The following is the opinion and analysis of the writer:
Fred DuVal
The financial challenges that exist at the University of Arizona are serious and will require difficult decisions to resolve. They are also emblematic of fiscal disruptions occurring throughout American public higher education.
Consider university actions in recent years:
West Virginia closed 12 graduate and doctorate programs and cut 28 majors.
Missouri furloughed 3,598 employees and 2.317 took pay cuts and Missouri Western cut 30% of the faculty.
Penn State furloughed 2,000 employees and applied a 3% cut to all units.
Michigan furloughed or laid off 1,400 employees.
Dozens of universities have privatized assets including dorms, parking, and event and Ohio State was first to privatize its energy production.
Stanford, Boise State, Clemson, UConn, Iowa, Michigan State, Minnesota and many others have eliminated sports.
Many universities have closed satellite campuses.
What’s going on?
Universities face large, embedded costs of infrastructure bond repayment, technology upgrades, and faculty contracts. Beyond that, most public universities, in keeping with their mission, provide institutional financial aid to brilliant students who otherwise can’t afford to attend. And while expensive sports programs may draw the highly valuable full-pay out-of-state student, they remain net negative assets.
That’s the cost side. What about revenue to pay for it?
There isn’t enough. This cost-to-revenue gap is a systemic reality.
Forty years ago, state governments — on average — contributed about 2/3 of the cost of a student’s education. The student and family paid the balance. And Pell grants — for those of highest financial need — paid most of that.
Today, those numbers are reversed, tuition has increased commensurate with the withdrawal of state support and Pell grants now cover one-third of what they once did of the cost of higher education. The student debt crisis that resulted has made the tuition remedy nonviable.
So, universities must address the cost side.
A few Arizona data points:
The state’s investment per in-state student is half what it was 40 years ago. We lose $5,000 on every Arizona student. This must be subsidized by full-pay out-of-state students. To be crystal clear, the Arizona financing model disincentivizes Arizona degree attainment.
And sure enough, while our universities are increasing overall enrollment, Arizona student attainment is flat. And this, notwithstanding that Arizona’s economy requires more degrees than we are currently producing.
This reliance on full-pay out-of-state students means that we must compete for them with other universities around the country. And these students want nice dorms, a robust campus sports program, and other costly amenities.
The immediate cash-flow crunch at the UA is a direct result of these broader realities — and yes, also some of our own making.
We — like almost every university in the country — are losing money in athletics.
We generously subsidize the most talented Arizona students to attend the university.
We have made major investments in new university initiatives that have resulted in the largest, most diverse and most highly qualified classes in our history and growing cutting edge research by nearly 50% to more than $900 million. The level of those investments must be carefully reevaluated along with the budgets of every unit and college where overspending has occurred.
We own assets that may lend themselves to potential public-private partnerships.
This is no time for business as usual. Higher education is being disrupted – like everything else — by technology, demographics, and politics. President Robbins enjoys the full support of the board as he makes the tough decisions this situation requires. He will be providing the Board of Regents a plan to address this issue by December 15. The board believes we need to act decisively, and we expect a plan that does so.
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