Hobbs restores $16.5 million in funding for U of A, ASU and NAU

Tuesday's restoration includes more than $4.7 million for the University of Arizona, plus slightly more than $1 million for the UA Health Sciences Center.

Arizona State University will get nearly $8.1 million, and Northern Arizona University is in line for more than $2.6 million.

In a news release late Tuesday, the Democratic governor did not dispute that she agreed in June to the $18.3 billion state spending plan negotiated with Republican lawmakers. That plan included a 2.5% across-the-board cut across multiple state agencies, including the universities.

But now Hobbs said she has federal dollars left over from $4.2 billion allocated to the state in 2021 as part of the federal American Rescue Plan Act. Those dollars were designed to assist state and local governments in addressing the impacts of the pandemic.

Under the law, the state was required to obligate the funds by the end of 2024, and to spend them by the end of this year. 

But gubernatorial press aide Christian Slater did not answer questions of where those dollars were originally allocated and why they are no longer needed there. Nor would he explain why, if Hobbs had those ARPA dollars all along — and knew in June the universities were being cut — she waited until now to replenish their funds.

"I'll decline to comment on the processes by which we determine ARPA funding,'' Slater said.

He denied that the timing has anything to do with the fact Hobbs is running for reelection and that early voting starts on Oct. 7. 

"As the governor has always said, she is committed to doing what's right for Arizona and putting politics aside,'' Slater said.

Hobbs faces Republican U.S. Rep. Andy Biggs in the November election. 

In state budget negotiations earlier this year, Republican state lawmakers originally proposed a 5% permanent lump sum reduction for all agencies — with some exceptions such as the state Medicaid system, where costs are determined by the number of people enrolled. Also off limits were what were considered essential services, including state police and the prison system.

Under that plan, the universities' share of the budget cuts would have totaled $38.9 million. Hobbs said Tuesday she cut that to less than $16.5 million.

And now, with the ARPA funds, that one-time cut is gone.

The across-the-board funding cuts were the direct result of Republican lawmakers needing revenues to finance tax reductions in the state budget.

University officials said they need state money to offset recurring budget cuts, finance large capital maintenance backlogs, and keep tuition affordable for Arizona residents. They also noted that state aid currently covers just 12% of their budgets.

But GOP legislators argued the universities could afford to take the financial hit.

Kingman Republican Rep. John Gillette said universities are getting millions of dollars in grants and contracts, many of them from overseas. He also produced charts to show a majority of money collected in tuition came  from out-of-state and out-of-country students.

The schools haven't disputed that, saying they are using the money from nonresidents who want to attend Arizona state universities, whether on campus or remotely, to help keep tuition low for Arizona residents.

Gillette, however, had a different take. "This is big business,'' he said. "If they're going to remain big business, then they don't need state money.''

Peoria Republican Rep. David Livingston, who chairs the House Appropriations Committee, defended the budget reductions, pointing out the cuts to universities were only temporary. "These universities have multi-billion-dollar budgets,'' he said.

Nothing in Tuesday's order restores the across-the-board cuts imposed on other state agencies. Slater said Hobbs earmarking the entire nearly $16.5 million in ARPA funds for the universities makes sense.

"The governor is committed to protecting our state universities and ensuring that they have the funding they need to give Arizonans opportunities to thrive and deliver a strong workforce for entrepreneurs looking to start and grow their businesses in Arizona,'' he said.