University of Arizona has balanced budget in sight after massive deficits

Dive Brief:

• University of Arizona released a fiscal 2026 plan that would balance its budget by reducing it 3.2% from current levels, though officials noted federal policy changes, state budgeting and enrollment could force adjustments. 
• The preliminary budget plan would make the deepest cuts to university support and administration, reducing those areas by 7.5% overall. Student support would be cut by 2.8%, and the aggregate budget for the university’s colleges would be reduced by 2.2%. It would also decrease facility and utility spending by 1.1% while increasing community outreach by 0.7%.
• At the same time, the framework funds employee raises, faculty promotions, investments in the university’s colleges and other spending areas, officials said Thursday in a community message.

Dive Insight:

The University of Arizona has been scrambling for more than a year to put its fiscal house in order. 

In early 2024, the university faced a budget shortfall reaching $177 million. The situation became so severe as to draw an open rebuke from the state’s governor, Katie Hobbs, who in a statement last February derided a “university leadership that was clueless as to their own finances.”

Since that time, then-President Robert Robbins stepped down and the university has made major cutbacks to its budget. 

Helping lead that work is John Arnold, who has taken on the chief operating and financial officer roles at University of Arizona after previously serving as executive director of the state board of regents. 

For fiscal 2025, the university reduced its budget by over $110 million, centralizing its fiscal planning, “rebalancing” undergraduate aid for nonresident students, delaying raises, and reorganizing administrative units including information technology, human resources and marketing. 

Arnold informed the state regents in November that the university was on track to wipe the remaining $65 million deficit from its budget and end fiscal 2025 with 76 days cash on hand — well above the nine days’ worth of cash that was projected last June. The regents require state universities to have 140 days of cash on hand, a target the University of Arizona hasn’t hit since 2022.

By the fall, cuts took the university’s employee headcounts and payroll expenses back to early fiscal 2023 levels. 

While making numerous reductions across the university’s operations, officials also announced salary increases and a raised minimum wage earlier this year. 

Arnold and Ronald Marx, the university’s interim provost and senior vice president for academic affairs, said in their message Thursday that the new budget framework “prioritizes academic excellence, faculty and staff support, and student success across colleges.”

They added the caveat that possible changes in federal policy, state budgeting, changing demographics and enrollment could all sway the final fiscal 2026 budget.

“We are actively monitoring these developments and evaluating the financial implications of the changing external environment,” Arnold and Marx said. 

Arizona lawmakers last year threw a wrench into budget plans with multimillion dollar funding reductions, which came as University of Arizona sought to reduce its deficit by tens of millions of dollars.