February 22, 2024 / Modified feb 23, 2024 10 a.m.

ABOR accelerates financial reforms amid UA fiscal woes

The Arizona Board of Regents swiftly implements financial reforms following the University of Arizona's financial troubles, amidst controversy over shared governance.

Old Main at the University of Arizona hero A cloudy sky over Old Main at the University of Arizona.
AZPM Staff

The Arizona Board of Regents fast tracked new business and financial policies in hopes to have them finalized in April. The changes come as an institutional response to the University of Arizona’s fiscal woes found last November.

“To guard against the mistakes made at the University of Arizona, the board is reinforcing existing financial management requirements and monitoring by implementing additional governance principles and review mechanisms to increase the board’s insight into–and confidence–university financial processes,” ABOR documents read.

The board moved to skip a committee review and held their first reading of the proposed principles.

The proposed University Financial Management Principles include:

  • Centralized financial planning and budgeting processes at all three universities
  • Centralized management and control structures at all three universities for information technology
  • The implementation of budgetary controls at all three universities to prevent units, programs and colleges from overspending
  • Budget controls on non-resident institutionally funded financial aid at all three universities
  • Requiring board approval to utilize cash reserves below established thresholds
  • Additional transparency in budget communications

If approved, each university will have to report to the board a financial status update that includes current practices and is in line with a new financial liquidity policy. That policy proposes to continue the use of monthly days cash on hand and requires universities to maintain the monthly days cash on hand with a range of plus or minus 25% of Moody’s current median among rated colleges and universities. It will also require universities to explain why they are or are projected to be outside of the established range. If a university moves to go outside of that range, they will need to highlight it in their proposed budgets and it will have to be voted on by the board separately from the fiscal year budget approval.

The board also moved to review proposed changes to its annual business review policy. Those changes include an annual gathering of financial administrators to share best practices, collaborate on emerging issues that may come from administering financial policies and managing financial risk. It also adds the review of financial business processes for one university per year through peer reviews, documentation of key processes and a report to the board.

A second reading and approval of these new policies will be held at the April board meeting.

UA’s Fiscal Crisis

ABOR Chair Fred DuVal began the public portion of Thursday’s meeting with an update to the community regarding how UA is working to mitigate its financial crisis. DuVal pointed to six principles that are guiding its decision: do not raise tuition, do not impact current students, do not touch retirement and benefits, do not implement furlough, cut from the top first and protect the academic core.

“There are two choices,” DuVal said. “You can cut costs, or you can raise tuition. That's it. If you're not going to do one, you're forced to do the other.”

DuVal assured the board that UA is choosing to not increase its tuition. He also shared that the university has begun executing $27 million in administrative cuts.

“We're making progress and executing according to plan,” DuVal said. “More to come, but real steps are being taken.”

DuVal acknowledged that “a major issue has been the athletics department.” However, DuVal remained optimistic after the announcement that UA hired Desireé Reed-Francois as the university’s new Vice President and Director of Athletics. Reed-Francios left the University of Missouri, where she held the same role, for UA’s position.

“With the announcement of the new athletic director, we feel like we have the right leadership in place at the right time to get athletics in the right spot,” DuVal said.

Shared Governance

ABOR Chair Fred DuVal served a cease and desist letter to Dr. Leila Hudson, chair of the University of Arizona Faculty Senate, following questions she raised on Monday regarding conflicts of interest at a faculty senate meeting.

“Dr. Hudson has inflicted a terrible blow to shared governance, which frankly works so well at the other two universities,” DuVal said. “How do you develop trust with people who intentionally lie about and publicly defame their partner? It's shameful.”

DuVal was the managing director for the private investment company Amicus Investors, LLC before being appointed to the board. That company lists UA and Arizona State University as previous partners. During Monday’s meeting, Hudson said DuVal was still listed as working for the firm when he joined the board. She utilized the Wayback Machine which documented a screenshot of the firm’s website that said he was a managing director.

DuVal pushed back on those claims saying the firm “failed to land any business” and “generated no income.” He emphasized that the firm went out of business in 2017 and joined the board one year after.

“Even if Amicus had pursued or landed business in Arizona, which we didn't, it would have been impossible to have had a conflict because the two engagements never overlapped,” DuVal said.

DuVal went on to say that, “the caliber of academic research skills that were demonstrated here are rather concerning. I frankly now doubt the accuracy and credibility of any one of the many accusations that are being made against the university and the president.”

DuVal has retained the former U.S. Attorney Paul Charlton as his legal counsel to “pursue legal remedies” and has called on the senate to preserve all documents regarding Hudson’s accusations.

“I must personally say this crossed a line,” DuVal said. “I refuse to be a punching bag, or let intentional defamation go unanswered.”

AZPM reached out to Hudson for comment. Her attorney said, “Dr. Hudson was exercising her constitutional rights and fulfilling her legal obligations when she raised these issues of public concern. She is now in the process of evaluating her various legal options.”

Following DuVal’s comments, Regent Lyndel Manson called Hudson’s skepticism “personal attacks” and “beyond the pale.”

“It is fully indicative of the culture of fear that has been instilled by the current leadership, creating an environment where faculty are loath to speak their minds in opposition or even contemplate running against the current regime because the retribution from leadership is swift and personal,” Manson said.

Manson criticized the senate’s level of “productive recommendations” and stated that some faculty have “declined to serve in the Senate because of its negative and aggressive nature, and its lack of focus on what is truly best for the university.”

“Watching this Senate try to run a meeting is an exercise in futility,” Manson said. “It is embarrassing the level of dysfunction on display, and the lack of any productive recommendations or outcomes.”

Manson described the UA Faculty Senate as “overly confrontational” and “anti-administration,” even suggesting that the body has “an eye toward the expansion of their authority well outside the intention or norms of shared governance.” She urged UA President Robert Robbins to establish new faculty leadership who are “interested in contributing to real solutions, rather than posturing and undermining potential progress.”

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