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UA is in a 'financial crisis.' The university's leader is considering sports cuts
UA President Robert Robbins told the Arizona Board of Regents last week that his university is experiencing major cash flow issues.
www.azcentral.com
UA President Robert Robbins told the Arizona Board of Regents last week that his university is experiencing major cash flow issues. He and other university leaders forecast that they would have 156 days of cash on hand this fiscal year. Instead, they have just 97.
That's the lowest number in a decade and well below the regents' target of 110 days. It comes after several years of declining liquidity, and big spending by the university on research and improving its rankings.
UA spokesperson Pam Scott told The Arizona Republic in a statement that those investments led to "some of the best incoming classes and record-breaking research." But while the university was focused on fulfilling its mission, chief financial officer Lisa Rulney told the regents it was less worried about revenue generation.
The financial discussion came just a day before the university announced a fundraising campaign called Fuel Wonder, which has already raised about $2 billion of its $3 billion goal.
None of that money will help with day-to-day operating costs. Instead, Robbins said it will largely go toward "moonshot" research projects and student financial aid.
"We made a bet on spending money," Robbins said. "We just overshot."
One of the units struggling most is its athletics department. As the Wildcats hemorrhaged money at the height of the pandemic, UA leaders poured more than $50 million into the school's athletics programs. That was about five times more than the school provided its athletics department the year before.
Most of that money — about $40 million — was provided as a loan for the athletics department to repay over 15 years with interest.
But the university sports programs are still losing money, Robbins said. He called it "a universal thing" among schools with robust athletic programs, adding that he doesn't know of an athletic program that isn't losing money.
Now, he said he is "going deep" to determine what to cut.
"We were always optimistic that the Big 12 was going to be the solution, and it's not," Robbins said. "So we've got to figure the athletics side out."
Robbins must give the board a report and corrective action plan by Dec. 15. Meanwhile, he and other university officials sought to assure regents and the public that they can turn their sinking ship around.
"The university will address its current budget challenges and emerge stronger and better prepared for future growth," Scott said.
What sports are on the line?
UA officials didn't respond to specific questions about what sports programs might see cutbacks or be discontinued entirely.But one thing is sure: Football and men's basketball are unlikely to be on the chopping block, Arizona Board of Regents Chairman Fred DuVal told The Republic.
"Your macro sports drive the entire enterprise," he said, calling those programs "big revenue generators."
For other sports, school officials have to consider factors like ticket, food and parking sales, he said, as well as the extent to which certain athletic programs drive out-of-state applicants and philanthropic gifts.
Robbins told regents that his school has long "underperformed on fundraising for athletics," indicating that additional donor support might help stem the department's bleeding.
Meanwhile, officials must ensure that their athletic programs remain gender-balanced and in line with Title IX. Those regulations give women the right to equal opportunity in sports at educational institutions that receive federal funding.
The school's shift from the Pac-12 athletic conference to the Big 12 may also present new considerations. The change will be beneficial for some sports programs' bottom lines, DuVal said, but may not be as lucrative for others.
DuVal said all that means the decision about what to cut will be "complicated."
"I may come down to what you offer," DuVal said. "But how you get there has a lot of moving parts."
Hiring, salary freezes also likely
University leaders told the regents they are considering hiring freezes, salary freezes and pausing some capital projects while working to improve the school's financial situation.Robbins said the school may also consider cutting its four-year guarantee on tuition and fees. The program locks in those rates for undergraduate students for eight semesters from the time of their initial enrollment, insulating them from rising costs.
"That's a great differentiator for us," he told the regents. "But if it's going to cost us money, which it does, then I think we've got to look at another hard decision."
He and the regents agreed that immediate measures are necessary to get the school's finances back on track. School leaders and the regents warned that university departments can also expect to see budget cuts for fiscal year 2024.
"This is really tough, because this is going to hurt the university and hurt faculty and staff to really do what's necessary to reach the minimum policy required of days on hand of cash," said Regent Larry Penley. "I wish it were otherwise."
Regents say they have Robbins' back
Robbins has served as UA's leader since 2017.In that time, DuVal said Robbins has overseen an explosion of high-caliber research at the university and driven philanthropic contributions to the school. The university has also seen a turnaround for its football team, which currently qualifies for a post-season bowl game for the first time since 2017.
"There is much positive and exciting about UA's situation," DuVal said.
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But the university has weathered several recent storms. At the beginning of Robbins' tenure, federal officials indicted several college assistant coaches following a long-running investigation into college basketball. The NCAA ultimately launched its own investigation, and the fallout continued for years.
Last year, a hydrology professor was fatally shot on campus by a disgruntled former graduate student. A consultant's report ultimately found that the university's threat management process was ineffective and its security systems inadequate in the period leading up to the incident.
As the school now faces financial challenges, DuVal said the regents will stick behind Robbins.
"This is a financial trend line that got our attention and needs to be reversed. And President Robbins is a strong leader that the board totally supports, and we have full confidence he will present a plan that addresses it."
