U of A asks units to plan for more potential budget cuts

“To help us understand the potential impacts of the dynamic environment, please prepare to discuss scenarios of 2%, 3% and 4% budget reductions — both the impact of such reductions in your unit, and what actions you would undertake to meet such reductions should they become necessary,” UA’s Chief Financial Officer John Arnold and Provost Patricia Prelock wrote to campus units on Nov. 10.

“We will not entertain any submissions that do not include planning at these levels,” they wrote.

"Grant funds and F&A recovery amounts (facilities and administration costs that pay for logistics and overhead research costs) remain uncertain, federal policy for international student enrollments are unclear, and importantly, federal impacts on state budgets are yet to be fully determined,” Arnold and Prelock wrote.

They also mentioned demographic trends across the country, placing pressure on higher education enrollments.

U.S. universities face what's called a “demographic cliff,” a steep decline in 18-year-olds in the U.S. starting around 2025 due to lower birth rates that began in 2008 during the Great Recession. That comes on top of enrollment declines for other reasons, as well; colleges and universities collectively experienced a 15% decline in enrollment between 2010 and 2021, according to the National Center for Education Statistics.

“Universities across the country are taking steps to guard against these fiscal uncertainties,” Arnold and Prelock wrote, as the UA begins its budget planning for FY 2027. “While we are confident in the university’s ability to navigate these challenges, we must be prepared for what may be coming our way," they said. 

Since January, federal agencies under the Trump administration have cut research funds and grants at universities and colleges across the U.S. The UA had 67 research grants stopped or terminated by federal agencies as of this summer, totaling roughly $60 million in lost unspent federal funds. 

UA spokesperson Mitch Zak said the “routine internal communication from the CFO and provost is the first step in the FY27 collaborative budget-planning process.”

“As with any well-managed organization, the University of Arizona’s financial planning incorporates a range of potential scenarios while making clear that the baseline assumption for FY27 is a flat expenditure and allocated-revenue base,” Zak wrote to the Arizona Daily Star on Wednesday. “As the process continues, the CFO and Provost will work closely with college and unit leaders to develop a balanced budget that advances the university’s strategic imperatives.”

He declined the Star's request to interview Arnold and Prelock.

The two administrators also told units:

• FY27’s budget should include a salary increase for employees, and funding for the raises should come from the overall budget allocated to each unit since there is no special additional pool of money for them;
• The baseline budget assumption for each unit must show flat spending and revenue.

Zak did not answer the Star’s questions on whether these possible cuts mean more layoffs for faculty and staff next year; if there would be more hiring freezes, spending cuts or frozen grants/funds in colleges; if the UA and the federal government have negotiated a reduced facilities and administration cost rate for research grants, which has been at 54.5%; and if salary increases will look similar to the ones handed out this fall.

UA Chair of the Faculty Leila Hudson said she’d like to offer reassurances that this is just a “prudent planning exercise,” but she can’t since she doesn’t know for sure.

“I am just as much in the dark as anyone, and maybe more than most, about all the different uncertainties that we’re facing,” Hudson told the Star Wednesday.

“What I can say is that I’m reasonably sure that the source of the uncertainty is not coming from inside the house,” she continued. "The uncertainty comes from factors outside the walls, and so, these are factors and risks we share with the whole higher ed landscape."

She said the UA's administration and faculty governance groups are "making good headway in cleaning up the mess that was left behind and righting the ship and coming up with really good strategies for maximizing our potential and achieving our goals." 

The UA recently finished eliminating a budget deficit, which started at $177 million in fall 2023 under former UA President Robert Robbins and led to layoffs and spending restrictions. Under current President Suresh Garimella, the deficit was eliminated as of July 1 this year, while the UA also provided raises to faculty and staff and increased its minimum wage by $1.50.

Hudson said the UA’s “most valuable and precious resource” is its people. “There’s not a lot of cutting left to do in terms of the personnel expenses,” she said, adding that faculty leaders will push hard to make sure any “continued shrinkage” comes from the administrative side.

Other UA faculty members also acknowledged the federal uncertainties, but expressed dejection that more cuts might be coming after the university managed to eliminate its deficit and have a balanced budget starting this fiscal year.

Nolan Cabrera, a UA professor in the College of Education, said the university has been facing cuts since the pandemic, and he doesn’t know how colleges are expected to reduce spending even more. 

“We aren’t going to be able to ‘do more with less.’ We can only do ‘less with less,’” he said. 

In the process of eliminating the deficit and balancing UA’s budget in fiscal year 2025, central administration took the highest percentage of cuts at an average of 7%, while college units took cuts that averaged around 2%. This was after central administrators asked colleges and academic units to submit budget models with 3% cuts in January, which they had said were “hypothetical scenarios.”

At the time, Arnold had told the Star it was common for central administration to work through exercises for cost-saving measures and investment opportunities.  

Lucy Ziurys, a UA professor of chemistry and biochemistry, said, “one can understand that the university leadership would want to ‘play it safe’ and prepare for a possible loss of revenue, given the current political situation.”

“However, one would also expect the administration to be cut as well as the colleges, and by more, perhaps 10%,” said Ziurys. “Clearly the faculty are the most important players here, as they conduct the teaching and research needed for the university to function."