On Dec. 13, 2023, the University of Arizona announced a comprehensive financial recovery plan to tackle its $240 million budget deficit. This plan was unveiled in response to the University’s financial hardship.
Recently, numerous educational institutions, both public and private, in the United States have reported large-scale staff reductions, program cuts, and campus shutdowns due to budget deficits caused by diminishing student numbers, the end of federal COVID-19 pandemic financial assistance, and other elements.
At the beginning of this year, four out of the 14 universities in the Big Ten Conference (Penn State, Nebraska, Minnesota, and Rutgers) declared that they had severe financial deficits, with two of them surpassing the $100 million mark. It was reported that West Virginia University was making cuts to battle a $45 million budget deficit, and Bradley University, located in Illinois, had a $13 million deficit, which is 10% of their overall operational budget.
On Wednesday night, the University of Arizona released a comprehensive financial recovery plan to combat its own $240 million budget deficit.
During a virtual meeting with the Arizona Board of Regents, President Robert Robbins announced the resignation of the university’s top financial officer and other measures to tackle cash flow problems.
Robbins announced that the university will put into effect an immediate hiring freeze, restrict international travel, limit purchasing, postpone nonessential capital projects, and delay strategic investments.
Robbins listed a few causes of the situation, such as decentralized budgeting, an inefficient administrative system, excessive spending and insufficient budget regulations.
The university failed to meet the 140 days cash on hand requirement as mandated by the state Board of Regents for the fiscal year of June 2023, showing a discrepancy between its income and expenditures. The university projected 97 days cash on hand for the approaching fiscal year of June. The student body of the university is estimated at around 50,000,
According to Robbins, the university can expect to save $16 million due to the hiring and compensation freeze, $5 million from the immediate purchasing restrictions, and an additional $9 million from the deferment of nonessential capital projects.
John Arnold, the Executive Director of Regents, will act as the school’s CFO and VP of Business Affairs for the coming months. Lisa Rulney, who held the CFO post since April 2019 and earned close to $500,000 each year, resigned from her role on Wednesday.
Fred DuVal, the Regents Chair, asserted that the board, the governing body of the state’s public university system, was to blame for not uncovering the issues sooner.
At the University of Arizona, DuVal stated that they would be taking the necessary measures to ensure this type of incident will not occur again either there or at any of the other state universities. This is the first step in reforming the situation.
The regents requested that Robbins employ outside professionals to modernize the university’s budget and monitoring processes in order to increase the financial oversight.
Robbins revealed that the guaranteed tuition program for all new students will end starting with new students in the fall 2025 semester.
In addition, the university will decrease financial financial aid for out-of-state students. On the other hand, no reductions will take place for Arizona residents who are in need of financial help as well as those who have already been accepted and are to receive merit-based aid.
Robbins noted that the university’s athletic department will be affected by the financial recovery plan, which includes increasing ticket prices, taking full advantage of media rights contributions, and cutting back costs by consolidating administrative tasks.
Robbins remarked Wednesday night that the University of Arizona’s most difficult budget challenge was athletics. He further declared that athletics was a cornerstone of the university and a major contributor to its future success. Robbins expounded that he has had several constructive meetings with the athletic department and that he is committed to producing a long-term plan to bring their budget back into stability.