As recently as last week, Arizona education seemed to be on its way to rising from the ashes of its budget woes. New developments, though, could spell disaster in the form of an $832 million loss in federal stimulus dollars.

When Gov. Jan Brewer presented her proposed budget on June 1, it was met with endorsements from the presidents of the state’s three public universities-Arizona State University, Northern Arizona University and the UA.

Although Brewer had gained the approval of school officials, her Republican colleagues in the state legislature were not as easily convinced. While agreeing with Brewer on the proposed $40 million total to be cut from the university system, the legislature passed its own budget opening the state universities to $50 million in fund sweeps.

Such sweeps could disqualify the Arizona universities from federal stimulus money, “”a factor which the legislative leadership seems to be ignoring,”” President Robert Shelton told the Daily Wildcat.

In order for states to receive federal stimulus money, they must show a “”maintenance of effort”” in financial support for state higher education. The sweeps would take money from non-state-supported funding sources within the university system, thus showing a possible failure of the “”maintenance of effort,”” according to the American Recovery and Reinvestment Act of 2009, which was signed by President Barack Obama in February.

Brewer formally applied for the federal stimulus money specifically for education on June 5, $146 million of which is meant to go toward the universities. Of that amount, $56 million is slated to go to the UA.

Shelton’s support of Brewer’s proposed budget was based off of its balance, unlike the budget the state legislature passed, he said.

“”She applies budget cuts and utilizes the federal stimulus funds wisely,”” Shelton said. “”But (Brewer) also recognizes that for the short-term, we need enhanced revenues.””

With the $3 billion deficit the state finds itself in, it becomes clear that Arizona needs new revenue, which will come in the form of almost $1 billion in stimulus money if the legislature would just back down from implementing sweeps, Shelton said.

“”It is my expectation and hope that the governor and legislature will honor the maintenance of effort condition,”” he said. “”If they wish, they have a way to completely devastate education in Arizona. The tools are in their hands to do just that.””

Despite its current position in limbo, much of the stimulus money has already been spent to help offset the state’s current $3.3 billion deficit, including $433 million to balance the budget, according to the Governor’s Office.

The UA, ASU and NAU have all released official statements on the possibility of the rejection of stimulus funds.

ASU’s statement claims the legislature’s current budgetary efforts are illegal in their “”sleight-of-hand efforts to seize one source of university funding to subsidize the level of ‘state support,’ which the state has represented as having been made in higher education in Arizona.””

The UA also refutes the legality of the legislature’s decision, due to the sweep funds originating from textbooks and campus housing.

Having already made $77 million in cuts during the current fiscal year, UA officials are bracing for a future that “”would be catastrophic for the citizens of Arizona,”” the UA statement said.

ASU’s statement goes on to say, “”These sweeps…will result in the loss of nearly $1 billion in federal education stimulus money to the detriment of the state budget, the state universities and the citizens of Arizona.””

Regents may sue legislature

The Arizona Board of Regents may take legal action in the near future to deal with the state legislature’s recent budget proposal.

When the Republican-led legislature passed its proposed budget late last week, it did not look much different from Gov. Jan Brewer’s proposal on the surface. But while both proposals included a $40 million cut to Arizona higher education, the legislature’s included $50 million in sweeps from university accounts.

“”These sweeps are, in fact, illegal,”” said Student Regent David Martinez. “”The Regents are willing to take that to court if necessary.””

Since the sweeps would take money from non-state-supported accounts within the university system, they are illegal, according to the Board.

The accounts open to sweeps are those associated with campus housing and textbook sales, said Andrea Smiley, a public relations representative with the Board.

“”Those accounts are not cash,”” she said. “”Those include things like the bookstore, which are often just inventory, as well as self-funded ResLife programs designed for the upkeep of residence halls.””

If the state attempts to remove the $50 million from university accounts, the Regents will be in full force to fight it, Smiley added.

“”What the Regents have told the legislature and the governor’s office is that if there’s any effort to move forward in sweeping those accounts, that that’s something we would not hesitate pursuing,”” she said.

In fact, the Board is already prepping with outside legal counsel.

The budget passed by the legislature is far from final, though. While leaders at the State Capitol have passed the budget, they are sitting on it in hopes of negotiating its final details with the governor.

Brewer could still veto the bill if she does not approve of its final outline. The governor’s original proposed plan protected Arizona higher education from sweeps.