Tuition increased, the budget was cut, funding was reallocated and undergraduate tuition fees were rejected during this financially-erratic year for university administrators.

The Arizona Board of Regents approved the largest tuition increase of the three state universities at 9.8 percent, a move that followed the statewide Changing Directions initiative and cultivated differentiated tuition between the schools.

Non-resident undergraduate tuition was increased $500, or 3.9 percent, while graduate resident and non-resident tuition was raised $600, or 13.9 percent and 4.5 percent, respectively.

The hikes brought the UA closer to President Peter Likins' goal to keep tuition rates at the top of the bottom one-third compared to peer institutions.

Following the two largest tuition increases in UA history, administrators said the hikes were necessary to foster excellence in higher education during a time of declining state appropriations.

"You can't build a great university on Wal-Mart prices," Arizona State University President Michael Crow said at a regents meeting.

With the UA losing $47 million from the state since 2002, administrators also introduced nine budget reallocation methods for fiscal year 2006, which are expected to bring $6 million to central administration.

Along with a one-half percent across-the-board budget cut, administrators imposed a 10 percent tax on carry-forward funds, which is leftover money in departments at the end of the fiscal year.

However, deans and department heads argued the tax will hurt already under-funded departments and may incite financial mismanagement in departments that do not want to see their funding go to central administration.

"What would you do if you were a department head with, say, $1,000 in an account in mid-June?" asked J. Christopher Maloney, head of the philosophy department. "Would you buy that computer that the department has long needed and thereby empty the account and avoid the tax, or would you try to squeeze one more year out of that old computer that needs to be replaced and watch your $1,000 wither under a tax?"

Some colleges will reduce in size next year when the provost sweeps faculty lines, saving the UA $2 million as vacated faculty positions may not be filled.

Administrators also increased summer tuition to cover higher utility costs and imposed a 6 percent tax on donations.

Provost George Davis said because the university has operated on decentralized funds since 1991, departments feel ownership of the money, and there was a sense of anathema when administrators tried to centralize funds.

The reallocations are expected to stabilize the university budget within three years.

Although many in the campus community objected to the reallocations, Likins said he was open about the process, holding several budget forums throughout the school year, and said the centralized funding will promote Focused Excellence by providing "excellent" programs with additional support.

But when administrators tried to pursue excellence in programs by proposing three undergraduate tuition surcharges in business, engineering and architecture, regents rejected the fees. Likins' proposed $60 information technology fee was also shot down.

Despite the lack of financial support from the state, Davis said excellence remains a goal for university administrators. In the fall, the university will have tighter admissions standards while increasing retention and recruitment efforts.

But the biggest change next year will not be budget reallocations or stricter admissions standards.

In July 2006, Likins will retire and the university will meet a new leader.