How this university plans to reduce its budget deficit by $110 million in one year

The university pledged not to reduce need- merit-based aid for current students and those admitted through fall 2024 or cut retirement benefits or institute furloughs. 

The University of Arizona has gone through the wringer in the months since discovering a $177 million budget deficit last November. Leadership on the state’s board of regents has been reshuffled, the president announced his plans to step down and highly ranked administrators have been let go. Yet, most importantly, the state’s flagship has a plan.

By fiscal year 2025, UA leaders have mapped out how they plan to cut the shortfall by $110 million, reducing its current $166 million budget hole to $52 million. Moreover, the university plans to balance its budget by Jan. 1, 2026, according to a financial update posted on the school’s website.

Administrative expenses will experience the steepest cuts, followed by collective cuts across the university’s colleges and specific reductions for the health sciences department, according to John Arnold, UA’s interim chief financial officer, in a presentation to the board last week. The university will also increase budget oversight over the athletics department, centralize administrative offices and launch a new budget model beginning in 2025.

“As a result of our budget decisions, the university will be in a position to allocate sufficient funds to ensure no college starts FY 2025 in a budget deficit,” President Robert Robbins wrote in an email to the community ahead of the board meeting.

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Steps taken to cut the budget deficit

At the board meeting, Arnold informed the audience that UA plans to decrease administrative units by 6.3%, or $30.1 million. All of the university’s academic programs will experience a collective 3.6% cut, which comes out to $26.1 million. University of Arizona Health Sciences, which houses colleges across several healthcare disciplines, will experience a 6.2% budget decrease, equating to about $10.4 million.

Arnold noted that these were “conservative” estimates due to unknown future revenue sources and state funding for FY25.

The university has already taken some immediate measures. President Robbins’ salary was reduced to $735,000, a 10% drop, and he is no longer eligible for a $270,000 merit-based bonus. UA has also let go of some athletic department employees, including its athletic director. Athletics made up $35 million of the fiscal gap last year, Arizona Sports reports.

Additionally, the university has already paused new hirings, restricted purchases and deferred nonessential capital projects.

The university pledged that throughout this process, it has no plans to reduce need- merit-based aid for current students and those admitted through fall 2024, reduce retirement benefits or institute furloughs.

Blunders and criticisms

University of Arizona leaders blamed inflation, the pandemic and “accelerated overspending” beginning in FY22 for the deficit

“The vast majority of the deficit is due to increased spending to enhance and improve our student experience and to strengthen our faculty and staff,” reads the university’s website. “This includes millions spent on student merit aid, compensation to retain and attract world-class faculty and staff, and critical strategic investments.”

However, critics point to a degree of negligence from the university, beginning with an accounting error that miscalculated its cash on hand by millions. Furthermore, financial mismanagement led to the university dolling out millions of dollars worth of unpaid loans to its athletic department, FOX 10 reports.

Gov. Katie Hobbs has criticized the Arizona Board of Regents for being particularly lax about the UA’s suspect purchase of a for-profit online school that has left its graduates with substantial debt.

“New facts have come to light that once again show the Arizona Board of Regents failed in their oversight role and highlight a university leadership that was clueless as to their own finances,” wrote Hobbs in a news release.

The editorial team of the Arizona Republic, the state’s largest newspaper, is equally incredulous about how its leaders “have failed so spectacularly at its job of oversight.”

“The university has lost some credibility in the community,” Arnold, UA’s interim chief financial officer, told The New York Times, “and a little trust we need to regain.”

Alcino Donadel
Alcino Donadel
Alcino Donadel is a UB staff writer and first-generation journalism graduate from the University of Florida. His beats have ranged from Gainesville's city development, music scene and regional little league sports divisions. He has triple citizenship from the U.S., Ecuador and Brazil.

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