Last fall the University of Arizona made a stunning announcement: Officials had miscalculated cash on hand by millions of dollars due to a flawed revenue-projection model and other missteps.
Initially, they believed that Arizona had made a $240 million mistake through accounting errors and inaccurate financial projections. That number was later revised downward to $177 million at the height of the deficit, nevertheless prompting steep cost-cutting measures.
Now, one year after the budget deficit was announced, the shortfall stands at just under $65 million, according to university officials.
Over the course of a year, Arizona has shaved more than $100 million off its deficit, largely through restrictions on hiring, procurement and capital projects and across-the-board cuts that included hundreds of layoffs but managed to avoid severe reductions in any academic departments. The university also reduced the amount of merit aid awarded to students. In addition, it benefited from “better than projected revenue performance,” according to university financial documents that show how it tackled the budget deficit.
The budget crunch precipitated personnel changes: Chief financial officer Lisa Rulney stepped down, President Robert C. Robbins resigned but plans to return to the faculty ranks and Arizona Board of Regents chair Fred DuVal relinquished his leadership post amid a fracas with faculty that earned the wrath of the state’s governor.
Tackling the Budget Woes
Since late last year, John Arnold has been tasked with fixing the university’s finances. Arnold was the executive director of the Arizona Board of Regents before stepping in as the university’s interim CFO, a move that prompted criticism from Democratic governor Katie Hobbs, who questioned the move given how it blurred the lines between the institution and ABOR.
Arnold has since had the interim tag lifted and taken on a senior vice president role.
Early on, the university emphasized improving its financial reporting, Arnold told Inside Higher Ed.
“Once we had a good understanding of what the nature of the problem was, we systematically worked with our deans, our department heads and other senior leaders in the university to identify areas where they could make some changes in their spending,” he said.
Shortly after the budget woes were revealed, Robbins warned that “draconian cuts” were coming. And while hundreds of jobs have been lost, academic departments have remained intact.
One of the first steps announced at Arizona was a freeze on hiring, travel, procurement and capital projects. In addition, the university has shed 328 jobs—including 13 vice presidents—since it began trimming budgets across the board.
Some of the deepest cuts were imposed across the administrative ranks, including a 36 percent reduction for alumni and development, 27.1 percent for the secretary’s office, 10.3 percent for the president’s office, and 11.1 percent for the business affairs and CFO unit. Among academic units, the College of Engineering bore the biggest budget cut, at 7.6 percent; the Agriculture, Life and Veterinary Sciences and Cooperative Extension saw a 6.7 percent budget reduction. The university libraries were the only unit that escaped without cuts.
“We asked everybody to come in with a plan to reduce spending between 5 and 10 percent, and the president’s office led the way with that,” Arnold said. “So we were able to work with those individual decision-makers to come up with the right budget cuts for their programs.”
But the budget cuts—and the process, which some saw as an affront to shared governance—have left many faculty members fuming. They are particularly aggrieved about the talented colleagues who left as a result of the compensation freezes. Faculty members have also expressed concerns about the centralization of information technology, which removed IT employees from individual departments, allegedly undermining their efficacy.
The hiring of a new vice president to lead IT has also rankled some faculty members—including Lucy Ziurys, a Regents Professor of astronomy, who has been at the university since 1997.
“There’s a lot of attrition. A lot of people have retired. Basically, you’re depleting the already small, overworked staff. They’re firing these people, but they’re hiring more vice presidents at much higher salaries,” Ziurys said. “We have John Arnold telling the newspapers that he got rid of 13 vice president positions—but now he’s hiring more people to replace them. So in the end, how many net jobs in administration are actually being removed? Probably very few.”
Another long-serving Arizona faculty member, Johann Rafelski, a physics professor who has been at the university since 1987, believes the nearly 100 remaining vice presidents listed in the budget documents is still too many. Arizona is weighed down financially by “administrative bloat,” he said. “We are as top-heavy as we can be.”
Athletics, which contributed $32 million in losses to the deficit, seemed a likely target for steep budget reductions. But the athletics department was largely spared the ax, with its budget cut by just 2 percent. While university officials once considered dropping some sports, a new athletic director said no programs would be eliminated. Some critics believe UA’s professed willingness to cut athletics was disingenuous.
“There was no way that athletics was ever on the chopping block. Never. That was all talk,” Ziurys said.
Arnold, however, noted that the department, which has a new CFO in addition to a new director, is now going through a restructuring and incurring additional costs as a result of UA’s move from the Pac-12 to the Big 12. As a result of the changes, he expects more savings in the future.
And despite faculty grievances over how the budget situation has been handled, Arnold argues that it has been a “collaborative, cooperative process,” guided by “robust shared governance” throughout.
“The [faculty] budget committee I’ve met with multiple times; the leadership of that committee has sat in on some of our individual budget meetings. I thought we had a terrific process,” he said. “I always welcome people to contact me directly and come in and chat.”
In addition to making cuts, Arizona saw a boost to its revenues that helped ease its financial burden.
The university collected $20.5 million in unanticipated grants, $10 million in higher-than-expected investment earnings, another $10 million in additional revenue from its health sciences program and $17.4 million from auxiliaries that exceeded forecasts, according to financial documents.
Looking Ahead
The University of Arizona anticipates being out of a budget deficit by fiscal year 2026, Arnold said. The path forward will require additional belt-tightening, he noted, though it is too soon to specify what those cuts may be. But faculty patience is already wearing thin.
At a Faculty Senate meeting on Monday night, Chair Leila Hudson referred to the budget deficit as “the financial mismanagement crisis,” clearly laying blame on the administration. But she also emphasized the need for collaboration with new president Suresh Garimella, who stepped into his role last month after leading the University of Vermont from 2019 until earlier this year.
“I think we really are at an inflection point where we need to synchronize and adapt ourselves to a faculty that works with the new administration as far and as deeply as we can to dig ourselves out of the hole. As a group, I think we should be prepared with all the information, the data, the specific narratives and the analyses that will help the person who holds the power—that is the president—to right the ship,” Hudson said in an address to fellow Faculty Senate members.
Garimella also spoke briefly at the meeting, fielding questions from faculty for about 10 minutes, including one from Rafelski on how many vice presidents the University of Arizona should have.
“I don’t think we should get hung up on numbers,” Garimella responded. “I think that what we should look at is how well the university is functioning. Are the critical functions being responsibly addressed, and are we as efficient as possible? And I will tell you that I will always focus on the efficiency of the administrative side. Give me a little time and you’ll see that.”
Garimella, who began his career as an engineering professor before climbing through the administrative ranks, seems to have been greeted with cautious optimism by Arizona faculty.
Rafelski praised his academic credentials and said he appreciated the president’s remarks on administrative staffing, but expressed worry about Garimella’s leadership team. He specifically questioned Arnold’s credentials, noting that the new CFO is not an accountant. Rafelski also wondered whether the new president will have the ability to push back on the Arizona Board of Regents.
Others, like Ziurys, have said that Garimella has made a “good impression” on her so far, which she hopes translates to action.
“He has said over and over again, he doesn’t believe in administrative bloat, and he had to deal with it where he was previously. I am hopeful that he will put an end to this ridiculousness that’s occurring. The faculty and the students make the university, not the administrators,” Ziurys said.