The UA will see a half-percent budget cut next fiscal year along with eight other budget reallocation methods, which will bring in $6 million to central administration, administrators announced yesterday.

The decision comes after months of deliberation among administrators, who said the university must reassess the way it manages money during a time of decreased state funding.

According to a financial bulletin released by President Peter Likins, Provost George Davis and Joel Valdez, senior vice president of business affairs, general funds have fallen by $47 million in the past two years.

"It is no longer possible to absorb this loss by the use of central reserves or the use of funds only temporarily available," Likins said in the bulletin. "We need a new strategy to restore the capacity of this university to make the investments required to achieve the goals of focused excellence."

The half-percent cut, which will save the UA $1.7 million, will also come with a 10 percent tax on carry-forward funds, leftover money in departments at the end of the fiscal year.

However, deans and department heads said last month that the carry-forward tax could incite financial mismanagement in departments that do not want to see their funding go to central administration.

"It's complicated for every college," said Jim Shockey, associate dean for instruction in the College of Social and Behavioral Sciences. "A 10 percent tax on one might be a nuisance, on another it might be critical."

Some colleges will also reduce in size because the provost will sweep faculty lines this spring for fiscal year 2007, saving the UA $2 million as vacated faculty positions may not be filled.

Tuition during summer session will increase to cover higher utility costs, a plan expected to bring in $650,000, while a half-percent increase in the administrative service charge on auxiliary programs will centralize $660,000.

In addition, a 6 percent tax on gifts and donations will go toward campus development costs, with 1 percent to central administration, totaling $400,000.

Another mechanism will shift $140,000 in faculty salaries from state funding to other resources, such as endowments, research contracts or program fees.

During a budget meeting in February, Likins said he expected objections from members of the campus community regarding the reallocations, but he added that they are necessary for the university to excel and "spare ourselves some of the shock" the UA faced last year with unexpected decreases in state contributions.

With the new financial mechanism and sweeping of vacant faculty positions, Likins said he expects the university's budget to stabilize in three years.