Things are moving fast with the University of Arizona’s financial crisis and it can be hard to keep up. So here’s a look at the latest developments.
At a glance:
- A house bill challenging shared governance at Arizona public universities, HB 2735, passed the Senate Education Committee on March 20, putting it only a step away from reaching Gov. Katie Hobbs’ desk.
- A leader in the Office for Research, Innovation and Impact announced his position has been eliminated.
- President Robert Robbins appointed 16 people to the new University Advisory Council on March 11.
- The U.S. Department of Education confirmed that the University of Arizona is on the hook for debts tied to purchase of the for-profit Ashford University, now University of Arizona Global Campus, on March 4.
- Moody’s Ratings, which sets the universities’ daily-cash-on-hand metric, dropped the UA’s credit risk rating from stable to negative.
- The Arizona Board of Regents approved leadership changes and pay cuts for Robbins at a special Arizona Board of Regents meeting on March 14.
House Bill 2735 passed the Senate Education Committee 4-3 during a hearing Wednesday. The GOP-sponsored bill strikes language from Arizona laws that empower faculty members to participate in decisions involving academic matters at the universities. Though the bill made it out of committee, it still has to pass the Senate before Gov. Hobbs considers signing it.
Republican State Rep. Travis Grantham, representing District 14 in Maricopa County, is HB 2735’s primary sponsor. Grantham presented the bill as a way to address accountability and oversight in Arizona’s public universities in light of the University of Arizona’s financial crisis. The proposal swaps the faculty, administration and regents’ current shared participation in governance for a vague “consult” role by faculty. Specifically, revisions strike language from Arizona laws that empower faculty members of each university through their “elected faculty representatives” to “participate in” the governance of their respective universities.
At the Senate committee hearing, 48 people from across the state signed up against the bill. Speakers included two University of Arizona Faculty Senate members, Mark Stegeman and Ted Downing, along with one former Arizona State University faculty member, David Wells.
Downing helped craft the original 1992 statute targeted by the bill and explained its roots.
“The law you’re being asked to gut grew out of a legislative concern over public accountability, transparency and costly administrative bloat,” Downing said.
Conversely, Grantham presented the bill as a way to hold the university president accountable by concentrating power and responsibility at the top.
Gov. Hobbs’ office has not responded to multiple requests for comment from Arizona Luminaria on HB 2735 and whether she plans to veto the bill if it reaches her desk. However, Hobbs said “it sounds exactly like what I’m already calling for,” in a Feb. 23 interview with KJZZ. Grantham framed this statement as approval from the governor during Wednesday’s hearing.
The bill passed the Senate committee along party lines with only Republican members voting in favor, following the same pattern that pushed the bill through the House of Representatives. Here is the breakdown on the Senate committee’s vote:
- Sen. Shawnna Bolick (R, District 2) – Aye
- Sen. Sally Ann Gonzales (D, District 3) – Nay
- Sen. Sine Kerr, (R, District 13) – Aye
- Sen. Christine Marsh (D, District 28) – Nay
- Sen. Catherine Miranda (D, District 27) – Nay
- Sen. Justine Wadsack, Vice-chair (R, District 17) – Aye
- Sen. Ken Bennett, Chairman (R, District 1) – Aye
The Office of Research, Innovation and Impact cut leadership jobs, according to a social media post by Brian Ellerman, the founding director of FORGE. We’ll have more information in an upcoming story. FORGE, which stands for “finding opportunities and resources to grow entrepreneurs,” provides support for entrepreneurs and startups and a collaborative work location in downtown Tucson.
Arizona Luminaria reached out to Elliott Cheu, the interim senior vice president of research and Innovation, UA Chief Financial Officer and Vice President of Business Affairs John Arnold and university spokesperson Pam Scott to verify details of the layoffs but have not received a response.
Robbins announced 16 appointees to the new University Advisory Council on March 11 amid contention over shared governance at the university and in the state. None of the new advisory council members are elected, unlike other UA faculty governance bodies. Robbins said he “worked with the deans and other leaders to identify the inaugural council members, several of whom are elected representatives in other shared governance organizations,” in his announcement.
All but one member of another faculty governance committee, highlighted this in a March 12 letter to the president, writing that the University Advisory Council does “NOT represent the Faculty Senate, the Committee of Eleven (C11), and/or any other elected shared faculty governance bodies, recognized by ARS 15-1601B and University policies dating back to 1947. UAC is a selected body, and NOT to be misinterpreted as an elected shared faculty governance body in compliance with Arizona Law (ARS 15-1601B).” Caleb Simmons was the only dissenting member of the committee and is also a University Advisory Council appointee.
Robbins officially announced the creation of the group on Feb. 27 but didn’t unveil its members until March 11, during the Faculty Senate’s monthly meeting. The Faculty Senate is the largest shared governance group in the university and many members, including its chair, Leila Hudson, have been outwardly critical of Robbins and other UA leaders for not respecting faculty, staff and student representatives’ role in the shared governance process.
The U.S. Department of Education confirmed the University of Arizona is on the hook for debts tied to Ashford University, now known as the University of Arizona Global Campus.
Axios first reported this as a possibility on March 4.
In August 2023, the federal agency forgave $72 million in student loans for 2,300 former Ashford students, concluding that “Ashford and Zovio made numerous substantial misrepresentations during that period that borrowers relied upon to their detriment.”
The UA bought Ashford University, a for-profit school owned by the company Zovio for $1 in 2020 despite public opposition from faculty and staff. The UA’s own business school argued against the purchase in a 2020 letter to the board of regents and UA President Robert Robbins.
University officials assumed that the U.S. Department of Education would not look to the UA to recover the millions in student loan relief, according to a Feb. 2024 report to Gov. Katie Hobbs from the board of regents. However, the federal agency’s senior department official had stated in August 2023 that they did plan “to recoup the funds from the current owner, as well as anything we can get out of Zovio,” according to an article by Inside Higher Ed.
Moody’s Ratings changed the UA’s rating outlook, a metric for credit risk, from stable to negative, according to a March 4 release. The Arizona Board of Regents utilizes Moody’s methodology to set universities’ required cash-on-hand threshold and have continued using Moody’s assessments as indicators of the UA’s financial health. Find coverage from Inside Higher Ed here.
The negative rating is a step back from Moody’s previous statements that DuVal referenced to defend the board and university’s leadership in a Jan. 25 board of regents’ meeting. “Earlier this month, Moody’s Investors Service deemed 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 at the meeting.
Moody’s rationale for the downgrade is tied to several controversies surrounding the school and board’s handling of the UA’s finances and their subsequent response.
“With turnover in management, recent evidence of weaker financial monitoring, and ongoing governance scrutiny, management credibility and track record, a key governance risk under our ESG methodology, is a key driver of this rating action,” the release said.
Moody’s acknowledged the university’s strengths, mainly student revenue and research, but cited other factors, such as its global campus integration and operating performance, as worrisome, stating, “The revision of the outlook to negative is driven by uncertainty around the pace of the university’s operating performance recovery following identification of a structural imbalance along with continued integration risk associated with University of Arizona Global Campus (UAGC).”
While the UA is currently in the process of cutting its annual budget — which as of January was in a $177 million annual deficit, it may not be fast enough for Moody’s.
“Inability to right size operations in a relatively short period of time would further narrow the university’s already thin liquidity profile,” stated the report. However, the investor firm outlined factors that could improve the school’s rating, including a “significant and sustained increase in available reserves to over 200 monthly days cash on hand.”
The Arizona Board of Regents approved leadership changes and pay cuts for Robbins at a meeting on March 14.
Robbins’ pay change includes a 10% cut to his base pay, lowering it from $816,008 to $734,407 annually, as well as the elimination of his bonuses. This year, Robbins was set to receive $150,000 in individual at-risk compensation and $120,000 in multiple-year performance compensation.
The board also approved:
- Regent Cecilia Mata as new board chair
- John Arnold as the UA’s interim chief financial officer and vice president of business affairs
- Chad Sampson as the board of regents’ new interim executive director
Read more about these changes here.
Editor’s note: Arizona Luminaria is in the residency program at FORGE and has received mentorship support and in-kind support from this program.
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