Dive Brief:
- Arizona’s Legislature passed a fiscal 2025 budget over the weekend that would slash tens of millions of dollars from the state’s public universities.
- The bill would reduce Arizona State University’s state funding by $11 million, University of Arizona’s by $6.6 million and Northern Arizona University’s by $4.1 million.
- The reduction comes as Arizona lawmakers try to plug a roughly $1.4 billion deficit in the budget in a state that lags much of the country in higher education funding.
Dive Insight:
The funding drop-offs would likely hit hard at Arizona’s universities.
The University of Arizona in particular has been struggling to rein in deficits of its own. Hanging over the institution is a $177 million deficit that it has been chipping away at with plans for broad-based budget cuts.
In a presentation in April, John Arnold, the university’s interim chief financial officer, pointed to state funding as one of the unknowns in the University of Arizona’s financial future as it tries to balance its budget, best as it can.
“We understand the state’s budget challenges and appreciate their efforts to prioritize higher education,” a University of Arizona spokesperson said in an emailed statement Tuesday, adding that the university will present an updated budget to the regents based on the new state allocations.
Meanwhile, Northern Arizona’s projected surplus is about $8.5 million for fiscal 2024. Arizona State predicted even more wriggle room, with a $271 million operating margin for fiscal 2024.
Arizona already lags the rest of the country in funding for higher education. Its higher education spending fell from 82% of the average in the U.S. in 2000 to 56% by 2023, according to a presentation Arnold made in 2023, when he was serving as executive director of the state’s board of regents.
Universities’ appropriations from the state general fund fell by 41.1% to $660.8 million between fiscal years 2008 and 2016.
The state was noted in a recent report from the State Higher Education Executive Officers Association.
According to SHEEO, Arizona is furthest from returning to higher education funding levels to those seen before the Great Recession. The state appropriated $7,103 in higher education funding per full-time-equivalent enrollment in 2023, down 34.6% from 2008 levels when adjusted for inflation. Louisiana and Nevada have also made dramatic funding reductions since the Great Recession.
Meanwhile, state and local funding for public higher education in the U.S. rose 3.7% in fiscal 2023 after inflation. Spending was helped along by federal coronavirus relief to states. However, spending per full-time equivalent enrollment at public institutions also rose in part because enrollment has declined, SHEEO noted.
Arizona isn’t the only state grappling with budget deficits. To the west, in California, some of the state’s largest universities could see major funding cuts in fiscal 2025. Meanwhile, an ambitious financial aid program to defray college costs for students could also take huge reductions under the Democratic governor’s proposals, according to media reports.
In Arizona, Gov. Katie Hobbs said on social media Sunday that she was “thankful for members of the legislature who came together and passed this bipartisan agreement,” adding that “I know we still have more work to do.” A spokesperson for the governor’s office said Hobbs will be taking action on the budget later on Tuesday.
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