The University of Arizona’s financial crisis has unraveled into a heated public fight with Gov. Katie Hobbs taking to social media to call for independent oversight “to restore faith and trust in the university” on the same day that Arizona Board of Regents leaders argued they are “on the right track” with even national financial agencies commending their swift response.
Hobbs slammed UA officials, repeatedly citing leadership’s failures, however, she did not name President Robert Robbins in her post Thursday on X, formerly known as Twitter.
The governor also lambasted the regents’ response to the university’s financial crisis, saying, “I no longer trust the process that is in place,” according to a Jan. 25 letter attached to her post and addressed to board chair Fred DuVal and John Arnold, the board’s executive director and UA’s interim chief financial officer.
Hobbs outlined immediate steps she wants the board to take, including overhauling their action plan and removing Arnold “as quickly as possible” from his temporary position to avoid “a real or perceived conflict of interest with Executive Director Arnold serving in a dual capacity in his role at ABOR and as CFO at the University of Arizona.”
“This is no longer just about finances, this is about a lack of accountability, transparency, and at the end of the day, leadership,” Hobbs wrote.
DuVal responded to Hobbs’ letter in a statement Friday to Arizona Luminaria saying they were going to fix the situation and “will be announcing the details of our plan next week.” He added that “a team of national higher education finance experts” will join as third-party forensic analysts.
“The governor is right to be focused on leadership that will allow our institutions of higher education to best serve our students,” DuVal said.
Under state law Hobbs, as governor, is an ex-officio member of the board of regents, serving while she holds office. She had opportunities to attend all meetings and access any board documents, which would include an early review of actions or inactions by UA leaders revealing the financial crisis, as well as plans to address the reported $240 million shortfall in the university’s cash reserves and $45 million in annual overspending.
Hobbs wrote in her letter that she appreciated DuVal and Arnold meeting with her staff on Jan. 24 to discuss UA’s financial crisis. However, that appreciation turned to alarm following a Jan. 25 news investigation that exposed university officials’ knowledge of the risk and faults of the school’s Ashford University acquisition, now known as the University of Arizona Global Campus.
“Less than 24 hours after that meeting another story in The Arizona Republic, ‘UA leaders acquired beleaguered online school despite red flags. It’s costing the university $265M,’ once again illustrated there is no coherent vision, let alone even an agreement on the severity of the problems, on how to lead the university moving forward,” she wrote.
Within hours of the article publishing, DuVal at the regents’ Jan. 25 public meeting defended the board and UA’s leadership.
“I want to be clear: We found it on our watch, we will address it on our watch. We are taking this extremely seriously and with a sense of urgency, ” he said.
DuVal then denied the online campus contributed to the university’s financial crisis.
“This was not caused by the acquisition of UAGC,” DuVal said. “UAGC did not drive the budget shortfall and articles to the contrary, are simply wrong with that.”
DuVal also refuted the narrative that the university lost $240 million from its reserves.
“There are no dollars missing. These were investments strategically made, but which we could not afford,” he said.
He cited a national credit agency’s positive review as evidence that the board and university are responsibly managing UA’s financial woes.
“Earlier this month, Moody’s Investors Service deemed that the board’s rapid and disciplined response, in quotes, as credit positive indicating a vote of confidence that we’re on the right track,” he said.
DuVal acknowledged that the university’s current trajectory is unsustainable.
“We have a bright future. But let’s also be clear that the cost curve is unsustainable. These numbers will go lower, absent change, we will get into trouble,” he said.
However, Hobbs expressed frustration at the university and board’s communication of the financial crisis and conflicting narratives, noting that their message doesn’t align with information from people outside of university leadership and the board.
“Since the financial issues were identified, public reporting has amplified narratives that contradict information shared with my office, further damaging the university’s reputation and leading to serious doubts about the university’s ability to clearly communicate the causes and extent of the financial crisis to the public,” she wrote.
The governor called for changes to the university and board of regents approach, including bringing in a third-party consultant to provide “a plan of proposed solutions to solve the ongoing crisis at the university,” conduct an external, independent audit and provide monthly reporting to the governor and the Arizona Board of Regents.
She requested a detailed plan by Feb. 9 outlining the major strategies and tactics “to resolve the financial issues at the university,” and a report with the “rationale and process” behind the Ashford University acquisition by Feb. 20, 2024.
“The story detailed conversations amongst the university’s leadership around the acquisition of Ashford University that demonstrated a secretive process which downplayed, and some might even say attempted to hide altogether, the incredibly risky nature of the purchase to the University of Arizona’s finances and reputation,” she wrote.
For months, UA faculty, staff and students have expressed outrage and scathing criticism of the board, Robbins and other university leaders. Many faculty members have called for an independent, external audit. On Jan. 19, the United Campus Workers of Arizona called for the resignations of Robbins and senior advisor Lisa Rulney, the former chief financial officer who stepped down amid the financial crisis but was allowed to stay in a business operations advisory role and maintain her full salary.
“The University’s financial mismanagement will only be resolved within a culture of transparency, accountability and honesty — a culture that President Robbins has continually failed to provide,” the union posted on Twitter.
Leila Hudson, chair of the faculty for the university and associate professor in the School of Middle Eastern and North African Studies, responded to Hobb’s letter in an email to UA faculty Friday morning.
“The bypassing of shared governance by administration and ABOR contributed to the challenges we all face today; reasserting shared governance and listening to the voices of the people who make the University work will be the key to assessing and solving problems and restoring trust.” Hudson wrote. “My primary goal continues to be preventing our academic units and programs from continuing to pay the price for mismanagement and failed oversight.”
Hobbs noted possible repercussions in her letter.
“The situation cannot afford any future missteps. The plan ahead must be implemented with purpose and fidelity. If we do not see progress, I will work with stakeholders to identify further changes to leadership and process in order to fix ongoing problems,” she wrote.
“To say the situation demonstrated that there is significant work ahead to restore the university’s financial health would be an understatement,” Hobbs wrote. “My goal is that the work done to address the financial issues at the University of Arizona will restore the full faith and confidence of the public in the university and our higher education system, as a whole.”
However, the battle between the governor and the board of regents’ leadership does not address months of ongoing calls from university faculty, students and staff for Robbins and Rulney to resign for failing the public university and its community.
The beleaguered for-profit Ashford University was acquired by the UA in 2020 and has been controversial among faculty, staff and politicians since the beginning.
Local media has been covering the Ashford acquisition, financial issues during the pandemic and the current crisis for several years without significant response or accountability from UA’s leadership.
The university’s own school of economics argued in 2020 against the purchase, citing Ashford’s low graduation rates, high levels of student debt, decreasing enrollment and targeting of vulnerable populations like low-income students and veterans.
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