It will take years for the University of Arizona to fully address a financial crisis that has created an estimated $177 million operating deficit, officials said Monday.
A 5% budget reduction, administrative centralization and layoffs are ahead, said John Arnold, who is acting chief financial officer at the university.
UA President Robert Robbins reiterated the austerity message in a letter sent to the campus.
“Fixing these challenges will require timely, strategic and sometimes difficult decisions,” he wrote.
Arnold — who is also the executive director of the Arizona Board of Regents, the body overseeing the state’s public university system — said the university caught the budgeting issues and should be able to correct course in the next 18 to 36 months.
“While that’s a big number, it’s fixable,” Arnold said of the operating defecit.
What created the deficit? Arnold said a mixture of a challenging economic environment and overspending hit the university hard.
Of UA’s 81 budget units, 61 are reporting a budgeting deficit for fiscal year 2024, he said. He also noted recent growth in inflation and the COVID-19 pandemic.
Arnold said the problem has been developing over the past seven years.
“The actual deficit has been years in the making,” Arnold said.
Arnold said the budget reduction will not affect the university uniformly. Over the next several months, the administration will provide guidelines to departments for how to plan their spending, which will later be reviewed depending on needs.
Some departments will see decreases in spending while others will see increases, he said.
The university will also be reevaluating its workforce needs, which will result in layoffs, Arnold said.
UA announced it would bring on two consultants, including an accounting firm to validate the budgets coming out of both the athletics department and the University of Arizona Global Campus — the university’s recently acquired online school serving approximately 24,000 students.
The Huron Consulting Group will review the university’s administrative structure.
The UA fiscal update comes after Governor Katie Hobbs released a critical letter last week to the Board of Regents saying there was “no coherent vision” in how to guide the university through its budgetary headaches.
In that letter, Hobbs also asked Arnold to transition out of his role as interim CFO “as quickly as possible.”
Arnold said Monday it was not ideal for him to take time away from his role as Board of Regents executive director and for the university to be without a permanent CFO, and officials were “working to rectify that” as quickly as they could.
This is a developing story. Return to azcentral.com for additional updates.
Helen Rummel covers higher education for The Arizona Republic. Reach her at [email protected]. Follow her on X, formerly Twitter: @helenrummel.
This article originally appeared on Arizona Republic: University of Arizona faces budget cuts, layoffs to fix its financial woes
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