TEMPE - Regents yesterday expressed support for a state-based financial aid program and appeared optimistic about a proposal asking state lawmakers to change their method for funding university growth.

Arizona is one of 13 states that offers none or virtually no state-based financial aid for university students, a financial situation that has forced the Arizona Board of Regents and university officials to divert large amounts of tuition revenue to financial aid, especially for needy students.

A large portion of student financial aid also comes from the federal government.

"Financial aid from the state is vital," said Regent Jack Jewett, who led the movement last year to increase university-based financial aid.

University presidents joined Jewett in arguing that the state must offer financial aid directly from its own coffers.

ASU President Michael Crow compared the current aid structure to a tax on the rich, saying that by drawing the funding from tuition alone, the universities are forced to rely on too few people to create a financial aid pool.

These comments on financial aid came in the context of a larger debate on how the state should reconsider a decades-old policy that typically offers universities funding based on enrollment growth.

This funding makes up a small percentage of university budgets, but officials consider it important, and it often becomes a contentious point in budget debates between the universities and state lawmakers.

This year, the UA is requesting $9.5 million and Democratic Gov. Napolitano is requesting $3.4 million. The Joint Legislative Budget Committee has proposed no funding for enrollment growth.

Regents agreed the current formula, which is based solely on growth of the student body, is simplistic and unreliable, especially as state universities change their missions and because the Legislature rarely funds growth to the extent the universities hope.

"It's clearly ... a model that for the last 15 years has been suffering," Crow said. "The universities are on different trajectories."

President Peter Likins said the Legislature would be more motivated to fund the universities if the formula rewards specific accomplishments, like an increase in the graduation rate.

"Then I think we're going to resonate with political leaders," he said. "My 55 percent graduation rate is an embarrassment."

He also told regents that educating upper-division and graduate students is more expensive than educating lower-division undergraduates.

One potential funding model would differentiate between the number of students in undergraduate, master's and doctoral programs, as well as in arts and humanities programs, which are cheaper to offer than science, fine arts and engineering programs.

Regents will continue discussing these funding mechanisms at future meetings, and Arizona Board of Regents President Chris Herstam said he hopes to develop a final proposal later this year.

Whatever proposal they adopt would have to win the support of state lawmakers, who allocate money to the universities.

"We need to make this not only palatable but attractive to the Legislature," said Regent Chris Palacios.