TEMPE - The University of Arizona will handle a proposed $67 million state budget cut by raising tuition and cutting student financial aid.

UA President Robert Shelton outlined his budget plan for next year at a special meeting of the Arizona Board of Regents on Tuesday, in advance of the board's tuition-setting meeting next month.

Of the $67 million in cuts proposed by the governor, about $40 million will be reductions to the core costs of operating the university, Shelton said. That means a mix of cuts to spending on personnel and financial aid.

The personnel cuts will include the savings from an early-retirement incentive program that was announced earlier this year.

A $24 million cut to financial-aid spending would mean 2,800 students get no financial aid and 10,000 students get less, Shelton said.

Options for the other $27 million include tuition increases, further cuts to academic units, borrowing and spending down reserves.

Shelton explained a scenario in which tuition would be raised by $1,000; however, he won't make an official proposal to increase tuition until next week. A $1,000 hike would raise $20 million in net tuition revenue, after discounts for financial aid.

"We simply cannot ask for a tuition increase that replaces all of the lost funds," Shelton told the regents.

Cutting financial aid and increasing tuition is "a double hit on students," said Emily Fritze, UA student president. She said the UA should look for ways to relieve some of the burden on students.

Regents were divided on whether cuts to financial aid should be on the table at all. Four regents told the Star they would not support any cuts to financial aid. Others on the 12-member board said everything is on the table.

Regents chair Anne Mariucci said she wasn't satisfied with the UA budget strategy. She said she wants the UA to look at other scenarios, including increasing tuition for non-resident students or an enrollment cap, and she wants UA leaders to answer questions about the collection and spending of student fees.

Regent Mark Killian also pointed out that there is still a lot of uncertainty in the budget picture. The Legislature hasn't finalized a budget and could potentially ask for deeper cuts than what Gov. Jan Brewer has proposed.

Contact reporter Becky Pallack at bpallack@azstarnet.com or 807-8012.