Senior Vice President, Chief Operating Officer and Chief Financial Officer John Arnold, introduced the University of Arizona’s Unrestricted Funds Operating Budget for Fiscal Year 2025 on Sept. 4.
The plan explained how the university’s unrestricted funds are distributed across different departments. This is the first yearly unrestricted operating funds budget update since the university announced the $176 million shortfall last November. Numerous factors led to this shortfall, including a lack of decentralized monitoring, a fluctuation between three different budget models in the past 10 years, inflation, excess spending on athletics and a lack of budget control for financial aid.
“University-funded financial aid increased rapidly from $189 million in Fiscal Year 2018 to a forecasted $326 million in Fiscal Year 2024. U of A has since developed new financial aid structures and budget controls that reduced merit-based aid while protecting need-based aid to support students,” Senior Director of Strategic Initiatives Mitch Zak said.
The university was able to recover over half of this shortfall through a series of initiatives to reduce spending. Temporary measures like hiring and compensation freezes were implemented. The university also centralized key administrative functions, reorganized leadership and set strict budget limits for capital spending and staffing.
The UA also restructured financial aid, worked to balance the athletics department’s budget and invested in high-return programs. Due to these measures, the actual FY 2024 spending ended up at a $63 million deficit.
“The reality of it is that the success of the budget process is a testament to the entire university. It’s not just John Arnold and the finance folks. He certainly played a big role to help guide it, along with President Robbins, but also you have deans and faculty and staff at the unit level being engaged. This was a tough challenge but really the university community rose to meet it and that makes us very proud,” Zak said.
The university’s hiring freeze and budget cuts since December 2023 led to a net loss of 636 employees by mid-2024, with unrestricted fund positions down by 328 compared to the previous year.
The addition of 3,000 staff from the University of Arizona Global Campus complicated hiring comparisons. Along with this, 13 of the 109 vice president positions were eliminated.
“Every year, employees make decisions to change positions, leave the university or retire in lieu of other separation reasons. Given these circumstances, the university cannot always determine if a specific position is impacted by a hiring freeze or a budget change,” Arnold said in the Unrestricted Funds Operating Budget report.
According to the budget update from Sept. 4, “For FY 2025, the university is projecting a $65 million unrestricted operating budget deficit.”
“I think the way we approach things now is to be very conservative. Our projection is that $65 [million] is a very conservative unrestricted operating deficit and we can move more quickly,” Zak said.
While the UA is expected to endure another year of financial shortfall, the university has made strategic investments that have led to substantial progress.
“The university’s financial investments have produced tremendous returns. The university welcomed its largest and most diverse first-year class in history. It has reached nearly $1 billion in research expenditures and is ranked as one of America’s top-ranked public universities. We’ve worked to address the budget deficit while maintaining overall academic, research and community engagement excellence, and the University of Arizona is well-positioned for long-term financial stability and sustainable success,” Zak said.
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