University of Arizona academic units accused of overspending in fact had no control over tuition discounting and strategic spending mandated by UA’s central administration, which caused the budget deficits, a faculty committee says.
Interim UA Chief Financial Officer John Arnold said last month that the academic units overspent by $61 million. Now, however, the General Faculty Financial Recalibration Committee claims the overspending is a direct result of the tuition discounting and strategic initiative spending mandated by central administration, which it says adds up to $61 million for one year.
The colleges have been generating more credit hours, or teaching more students, but getting less and less money back from central administration, the Faculty Senate was told at a special meeting Monday by Gary Rhoades, chair of the General Faculty Financial Recalibration Committee.
“The money got pulled out of the units to fund (projects) that in the words of the (UA) president and the chair of the Board of Regents, we could not afford,” Rhoades said. “It’s not only that we could not afford it as an institution, it’s that it drew money out of the academic units that are generating the very revenue that this institution lives on.”
Providing excessive tuition discounting through merit aid cost $26 million to $36 million per year over five years, the committee’s report said. Investing in strategic initiatives cost $146 million over four years, and supporting athletics subsidies cost $125.5 million since 2016, including approximately $32 million in fiscal years 2023 and 2024, it said.
The faculty committee called Monday for a 20% cut in athletics administration and a freeze on coaches’ salaries and hiring. That was the same day UA President Robert C. Robbins announced the hiring of Desireé Reed-Francois as athletic director and the extension of basketball coach Tommy Lloyd’s contract.
Moreover, the committee said there were “insufficient to nonexistent expenditure controls,” including from the Arizona Board of Regents, “on central administration that enabled continued spending, even as days-cash-on-hand declined for several years,” causing the current UA deficit of $177 million.
Arnold pushes back
Robbins and Arnold didn’t attend the meeting, but Arnold told the Arizona Daily Star in an interview Tuesday that the committee was “adding a bunch of numbers together and trying to reach the $61 million number.”
He added that the $61 million his office says was overspent by academic units came from surveying “every single unit in the university” and asking them to break down their expenditures.
That $61 million overspent in fiscal year 2023 could grow to as much as $116 million by the end of June, according to Arnold’s presentation last month.
Rhoades rejected the accuracy of a possible 90% increase.
“I don’t know anyone in any unit that’s experiencing a 90% increase in their expenditures this year versus last year,” Rhoades said. “That number, we’re very skeptical about that.”
In response, Arnold questioned if Rhoades had “any evidence or logic,” accusing him of “doing faulty math.”
The possible $116 million is the “worst case scenario,” but because of strategies already put in place, such as a hiring and compensation freeze, Arnold said there are hopes the number will be smaller.
Rhoades later told the Star, "Skepticism is healthy and called for, particularly when there is such a large increase projected, with no specified accounting of and for it. It is quite reasonable to be skeptical, and it would be reasonable to expect an accounting from him of specifically how he came to those numbers, and how he might explain such a very, very large increase, which defies logic. The GFFRC committee, as I indicated has expressed an interest in meeting with John, and we know he is busy, but we would appreciate the chance to connect to discuss these and other matters."
‘We felt like we had a deal’
Arnold’s plan unveiled last month will centralize various units such as facilities, human resources and information technology and hire outside consultants to work on the larger issues of athletics and the UA Global Campus project. Additionally, it requires all units to submit plans for a possible 5%, 10% or 15% budget cut.
According to Rhoades’ presentation, the plan “fails to prioritize and protect the academic core; reduce senior administrative costs and protect graduate assistants, mid-lower-level staff and faculty” and “target solutions to where the biggest problems are” while “punishing all units for the significant challenges of the relatively few.”
“I think one of the pleas that we’re making as a committee is we felt like we had a deal with President Robbins of no across the board (cuts), protect the core, prioritize people,” Rhoades said. “And we feel like that has been lost.”
Rhoades’ comments come after the UA revealed last week that it was “permanently eliminating” $27 million worth of open jobs from academic units. Despite multiple requests from the Star, the university has not disclosed which positions are being cut.
Defending Robbins, Arnold told the Star that “the president has been clear as clear can be” that he wants to protect the academic units and start cutting from administration first.
“How have we harmed the academic units?” Arnold asked, frustrated.
Rhoades also said his committee requested the names of the units in deficits to “disaggregate” academic from non-academic units. He said Arnold’s office did not want to share that information.
According to Faculty Senate Chair Leila Hudson, “The academic units generate by far the greatest share of our revenues, and yet of the revenues that each college produces through the labor of its faculty and staff, only 42% of those revenues are budgeted back to sustain each unit proportional to its activity and productivity.”
Hudson claimed that “a whopping 58% of the revenues produced by our academic colleges is collected and retained at the center for redistribution, without any transparency.”
This so-called taxation of the academic units, through the budgeting model Activity Informed Budgeting, has been frequently criticized by the UA faculty. Under Arnold’s plan, the university will work to completely overhaul the system, creating a new model by 2026.
‘Excessive’ athletics spending
The General Faculty Financial Recalibration Committee called for “reigning in the excessive, ongoing, nationwide worst spending” of the athletics department by implementing a 20% reduction in athletics administration through attrition, retirement, layoffs and more at the senior level.
The committee is also calling for the UA to freeze coaches’ salaries, suspend the hiring of new coaches and to reduce salaries to be counterbalanced by donors.
UA announced Monday that donors are paying for a fifth of new athletic director Reed-Francois’ $1.25 million compensation package and a fifth of basketball coach Lloyd’s new $27.9 million package over five years. Donors will pay the base salary for former Athletic Director Dave Heeke through the end of his contract in March 2025.
Although most athletic departments lose money, those at 17 of the roughly 53 “power five” conference schools do not, according to the faculty financial committee’s report.
Additionally, “among those power five schools, only six run deficits at a level such that they receive more than 15% of their money from main campus.”
In 2023, the UA athletics department received a larger subsidy (over 25%) than any other power five school, Rhoades said. That is on top of subsidies from main campus of $56.5 million from 2015-2019 and $69 million in 2021 and 2022.
“We are the worst in the country in overspending in athletics,” Rhoades claimed.
UAGC deficit
The faculty financial committee says that in 2023, the UA underwrote about $103 million in federal student financial aid liability for the UA Global Campus project to “ensure UAGC’s ongoing access to Title IV financial aid.”
Additionally, according to the committee’s report, UAGC “ran a net deficit of $18.3 million.”
UAGC was assimilated into the “UA books” with over $265 million in operating expenses. By raising the university’s operating expenses, the UAGC acquisition, according to the presentation, raised the days cash on hand required to meet the ABOR metric of 140 days.
“Although it is claimed that they brought $47 million in cash on hand, for an operation at the time of $265 million, they should have brought $100.7 million to meet the ABOR (required cash on hand) threshold,” according to the presentation.
“We are assured that the deficit will only be two or three and a half million this year and that next year they’ll turn a profit,” Rhoades said. “But we’ve seen this movie before. This is the sort of magical thinking that got us into this situation.”
Arnold has previously stated in Faculty Senate meetings that it was “fundamentally not true” that the university was funding UAGC without the global campus making any revenue.
Caleb Simmons, executive director of online education at Arizona Online and a faculty senator, chimed in to “dispute the approach” of the General Faculty Financial Recalibration Committee.
“I don’t think that this is a productive way to approach UAGC and its integration,” Simmons cautioned.
Info ‘fairly terrifying’
The Committee of Eleven, the UA’s oldest shared governance body and an elected advisory committee, presented a series of questions for Robbins in the meeting. It was clear the committee was under the impression he would attend and answer their inquiries.
But UA officials issued a written statement Tuesday saying, “Faculty Senate did not request President Robbins to attend the meeting to be available for questions. Additionally, the special Faculty Senate meeting was scheduled only a week prior, when the President’s schedule already was full. President Robbins was busy leading and participating in numerous meetings and events throughout the day Monday, capped by hiring one of the most successful Athletic Directors in the country.”
Because of his absence, the committee simply read the questions out loud.
They included asking Robbins to confirm that the Faculty Senate and shared governance bodies at the UA were unaware or opposed to the decisions that led to the financial crisis.
The committee also asked for a list of specific administrative positions to be eliminated and questioned why Robbins “consistently seeks outside consultants for guidance rather than trust (his) own elected faculty representatives.”
Tessa Dysart, a law professor and secretary of the Faculty Senate, pushed back against the criticism facing Robbins.
“It’s unfortunate that it’s come to this because I’ve only seen efforts at collaboration and working together” from Robbins, she said.
That sentiment was countered by Steve Schwartz, a chemistry professor on the Committee of Eleven.
“I feel very uncomfortable with categorizing the president’s actions as collaborative,” he said. “The reality is, we have no further information about what’s going to actually happen here and the information that we have is, in fact, fairly terrifying.”
