UA pushes out finance chief Lisa Rulney; ABOR drills down on centralized spending

Golly, why would I have thought the University of Arizona’s budget shortfall would be used to justify a power grab?

Maybe because that’s exactly what’s happening.

The Arizona Board of Regents voted unanimously Wednesday to accept recommendations from its finance director to give UA administrators more power to control spending within disparate academic units, as was devilishly predicted in this space.

UA President Robert Robbins also laid out the steps he will immediately take to address a budget shortfall of a yet-to-be-determined size.

He announced a hiring freeze, putting the brakes on international travel, delayed salary increases, ending a guaranteed tuition program and concluding strategic investments to improve the prospects of scoring more research grants.

Related: A useful crisis: University of Arizona budget mess explained, hopefully

We’ll get back to that. While there were a lot of details, there was nothing boring about this special ABOR meeting.

Robbins also announced the resignation of UA Senior Vice President of Business Affairs and Chief Financial Officer Lisa Rulney, who will be replaced by ABOR finance chief John Arnold in the short term to get the university through the situation.

Arnold laid out the plan, which empowers the Board of Regents to:

  • Require centralized planning during the budget process which lets the ABOR approve spending down reserves.
  • Add quarterly financial reporting so there aren’t future surprises if weird trends are discovered mid-year.
  • Create a peer review process and hold an annual summit to make sure best practices are followed.
  • Establish a specific UA reporting process during the next couple years that even further centralizes the “budget structure.”

This is the part where a primer is required on how the UA got to this problematic point.

Administrators figured out that they were well short of the 140-day cash reserves ABOR requires for reasons they have yet to explain. That led the campus budget types to discover issues caused by some miscalculations in revenue projections and great-than-expected surplus spending by the departments,

Departments hold half the university’s reserves and are able to spend them without telling the bean counters in the tall building on the Mall. To be sure, that kind of decentralization can be a problem.

Standards of discovery

Don’t dismiss the idea that the regents and the UA leadership would want more control over the budgeting. It’s a good concept and pretty standard in governing agencies that use public money.

However, we should question if “centralized standards” impede academic progress. Colleges, schools and departments operate freely under the university umbrella because it allows for freedom in terms of research and education.

Quality research requires a degree of independence from other agendas. Assumptions need to be challenged. Theories need to be retested. A degree of cowboy independence is necessary to advance human understanding and the universities are where that often happens.

Not everyone is completely cool with this. Basic research and social sciences can seem superfluous in a state that puts more value on short-term return on investment than pure discovery and better understanding of the human condition.

Regents who have votes were all appointed by Republican Gov. Doug Ducey, and he was a big government-as-a-business guy.

It’s a meat and potatoes approach Regent Robert Herbold championed without pushback.

“We have an opportunity to refocus the University of Arizona on its mission as a great research university with excellence especially in the basic and applied sciences and how it serves Arizona with that excellence,” Herbold said. He further questioned the UA’s efforts “to serve so many constituencies.” 

Queer studies classes didn’t create a bad revenue model, though.

Herbold seemed to take a veiled swipe at programs that don’t have an obvious and immediate financial benefit to the state. With technology and artificial intelligence moving so fast, I would challenge anyone to say engineering, finance and computer programming are secure investments.

A crisis could be a good opportunity to recenter the U in a direction that fulfills certain quarters.

And yes, Sub-Saharan Gender Studies (if such a class exists, and if not, why not?) is more central to the university’s mission than having a top-5 back court.

I bring this up because UA Athletics has borrowed $78 million from the main campus budget, which pays for teaching and the infrastructure required for inquiry. The sports crowd is paying back this money at a rate of $12 million per year. 

So the UA’s budget hit is partially because that wall of separation between athletics and academics has fallen.

An unknown deficit

I’ve got one nagging concern about all this. We don’t know how big the UA deficit is or how it is structured.

Robbins said something prior to announcing his actions that’s just not true.

“We have an ongoing budget deficit, meaning we are spending more than we are taking in,” Robbins said. Uhhh. No. Not at all.

Cities and town must balance their budgets. They are legally forbidden from carrying deficits.

Yet, some years they spend more than they take in and rely on spending reserves.

That’s not a budget deficit. I used this example on Sunday and it’s a good one. This fiscal year, the town of Sahuarita is spending $21 million of a $53 million surplus that rolled over from fiscal year 2023. They are not in a deficit. 

They will be in one quickly if they used those surpluses to pay for ongoing commitments. If they paved a road, bought a police cruiser, paid off some pension debt, they aren’t on the hook next year for doing more of any of that.

The university’s colleges and academic units each have surpluses and each spent them differently. Did the Aerospace and Mechanical Engineering Department spend some money on new computer assisted drafting stations or fork over a down payment on an F-35? Or did it blow something up with its new Joint Strike Fighter and it now must pay damages for next 20 years?

What they are spending those surpluses on determines the size of any ongoing deficit.

Also, what remains unclear is if the UA must return to 140 days of surplus across all funds including research grants, or some smaller number. I went into why this might not be wise for a university that depends so much on outside grants.

So the UA is making noise. Regents are centralizing control under the president and people are being fired over a problem no one has quantified.

Be clear: I’m not saying the budget problems are “fake news” or that administrators are out of line in seeking more power over what is a highly decentralized budget process.

Maybe don’t go pushing buttons, breaking glass and firing people until those administrators fully understand the problem, is all.

Otherwise, the budget issues smell like people pushing agendas and grabbing power, perhaps for their own edification and neither the betterment of the university or wisdom itself.