Dark Hours and the Perilous Cliff Ahead

by Ford Burkhart

Deep in the doldrums of the Great American Recession, Robert Shelton scribbles on pieces of paper. He’s writing “ballpark numbers,” he says, like tuition increases and spending cuts to offset the loss of $100 million in state dollars.

It’s what the UA president does, by his estimate, for 10 hours a week. “You write some numbers,” he said one recent afternoon, switching gears abruptly from the whirlwind of finding a new athletics director. “You think. You try something else. You think some more.”

One crucial figure is a tuition goal that can replace federal stimulus funds set to vanish in 2012. Tentatively, that number is $9,200 a year, up from about $6,800 these days for Arizona residents. This amount, Shelton says, would put the UA near the median of its national peer institutions.

At $9,200, tuition revenue would make up $60 million in lost dollars, Shelton says, with program cuts providing the other $40 million. Maybe.

The bottom line, he says, are three promises, what he calls his watchwords: access, quality, and discovery. Big increases in scholarship funds — in all more than $100 million, based on a percentage of tuition dollars — will ensure access for a diverse student body. Rewarding quality and discovery will guide the rest of the response, Shelton says.

Somehow, he remains optimistic. During his third State of the University speech as president, he defiantly vowed that the UA would think its way out of the loss of a quarter of its state dollars by applying collective creativity. “So the cuts be damned! We have the creativity to do it.” The crowd rose and applauded.

Shelton also said the UA would reject equal cuts to UA programs across the board that would amount to “dooming the UA to a future of mediocrity.”

But just what steps the university might take is not yet clear.

Meanwhile, some 600 workers are missing from the state-funds payroll — some were let go, others were not hired as positions were frozen. Nearly every campus division has newly empty staff desks. There are other big and small changes: Students report being squeezed out of required classes and scrambling to fill schedules. Most of the seasonal flowers that decorate the campus are gone. A $5 entry charge, the first ever, greets visitors to the Arizona State Museum. At a fall 2009 job fair, where UA work-study employers once competed for top students, hundreds of applicants milled about in search of fewer offers.

To save costs, a few classes were moved into the 1,100 seats of the orchestra level of Centennial Hall. (See the related story on page 19.) Older alumni recall the 1950s and ’60s, when it was common to have a class in the auditorium, but lately, student reactions are mixed. After a lecture in marine science, Hillary Davison, a prebusiness sophomore from Los Angeles, said the experiment worked for her: “There are lots of ways to learn. We have study sessions led by honors students and review sessions. They do a lot to make it interesting.” Others were more somber, noting that class control is difficult.

Rewarding teaching, Shelton says, is one element of the long-term campus Transformation Plan that redesigns budgeting, using tuition income to better reward units that step-up teaching efforts. The results from the Tuition Funds Flow Task Force take effect in 2011.

Early next year, the UA may face a call for more cuts beyond the loss of $100 million in state funds over 18 months. The Arizona legislature is wrestling with a budget gap estimated at $3.5 billion, ranked as the worst per capita in the United States.

Beyond the current struggle looms the loss of federal stimulus funds in 2012. Shelton calls it “the perilous cliff.” The next two years, he says, offer a “grace period” in which the UA can lift tuition and fees to a minimum operating level — and then comes the year that gives everyone the shivers.

The UA is not alone. The cover of Vanity Fair magazine headlined “Harvard’s Big, Dumb Financial Train Wreck,” which it said had lost $8 billion in the collapse of a $37 billion endowment. Stanford reported a drop of $300 million in revenue. And the University of California system stirred protests when it raised tuition by 30 percent following $813 million in cuts. California and Arizona are among nine states that are not sure how they will meet their payrolls through June 2010.

Like many other universities, the UA is sending out recruiting teams to try to increase the proportion of out-of-state and international students, who pay a greater share of the university’s costs in tuition. The Arizona Board of Regents recently increased the limit for nonresident undergraduate students to 40 percent, up from 30 percent in recent years. Recruiters visit China, India,

Vietnam, Indonesia, Bolivia, Argentina, and Mexico. “Our dependence on nonresident students increases as we have less state support,” says Paul Kohn, the UA dean of admissions. “To be as robust as we have been, we have got to get dollars from somewhere else.”

Demand remains high. In past years, the UA admissions office reviewed more than 200,000 out-of-state applications. For fall 2010, that figure is up to 300,000, from all 50 states and 100 countries, Kohn says. The proportion of nonresidents was about 30 percent of the fall 2009 freshman class, which numbered about 7,000.

For fall 2010, the target number is 7,200 freshmen, including about 2,000 transfer students that enroll each fall.

There was a threat last year that the state might sweep some funds collected by the UA, like cash reserves at self-supporting units, but the UA managed to protect those funds. Unlike its sister institutions in the state, furloughs for staff were averted after the UA received $60 million in temporary federal stimulus dollars.

Plans for further possible cuts are being worked out by the president’s office in conjunction with committees of faculty members of each college. Soft spots to cut the budget are scarce. Some 83 percent of state funds pay faculty and staff salaries. Utilities are 5 percent, with operations at 10 percent. The other 2 percent goes to debt service and running the physical plant.

A $766 surcharge raised in-state tuition and mandatory fees for fiscal 2010 to $6,856, up from $5,542 for 2009, and to $22,266 for nonresidents, up from $18,676. Including campus housing, the estimated total cost is $20,520 for in-state students and $35,930 for nonresidents.

To compensate for tuition gains, the university made financial aid off-limits to budget cuts, and the creation of the Arizona Assurance scholarship program now guarantees a free education (including room, board, and books) for students from families with incomes of less than $42,000. In its first year, the university enrolled almost 600 Arizona Assurance scholars, and this fall admitted nearly 750 more. These efforts have helped decrease overall student post-college debt despite the tuition increases.

Shelton’s office suite contains an enviable collection of Southwestern art. We asked him to imagine a new painting, one that would capture the current budget struggle.

“Put a dozen people at the top, a montage of our best accomplishments,” he mused. “At the bottom, show a crumbling foundation, with dollar signs falling away. And in the middle, put the people of Arizona who benefit from all this.”

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