University Financial Update
Dear Colleagues,
The recent announcement of the University of Arizona’s Days Cash on Hand shortfall understandably has caused considerable concern throughout our campus and local communities. The news and discussions surrounding the university’s financial situation also have unfortunately led to several inaccurate assumptions and misunderstandings. I regret the stress this has caused many in our community and hope the information that follows will help address some of the misconceptions and bring greater clarity to the university’s financial position.
To begin, below are a few important points to understand.
- Student success remains our top priority. We will not reduce need-based financial aid. Any potential changes to future merit-based financial aid would not affect current or accepted students.
- In any upcoming decisions, the university will first and foremost protect its teaching and research mission.
- There will be no furloughs.
- There will be no cuts to retiree benefits.
- No decisions about any budget cuts or related issues have been made at this point.
Following is additional information and more specifics.
Current Financial Situation
This is an important issue that we must address, and I do not want to understate or diminish that fact. This financial situation is primarily about Days Cash on Hand. The University is not in financial jeopardy, but new budget controls must be implemented to prevent deficit spending in the future.
Days Cash on Hand is a once-a-year financial snapshot that measures the number of days an organization can continue to pay its operating expenses given the amount of unrestricted cash available. At the end of the last fiscal year, June 30, 2023, the university had $704.5 million in reserves, down $140 million from the year before due to continued spending on strategic initiatives and accelerated spending at the departmental level. This resulted in a reduction in our reserve balance and left us 30 days short of the number of Days Cash on Hand required by Arizona Board of Regents’ policy.
The bottom line is that the Days Cash on Hand shortage is due to the fact that the University’s expenditures continue to outpace its revenue, and we’ve been making up the difference with reserves. Our immediate financial task is to right our ship and address the structural deficit we are experiencing with a number of our central, college, and unit budgets. The longer-term issue is to replenish our reserves, in a reasonable timeframe, to ABOR-required levels.
What’s Next
We continue to review the specifics that led to this point and to evaluate what changes need to be made to our processes throughout our organization to ensure financial responsibility. Our path forward certainly will include enhanced reporting and monitoring tools that ensure timely awareness as well as accountability when overspending occurs.
The University will report its financial strategies to ABOR by Dec. 15. Following our stated plan, we will have some time to course correct, address our structural deficit, and rebuild our reserves.
In addition to the members of the Board of Regents, I have spoken to Governor Hobbs and assured her that our solutions will be thoughtful and sensible and will allow us to continue our investments in need-based financial aid. I will continue working with shared governance partners and senior university leadership to create plans that positively impact the University’s financial situation while advancing our important education, research, and outreach mission.
Like other challenges we have faced together in recent years, this one also will be met and the University of Arizona will continue to thrive.
Sincerely,
Robert C. Robbins, M.D.
President
The University of Arizona
This email was sent to: all faculty, staff, graduate students, and DCCs.