Fiscal problems at the University of Arizona have led to belt tightening, the resignation of its chief financial officer, and a move to increase financial oversight of the state's public university system.
At a special meeting Wednesday, the Arizona Board of Regents unanimously adopted a report
Board Executive Director John Arnold said the report serves as a "concept paper" to develop systemwide policies.
The move came in the wake of the University of Arizona's dwindling cash reserves that fell from $844.5 million at the end of fiscal 2022 to $704.5 million at the end of fiscal 2023.
"Because the university both increased expenditures and spent down cash balances, at the end of fiscal year 2023 a combined increase in cash or reduction of expenditures of $240 million would have been required to return the university to the standard of days cash on hand," the report said.
Board Chair Fred DuVal called the cash reserves decline a symptom of "two serious problems" — the university's ongoing budget deficit and a financial and reporting structure that did not flag the situation sooner.
"We intend to take the first steps to turn the ship around at the University of Arizona and to assure our campuses and the public that this will not happen again," he said at the meeting. "We must address both its budget and its management procedures and we must address ours as well."
The university has taken immediate action.
"These steps will not lead to an immediate increase in cash, but will address the problems causing the decrease in cash," University President Robert Robbins told the board.
The steps include freezing hiring and international travel, restricting purchasing, deferring non-essential capital projects, and pausing strategic investments. In the longer term, the fiscal 2025 budget will be reduced, planned salary raises will be delayed, a centralized financial system will be put in place, and ways to increase athletics-related revenue will be explored, Robbins said, adding the university will not reduce retirement benefits, institute furloughs, or cut need-based aid to current students.
He also announced the resignation on Wednesday of CFO Lisa Rulney and said Arnold will serve as interim CFO for a few months.
The Tucson-based university, which is rated Aa2 by Moody's Investors Service and AA-minus by S&P Global Ratings, had nearly $1.334 billion of bonds outstanding at the end of fiscal 2022.
The University Financial Oversight Enhancements and Expectations report adopted by the Board of Regents recommended that each university have a centralized financial planning and budgeting process, as well as controls in place to prevent over-budget spending, while requiring board approval to "expend cash reserves below established thresholds." The report also called for more detailed cash flow reporting by the universities.
