Arizona Regents Grant Raises, To Lobby Legislature For Right To Borrow

At its meeting on Friday, the Arizona Board of Regents demanded more money from the legislature. The Board also approved its FY 2017 state operating budget request, unveiled its 2016 legislative agenda, and raised the salaries of all three university presidents.

Arizona State University President Michael Crow will receive a $150,000 raise for the 2015 fiscal year.

University of Arizona President Ann Weaver Hart will get an increase of $115,000. Her total compensation is now $753,700.

Northern Arizona President Rita Cheng will get an increase of $40,000. Her total compensation is now $560,200.

While complaining that the taxpayers and the legislators are stingy, Crow’s increase will bring his total salary and benefits to nearly $1 million.

On average, the annual per-student cost of education is approximately $15,550. This figure includes costs related to the presidents’ salaries, academic programs, support services and operations and maintenance items. Research and capital expenditures are not included in this figure.

In FY 2016, the state will provide $5,302 per resident student. Through tuition and fees, resident students contribute an average of $6,554.

Universities cover the balance of costs, which means they are currently losing approximately $3,694 per resident student while encouraging more and more students to enroll in classes that provide little or no opportunity for gainful employment. As a result, in FY 2016, the estimated total system-wide loss will be $355 million.

The university system requests the FY 2017 state increase its resident student support to 50 percent of the cost of education ($7,775).

The Board claims that the “university system is not requesting a new statutory funding formula, “but instead “asks the state to view university performance and outcomes and align state support with its defined benefit.”

The University of Arizona is requesting $8 million to fund the University of Arizona Veterinary Medicine program at Oro Valley initiative. The request will fund building renovations. The regents claim that this will enable 60 high paying jobs, establish a $24 million program in Oro Valley. The details of the secretive deal will be unveiled on September 28, 2015 at the El Conquistador Hotel and Resort.

The Board wants to lobby the Legislature in 2016 to give the system the authorization to issue commercial paper and obtain commercial lines of credit to help manage cash flow and provide bridge financing for capital projects; the ability to develop independent benefits programs; and elimination of the state tuition remittance process and maintaining transparency by modifying reporting requirements to align with the ABOR business cycle.

Highlights:

FY 2016 Supplemental

Reduction restoration – Increasing the state share ($24 M): The conclusion of the FY 2015 proved that some of the base budget assumptions for FY 2016 were incorrect. Most notably, actual revenues exceeded the forecast by nearly $400 million. Increasing the university reduction from Gov. Ducey’s original proposal of $75 million to the enacted $99 million was unnecessary and should immediately be reversed. Restoring this $24 million would increase the state’s per-resident-student support to $5,552.

FY 2017 Request

Reduction restoration – Increasing the state share ($33.4 million): After the FY 2016 supplemental and impacts from the Health Insurance Trust Fund (HITF) changes, the remaining cut will be $67 million. The universities request the state restore half of this remaining reduction in FY 2017. Including the FY 2016 supplemental, this will raise the state’s per-resident-student support to $5,900, or approximately 38 percent of the university system’s cost per resident student and reduce university operating losses to
about $3,096 per resident student.

Student growth ($10.4 million): The state should cover 50 percent of the educational costs for anticipated student growth. To calculate this number, the universities propose using actual growth for the year preceding the budget year, in this case FY 2016 growth over FY 2015. For the FY 2017 request,
the system will report this number by mid-September. Currently, the universities forecast growth of
1,339 new resident students.

Facility maintenance and operations ($19.2 million): In addition to operating costs, Arizona’s public universities have significant capital costs. In FY 2014, the university system spent $159 million on capital renewal projects. The universities request the state include $200 per resident student on an ongoing
basis to help offset resident students’ impacts on university capital.

One-time capital request ($75 million): The university system is facing a capital crisis with over $652 million in unmet renewal needs including high priority items such as fire alarms, roofs, and asbestos abatement. Further, student growth continues to create needs for additional square footage. The
university system will provide a specific project list as part of this request and will provide matching dollars to further leverage state funding.

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