On Nov. 2, Lisa Rulney, the University of Arizona’s Chief Financial Officer, presented a shocking financial update to the Arizona Board of Regents, revealing that the school had a significant deficit in their cash reserves.
The shortage exposed that the school’s administration, which includes President Robert Robbins and Rulney, has been overspending heavily with minimal oversight.
Faculty, staff and students, along with members of the community, have criticized Robbins and school administrators for their poor financial management and dubious expenditures — calling for accountability and reform.
Now, the UA must replenish its monthly cash-on-hand reserves to meet required amounts set by the board of regents and figure out how to cut the annual budget. Faculty members are furious with Robbins’ delays in including their input on proposed cuts.
The regents gave university administrators until Dec. 15 to present a plan on how they’ll address UA’s financial shortfalls.
1. What is cash on hand?
In short, monthly days cash on hand is a metric for liquidity, or the total unrestricted cash immediately available to the school.
Gary Rhoades — a UA professor of Higher Education and leader of a faculty committee offering recommendations for the Dec. 15 plan — said to imagine the university is a person who has a bank account. Now, think of that account as the school’s reserves and they want to keep enough cash in it so if something terrible happens they can fund their living expenses for six months to a year.
The board of regents sets a cash on hand minimum and maximum based on the methodology of an investor service — Moody’s, according to their guidelines.
While the calculation is complex, the board describes cash on hand in their guidelines as the representation of “the number of days the university can fund expenses with cash and investments that can be liquidated (i.e., sold) within one month,” and one of several factors they can use to set tuition.
2. What are the numbers?
- The board of regents had set the minimum required days cash on hand for the UA to 140 days, according to Rulney at the Nov. 2 board of regents meeting.
- In June, Rulney told the regents the university projected having 156 days of cash on hand. By the regent’s November meeting that number had nose-dived. Rulney told the board the university now only had 97 days of cash on hand.
- Rulney blamed the discrepancy on the methodology the UA used to make projections.
- The shortage amounts to $240 million — over three times more than the $79 million the school made in 2023.
- The university overspent by approximately $45 million a year.
3. Where did the money go?
The UA’s central administration spent more than they had and made up the difference with the university’s reserves.
Robbins and Rulney have attributed the shortage to overspending on strategic initiatives, “a combination of significant unexpected demands” and “accelerated spending at the departmental level,” as well as loans to the university’s athletics department.
However, the General Faculty Financial Recalibration Committee, led by Rhoades, presented a seven-page report at a Dec. 4 faculty senate meeting where they highlighted three areas that they said proved detrimental to the institution’s financial standing.
- Athletics Department — Robbins said at a Dec. 4 faculty senate meeting that athletics has received $87 million in loans since 2019 that haven’t been repaid. He said $20 million of the annual deficit is due to the UA’s athletics department. Rhoades told Arizona Luminaria that loaning money to UA’s athletics was a poor bet as only 5-10% of athletics departments in the country make money and “Everywhere else is losing money. And we were one of those everyone else.”
- The University of Arizona Global Campus — The UA purchased its so-called global campus for $1 while it was still Ashford University — a for-profit college that was actively losing money and under fire from federal officials for deceptive recruiting tactics. The university’s own school of economics argued against the purchase, citing low graduation rates, high levels of student debt, decreasing enrollment and targeting of vulnerable populations like low-income students and veterans. University officials have not quantified how much the purchase has affected the school’s reserves. However, according to the recalibration committee, UAGC reported $265 million in operating expenses last year. The UA also assumed $103 million in student financial aid liability so that UAGC students could be eligible for federal financial aid.
- Merit-based tuition discounting — The university began offering more merit-based financial aid to attract higher performing students, many from out of state. Tuition discount rates increased by 10% in the last five years, costing the school more than $100 million since 2019, according to the recalibration committee report.
4. What’s happening now?
Robbins is working with administrators and faculty to develop a plan to replenish the school’s reserves and slash the annual budget by $45 million.
Cuts to the school’s finances will come at the expense of faculty, students and school units, including colleges and departments.
The report with a budget plan is due by Dec. 15. University faculty, students and staff are outraged with Robbins’ delays in drafting the plan. Robbins wrote that, “No decisions about any budget cuts or related issues have been made at this point,” in a Nov. 22 email to university stakeholders.
At a Dec. 4 Faculty Senate meeting, faculty expressed anger at having to make up for administrators’ mistakes and not being included in drafting a plan for budget cuts when the university only had 11 days left to report to the regents.
“What we have is a system that puts academic units in a position to generate more revenue but getting less allocations,” Rhoades said at the meeting.
Faculty and students have called for audits and reform to the school’s financial system. Some faculty and students are also calling for accountability and the firing of those responsible, including Robbins and Rulney. One faculty senate member, a former state lawmaker, went so far as to urge the regents to refuse any plan from university administrators that does not include the faculty’s participation.
Robbins responded to criticism with an invitation at the Dec. 4 meeting for faculty to help draft the plan and report.
5. How could the new financial plan impact faculty, students and staff?
- Cuts – Robbins has hinted at hiring freezes, halting pay increases, less merit-based aid and departmental cuts. Rulney and Robbins in a Nov. 15 Strategic Planning and Budget Advisory Committee meeting also suggested selling land, restructuring debt and ending tuition guarantees.
Robbins said at a Dec. 4 faculty senate meeting that “administration would take a disproportionate share of these cuts.” He added that athletics is already laying off people with plans to increase ticket prices
However, they will not cut need-based financial aid, potential changes to future merit-based financial aid would not affect current or accepted students, there will not be furloughs and the university will first and foremost protect its teaching and research mission, according to Robbins in a Nov. 22 email to university stakeholders.
There are no planned university-wide layoffs, but Robbins said at the Dec. 4 faculty senate meeting that each department will decide on specific cuts to manage their own budget.
- Reform and Accountability – Robbins emphasized in a Nov. 22 email to university stakeholders that the path forward must include policies to prevent future financial shortages such as “enhanced reporting and monitoring tools that ensure timely awareness as well as accountability when overspending occurs.”
The immediate focus is to address a pattern of excessive spending from cash reserves to keep the deficit from growing, and then to replenish the university’s reserves within a “reasonable timeframe,” Robbins wrote.
Leila Hudson, a chairperson of the senate and associate professor of Middle Eastern & North African Studies, criticized Robbins’ reliance on current administrators.
“I’m concerned he’s depending on the same team that created the management crisis to fix it,” Hudson said at the Dec. 4 faculty senate meeting.
Alyssa Sanchez, UA’s first Latina student body president lambasted university leadership at the Nov. 16 board of regents meeting: “How is a team of people able to make a $240 million mistake and stay employed?”
6. How can I read the report and provide feedback?
The Arizona Board of Regents anticipates scheduling a special meeting — that will be livestreamed and publicly accessible — to review the UA’s financial plan, according to Megan Gilbertson, spokesperson for the board of regents. However, they have not decided on a timeline for the meeting or when the report will be publicly available.
On Dec. 5, Arizona Luminaria also asked the UA’s communications department how and when the public will be able to access the report. Pam Scott, a UA spokesperson, said “they’re checking on it.” Scott has yet to provide further information.
7. Where can I read more?
Here’s our coverage so far:
Outraged UA community calls for audit, accountability amid shocking financial crisis
UA President Robbins silent on questions about misspending from public
UA president: ‘Overspending’ calls for new controls as deadline looms for budget cuts
We will keep digging into this issue. Please send tips and story ideas to reporter Carolina Cuellar at ccuellar@azluminaria.org or info@azluminaria.org
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