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| Q: | What is the true percentage the universities were cut in the FY09 budget? | |
| A: | The universities sustained $191.5 million in cuts in FY09. The recent $141.5 million mid-year cut to the university system represents a 13 percent cut in the funding the universities receive from the state. Keep in mind that these cuts follow the $50 million cut the universities took at the beginning of the FY09, and the $25 million mid-year cut in FY08—all of which had a significant impact on the universities’ instructional budget. Some have stated that these cuts are only 4 percent of the universities' budgets, but this is misleading. Actually a large portion of university budgets are legally committed to specific purposes and come from sources other than the state general fund. The universities rely on several revenue sources to support teaching, research and services. Revenues come from the state in the form of general fund support; from students through tuition and fees; from generous gifts made by donors; and from grants and contracts mainly in the form of federal research monies. Because gifts, grants and contracts usually have restricted uses, those monies generally cannot be used to offset losses in state support. In FY1979, state appropriations to the university system constituted 19.4 percent of the general fund appropriations. 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, with headcount besting previous years by tens of thousands. This has forced universities to increase tuition and other sources of funding. | Top |
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| Q: | What would be the impact of more cuts in FY10? | |
| A: | The universities cannot make additional cuts without severe, and potentially catastrophic, consequences to the basic integrity of their ability to adequately educate Arizona’s college students. While experiencing record enrollment growth, the universities have already sustained a 13 percent cut to the system’s general fund budget in FY09—dollars that form the backbone of the universities’ instructional budgets. Mid-year FY09 cuts came after the spring semester had begun, limiting the universities options to manage the cuts. As a result, the universities have had to take a number of immediate actions to implement the FY09 cuts, which will also impact next fall’s students:
More cuts in FY10 will lead to further, more drastic curtailment of academic programs and services, and community outreach, and put in jeopardy millions in matching federal dollars for research—further harming the state’s economy and the prospects for students to get a college education. However, an infusion of monies from the federal stimulus package into not only the university system, but other state entities, could minimize significantly the need for cuts to the universities in FY10. | Top |
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| Q: | How will the federal stimulus monies help Arizona and the universities? | |
| A: | The federal stimulus monies will help Arizona’s universities, and we strongly encourage Governor Brewer to take full advantage of the stimulus dollars. According to the legislation signed by President Obama, Arizona is set to receive a minimum of $843.6 million of State Fiscal Stabilization Funds (SFSF) for education. Here’s how it is required to breakdown:
It’s important to note that the university system began FY09, which commenced in July 2008, with a $50 million cut, which was done by the legislature in anticipation of a tough budget road ahead. So, realistically, the universities have been challenged with $191.5 million less in state funding for FY09—with $141.5 million being eliminated with only 5 months left in the fiscal year. However, the federal stimulus dollars are a one-time cash infusion, and the state could still face declining revenues in three years. Clearly, new approaches to crafting a sustainable state budget must be identified. | Top |
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| Q: | Haven’t recent university budget increases been a significant driver of the budget growth that the legislature is now trying to curtail? | |
| A: | The universities’ budgets have been among the slowest growing sectors of the state budget, and not a major causal factor behind the growth of state general fund spending. During the past ten 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 19.1 percent in FY1979 to 9.5 percent in FY2009. | Top |
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| Q: | Have the universities suggested solutions to the budget crisis facing our state? | |
| A: | Yes. The universities are working very hard on suggested solutions. The FACT, or the Fiscal Alternative Choices Team, has been formed—a working group of university economists, and business school faculty and administrators—to work toward the development of a broader range of budget balancing options for the legislature to consider for FY10, beyond just budget cuts. The establishment of FACT was in response to requests from both Senate President Bob Burns and Speaker of the House Kirk Adams, who asked the board and the universities to use their considerable faculty and institutional resources to bring options to them other than budget cuts to solve our state’s fiscal crisis. The FACT is being led by Ted Ferris, former director of the Joint Legislative Budget Committee from 1985-1997, which included another deep, real estate-led recession, between 1988-1992. The universities have identified the following individuals to participate in the FACT effort:
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| Q: | How much money does the state provide to the universities on an annual basis? | |
| A: | 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 the state has had to deal with competing demands on the state treasury. In FY1979, state appropriations to the university system constituted 19.4 percent of the general fund appropriations. 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, with headcount besting previous years by tens of thousands. This has forced universities to increase tuition and other sources of funding. | Top |
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| Q: | What has been the enrollment growth of the universities over the past five years? | |
| A: | Over the last five years, enrollment (full-time equivalent) in the Arizona University System has increased by 13 percent from 104,685 in 2004-05 to 118,743 in 2008-09. Total headcount has increased by 11 percent from 114,399 in 2004-05 to 127,446 in 2008-09. | Top |
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| Q: | How has tuition increased over the past five years? And, couldn’t tuition increase be used to offset the cuts? | |
| A: | Over the last five years, undergraduate resident tuition and mandatory fees has increased at an average annual rate of 9.5 percent at ASU, 8.7 percent at NAU and 9.0 percent at UA. Nonresident undergraduate tuition and mandatory fees has increased at an average annual rate of 8.2 percent for ASU, 6.4 percent for NAU, and 8.6 percent at UA. The board has encouraged the universities to implement programs that will help to keep tuition affordable and predictable for all students. The programs the universities have already instituted include: guaranteed tuition programs, merit and need-based scholarships, and institutional financial aid. Tuition would appear to be a primary source that could be used to offset cuts; yet, one must be mindful that the Arizona Constitution mandates that the Arizona University System provides instruction that is “as nearly free as possible.” The tuition increase needed to offset the cuts could have a real impact on students’ accessibility to a higher education in Arizona. The $141.5 million cut is equivalent to $1,200 per full-time student. Drastic increases in tuition, if not accompanied by commensurate increases in financial aid, could hamper student access to the universities. Since the state has opted to not fund a significant financial aid program, the universities have stepped up to fill the void, yet another pressure on tuition. | Top |
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| Q: | What role does financial aid play in Arizona to offset tuition increases, or decreases in state funding? | |
| A: | 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 $250 million of their resources to financial aid—called institutional financial aid. According to board policy, the universities must set aside 14 percent of tuition revenues for need-based financial aid. For FY09, the board asked the universities to set-aside at least 15 percent. Total financial aid awarded to state university students has increased more than 47 percent over the last five academic years. Institutional aid, scholarships and awards provided directly by the universities, has increased by 62 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 3 percent over the last 10 years, as tuition rates have been steadily increasing. | Top |
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| Q: | What is the economic impact of the university system on the state? | |
| A: | Arizona’s universities serve as an economic engine for Arizona—with a total economic impact of some $6.5 billion. The universities contribute billions of dollars in economic benefits to the state economy. In recent studies, economists at each of the three state universities have estimated their respective institution’s statewide economic impact to be:
*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. The universities compete for and win millions of dollars in annual research funding, most of which is spent directly in the Arizona economy. FY 2008 estimates of annual research expenditures:
Universities provide among the most, if not the most, jobs for their communities. Total university jobs in FY2008:
Each year, the universities graduate thousands. Degrees awarded between 2007-2008:
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