Solutions Through Higher Education

Below are frequently asked questions (FAQ) the Arizona Board of Regents has been asked regarding Arizona’s universities and the impact of budget choices by our state’s elected leaders. The questions are provided in a question-and-answer format for simplicity and readability purposes. The goal of this document is to provide context and detail to the budget discussion regarding universities. 

The universities sustained $18.8 million in permanent cuts in FY08, $191.5 million in cuts in FY09, $50 million in FY10, and $198.2 million in FY12 for a total of $458.5 million in cuts over the last four fiscal years. Taken together, that is a budget reduction of 41% across five fiscal years—all of which had a significant impact on the universities’ instructional budget. In addition, enrollment growth was last funded in fiscal year 2009 and now totals $122.4 million the universities have not received.

In 1979, state appropriations to the university system constituted 19.4 percent of the general fund. Today, the university share amounts to less than 10 percent. This decline has been occurring at the same time that enrollment growth has exploded across the university system. This has forced universities to increase tuition and other sources of funding.

The Arizona Board of Regents has directed the universities to implement programs that will help keep tuition as affordable and predictable as possible for all students. Programs that the universities already have instituted include: guaranteed tuition programs, new degree pathway partnerships with community colleges, merit and need-based scholarships, and institutional financial aid.

While experiencing steady enrollment growth, the universities have sustained a 50 percent cut in per student funding since FY08—dollars that form the backbone of the universities’ instructional budgets. As a result, the universities have:

• Raised tuition
• Closed and consolidated programs
• Cut or left vacant nearly 1,000 positions
• Furloughed tens of thousands of employees
• Closed extended campus sites
• Deferred maintenance

The universities cannot sustain additional cuts without severe, and potentially catastrophic, consequences to their ability to adequately educate Arizona’s college students. More cuts would lead to further curtailment of academic programs, services, and community outreach, at the very time when our state and nation need to serve more citizens and produce more college graduates to keep pace with our global competitors. In addition, further cuts to the universities would jeopardize federal research dollars, some of which stipulate that matching state funds must be provided as a condition of the grant. This further harms the state’s economy and students’ ability to complete a robust college education

Federal dollars to Arizona’s universities support financial aid that allows more individuals to pursue college degrees and secure high-paying jobs in our work force. Federal dollars also support university research – often in partnership with private companies in Arizona and best-in-class organizations around the globe. These funds benefit everyone’s quality of life, however federal financial aid and research money cannot be allocated to other areas when state support is cut.

The federal stimulus monies of 2009 provided $843.6 million as State Fiscal Stabilization Funds (SFSF) to help minimize reductions in K-12, higher education and other essential state services. The one-time allotment sought to restore K-12 and higher education (both universities and community colleges) funding for fiscal years 2009, 2010 and 2011 to the higher of either fiscal year 2008 or 2009 to the extent that funds are available. The universities did not receive enough money to fully restore funding to FY2008 levels, which was Arizona’s peak funding year for higher education.

It’s important to note that the federal stimulus dollars were a one-time cash infusion, and the state faced declining revenues for five fiscal years. Clearly, new approaches to crafting a sustainable state budget must be identified

The universities’ budgets have been among the slowest growing sectors of Arizona’s state spending and not a major causal factor behind the growth of the state general fund. During the past 10 years, university general fund appropriations grew by an average of just 2.9 percent per year, while total state general fund spending grew by 7.2 percent per year. Further, the university system share of the total state budget has dropped throughout the past 30 years from 19.4 percent in FY 1979 to 9.5 percent in FY 2009.

Since 2009, the universities have taken a number of steps to help our state address its financial crisis and efficiently use its portion of state revenue.

Our state universities are voluntarily re-aligning to be more focused on the outcome-driven objectives that matter most to businesses and taxpayers. This includes cost containment, elimination of redundant or outdated programs, privatization of popular programs, and growth in research dollars. The realignment in Arizona draws on the strengths of each university to ensure value to the student and public. It recognizes that universities should e evaluated and funded based on student degree completion – not just headcount at the beginning of a semester.

In addition, our community colleges and universities are accelerating their partnerships in new ways so that more bachelor’s degrees than ever before can be initiated at a community college and seamlessly finished at one of Arizona’s state universities – sometimes on the same campus. Currently, there are more than 1,200 “degree pathways,” that allow a seamless transition into a university bachelor degree program. This can save up to 35 percent off the tuition sticker price at a university main campus. It gives rural students a more affordable way to attend college without relocating to Flagstaff, Tempe or Tucson, and students often arrive at university better prepared for upper-division coursework.

In Arizona, as is the case in most of the United States, the public university system's share of state appropriations has become smaller as Arizona has dealt with competing demands on the state treasury. In FY 1979, state appropriations to the university system constituted 19.4 percent of the general fund appropriations. Today, the universities’ share amounts to less than 10 percent. This decline has been occurring at the same time that enrollment growth has exploded across the university system, with headcount besting previous years by thousands. This has forced universities to increase tuition and other sources of funding.

Over the last decade, total enrollment has increased 20 percent from 108,234 during the 2001-02 academic year to 134,451 in 2010-11. Since 2005, total enrollment in the Arizona University System has increased by 15 percent from 114,399 during the 2004-05 academic year.

There are a number of indicators that tell us Arizona’s state universities provide a high-quality education at a nationally competitive cost. This includes consistent “best of” rankings for degree programs in the Business, Entrepreneurism, Health, Environmental Sciences, and other fields; faculty awards for quality teaching and innovative research; the ability of our universities to attract prestigious partners, such as Mayo Clinic, and the ability to win competitive research grants from esteemed organizations such as the National Science Foundation, Bill & Melinda Gates Foundation, and others.

Maintaining the quality of our university instruction has never been more important. While other nations outpace us in the race for new knowledge, we must continue to provide an excellent education to Arizona’s next workforce. We believe higher education is the foremost solution to improving our economy.

Even with these financial pressures, the state university system has been able to maintain its commitment to access and affordability. Higher education and tuition costs in Arizona remain among the lowest in the country among similar public universities. As a state, Arizona invests only $10 million in need-based financial aid to the Arizona Financial Aid Trust (AFAT).  Compare this to states of similar size:  In 2005-06, Colorado invested more than $55 million in need-based financial aid, the state of Washington invested $167 million, and Indiana invested $281 million.  Without a comprehensive state-funded financial aid program, the universities devote $366 million of their resources (in FY10) to financial aid—called institutional financial aid.  

According to board policy, the universities must set aside at least14 percent of tuition revenues for need-based financial aid.  In recent years, the universities have set-aside 17 percent of tuition revenues. Total financial aid awarded to state university students has increased more than 64.9 percent over the last five academic years.  Institutional aid, scholarships and awards provided directly by the universities, has increased by 82.6 percent over the same time period.  In reality, the “sticker price” of attending one of the state universities is vastly different from the cost to the student who demonstrates need.  This is evidenced by the fact that average student debt upon graduation has increased by only 16.1 percent over the last five academic years (2005-06 to 2009-10) as tuition rates have been steadily increasing.

Our three public universities serve as an economic engine for Arizona, contributing more than $10 billion in economic benefits to the state economy. Universities drive the need for off-campus housing, food and beverage service, numerous retail and support services from small businesses, as well as employment. In recent studies, economists at each of the three state universities estimated their respective institution’s statewide economic impact to be:

• ASU     $4.4 billion (FY 2009)
• NAU     $1.5 billion (FY 2009)
• UA       $4.8 billion (FY 2005)*
• Arizona University System: $10.7 billion
  

*Total is based on a 2004 study that put the UA main campus total economic impact at $2.3 billion, and a just-released study that put the UA Science and Technology Park economic impact at $2.45 billion. These reports used different study methodologies.

In addition, the universities compete for and win millions of dollars in annual research funding, most of which is spent directly inside Arizona. Total research expenditures in FY 2009 were:

• ASU     $281.6 million
• NAU     $26.1 million
• UA       $565.3 million
• Arizona University System: $873 million