose and fidelity. If we do not see progress, I will work with stakeholders to identify further changes to leadership and processes in order to fix ongoing problems."

Bernick is more optimistic now that Hobbs has become more involved in the action plan.

"I feel more confident that the governor is stepping in and getting more involved with the Board of Regents process, and I hope that the takeaway from all this is that universities can't be run by a bunch of businessmen," Bernick said. "They can't be overseen by people who don't understand public education and that fundamentally, (ABOR is) responsible and had incentivized the choices made by President Robbins."

Read more: UA, ASU students hold protest, speak at ABOR meeting on financial crisis

Looking further into the future, Arnold said in an article by that the UA will explore alternate revenue options, specifically during the summer and winter. It will begin this process by studying its spaces and looking toward consolidation.

According to the University Financial Updates page, "The University's immediate financial task is to address and eliminate its structural deficit while ensuring the ongoing success of its teaching, research and outreach mission."

"We will continue to work with the Arizona Board of Regents and shared governance partners to inform solutions that will allow us to balance our budget by 2026 while also minimizing the impact on our students, faculty and staff," Robbins said. "We will share regular updates about the financial action plan and budget decisions impacting the campus community."

Edited by Walker Smith, Sadie Buggle and Shane Brennan

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