Once flush with cash, the University of Arizona in November announced a large — and unexpected — budget deficit. This week, administrators unveiled some aspects of the financial-recovery plan, which includes cost cutting: They predict layoffs, along with cuts across a wide array of departments and academic divisions. Cuts in athletics, too, are a real possibility.
“We’re not going to do across-the-board layoffs,” the university’s interim chief financial officer, John Arnold, told The Chronicle. “But if we can find ways to be more efficient, we’re going to take steps to do that.”
The university says that out of 81 budget units, 61 have been operating at a deficit. It has already implemented a freeze on hiring and salaries, and employee travel restrictions. The facilities department has been centralized, and the human resources and IT departments will be centralized in March.
Academic units have been asked to submit three slimmed-down budget scenarios: a five-percent cut, a 10-percent cut, or a 15-percent cut.
The hiring freeze has created a “perfect storm” of employees having to work harder to pick up the slack, while not being compensated for that additional work, said Maria Sohn Hasman, a program coordinator at the university’s Arizona Institute for Resilience.
Sohn Hasman complained that the hiring freeze is being applied selectively. “The messaging has been so inconsistent throughout all of this,” she said. “They just hired a new football coach, and new athletics director, and they’re looking for a new provost.” Arizona’s new athletics director is an interim. The university told The Chronicle that “coaches are paid from auxiliary funds, and Athletics follow the exception process for auxiliary funds.”
The university added: “The ‘athletics director’ designation allows for important voting, leadership, and membership privileges within the NCAA.”
The university has pledged to minimize any harm to students, but Sohn Hasman said a course taught by academic advisers, which guided students on selecting a major, was canceled for the spring semester because the university wanted the advisers to teach the course free, and they refused.
“And now students are left to navigate that by themselves,” she said.
After this article was published, a university spokeswoman told The Chronicle: “Academic advisers who are selected to teach the major-exploration course earn additional compensation for teaching it. The funding for these courses for spring 2024 was not approved in time for the sections starting on January 10, and so the initial sections were canceled. The funding was approved in late January, and the major-exploration course will be offered, as planned, starting on March 11.”
‘A Management Crisis’
As university leaders work to regain the confidence of both students and employees, the university’s projected $177-million budget deficit remains shocking not only because of its size, but because of its embarrassing explanation:
Simply put, the university says it lost track of its rampant spending, due to both inaccurate budget-forecasting models, and poor communication between central administration and individual academic units.
“A couple of years ago, the university was cash-rich, they had a lot of cash on hand,” said Arnold, the financial officer.
The picture is different now. Robert C. Robbins, Arizona’s president, told a leadership forum on Monday: “We have some serious financial issues, and I want you to know that I take full responsibility.”
“It happened while I was here,” added Robbins, who assumed the presidency in 2017. “And I also take full responsibility for helping lead and chart a pathway forward for us to get to better financial health of the university.”
It is unclear whether Robbins will remain in his job long enough to see Arizona emerge from the crisis. The university’s financial-recovery plan has a three-year timeline for getting back to normal.
Last month, the United Campus Workers of Arizona called on both Robbins and Lisa Rulney, the university’s former chief financial officer, to resign. Rulney stepped down as CFO in December, but remains employed at the university as a senior adviser, with a salary of $506,325.
National factors have contributed to Arizona’s budget woes, including the Covid-19 pandemic, and financial stresses on athletic departments nationwide. (The university says it has loaned its department $86 million since 2018.) And university leaders’ strategy to continue increasing merit aid to attract more students has put further strain on the budget.
But the fact that administrators only sounded the alarm after discovering a deep budget hole they built is quite startling to some in the university community. “I am simply stunned by the way in which our financial projections and our financial actuals and our so-called budget system were designed with so little business acumen, or attention,” said Leila Hudson, the chair of the faculty.
Hudson said the university’s leadership team lacked prior experience as faculty, and the team suffered from a “profound misunderstanding” of how to run a high-profile research university.
“It was a management crisis,” Hudson said. (Robbins is a surgeon, and was a professor and department chair at Stanford University’s School of Medicine for years, among other posts.)
In December, The Chronicle reported that Arizona’s forecasting models struggled with wildly inaccurate liquidity projections for years, since at least 2015.
Hudson said that the university’s overall operations are still sound, and she worried that “penny-pinching” measures could harm academic departments that have been performing well, and bringing in revenue.
Hudson urged the university president to collaborate more with faculty in tackling this crisis. “That’s the only way that he will come out of this,” Hudson said. “I think there’s still a pathway for that. He can’t lead us out of it, but he can walk alongside us as we continue to work very hard to guide the university out of it. But it’s going to take a lot of work, and a lot of trust, and a lot of goodwill.”
Arizona’s governor, Katie Hobbs, has aggressively called for explanations from university leaders, as well as the Arizona Board of Regents. In a blistering letter last week, Hobbs demanded monthly updates on the budget crisis going forward, and she raised questions about the university’s inconsistent explanations for how the crisis happened in the first place.
“This is no longer just about finances,” the governor wrote. “This is about a lack of accountability, transparency, and at the end of the day, leadership.”
University leaders have pledged to be transparent about the cuts going forward, and they’ve promised to scrutinize administrative positions, and not just rank-and-file employees.
From 2014 to 2023, the number of university administrators increased by 43 percent, according to Hilary Houlette, a higher education Ph.D. student at Arizona and a graduate assistant for the General Faculty Financial Recalibration Committee.
Houlette said there is an “air of frustration” as new information about the budget cuts slowly trickles out. Still, she expressed optimism that the university can build a sustainable budget model: “I see that as an opportunity moving forward.”
Does she trust the current university leadership to handle that task?
“I am not willing to respond to that,” Houlette said.
