Peter Likins

Administration develops multiple

plans for successful financial future

Editor’s Note: This is the second article of a two-part series focusing on university debt as a result of state budget cuts. While yesterday’s article focused on how the UA has been affected by the cuts, today’s story addresses how the UA plans to deal with these cuts in the future.

Four years after the state Legislature cut almost $50 million in state funding from the UA, administrators think they’ve developed a plan to maintain long-term financial stability.

The UA has absorbed previous state cuts through reallocating money, increasing tuition, reducing its staff and eliminating programs, said Budget Director Dick Roberts.

But state cuts are a trend that is unlikely to reverse, so the UA is forced to come up with a long-term solution that combines Focused Excellence, minimizing operational costs and finding a balance in the university’s sources of funding, said President Peter Likins.

When the Arizona Board of Regents announced the Changing Directions initiative in 2002, each of the three Arizona universities were given the freedom to manage themselves.

UA administrators chose to implement Focused Excellence, a policy that encourages slowing growth and increasing academic standards.

“Every dean and every department head is supposed to follow the same principles reallocating money and putting it where it will do the most good and focusing it in areas where we can be most superb,” Likins said.

Part of the plan involves capping main campus enrollment at 40,000 students, Likins said.

Provost George Davis said the cap is related to the idea behind Focused Excellence that less equals more.

“We want to do less and exceed it in terms of quality,” Davis said. “When you try and carry so much beyond your carrying capacity, it brings everything down.”

But there are people who disagree with this plan, saying that growth is the best way to increase university funding.

“I disagree with the cap. ASU grew in enrollment and got more money from the state,” said State House Rep. Ted Downing (D-Ariz.). “Grow and ask us to pay for it.”

But continued growth would not be successful for the UA because it would not promote the university’s goal of raising its academic excellence standards, Likins said.

“We will not try to pay for our costs by just getting bigger,” Likins said. “Continued growth is something that just can’t go on forever. You can’t get bigger and bigger and still maintain quality.”

Though administrators announced the start of Focused Excellence in 2002, some faculty said it doesn’t seem to be put into effect yet.

“I think Focused Excellence is a good plan, but I’m not sure yet that it’s very focused,” said Mark Smith, head of the department of chemistry. “It’s my understanding that the university is doing largely everything it used to.”

Department of history head Karen Anderson said she thinks the plan needs to be clearer.

“I would like for the university, which says it’s devoted to Focused Excellence, to say what this means and where the priorities will be,” Anderson said.

Alfred Kaszniak, head of the department of psychology, said Focused Excellence is not the problem, but he thinks the faculty is not fully informed about the university financial situation, so they cannot contribute to their fullest potential.

“The one thing that I do think as a department head is that we really need a campuswide discussion about how resources are equitably allocated, even in times where those resources are tight,” Kaszniak said. “As planning for the future goes on, consultation really needs to be broader than it has been. I don’t think decisions can reasonably be made with as little input as has occurred in the past.”

In addition to Focused Excellence, the UA is trying to minimize operational costs, specifically in the area of utilities.

The UA spent $15 million on two gas turbines in 2002, which provide 25 percent to 30 percent of the university’s energy needs, according to the UA advancement Web site.

The turbines power the second largest underground chilled water system in the country, which cools buildings while helping the university avoid paying for power during peak hours when it costs the most, Roberts said.

But ultimately, the best way to prevent the UA from getting caught in a financial crisis is to avoid relying on a single source of funding, and instead, balance its dependency on the endowment, tuition revenues, auxiliaries, and grants and contracts, Likins said.

“Across the country state money for public universities is going down, down, down,” Likins said. “If you rely solely on any one of these sources, you’re at risk.”

The UA has started working on the balancing act by completing Campaign Arizona, a $1.2 billion fundraising campaign for the endowment, and by increasing the cost of tuition every year.

The money raised from Campaign Arizona will increase discretionary dollars and ultimately give the president, provost and deans more flexibility in how they can respond to financial challenges like state budget cuts, according to the Campaign Arizona Web site.

It is unknown how much money from the campaign will go toward offsetting the budget because funds are still being allocated, Likins said. But as donors put money toward specific university areas, the UA is able to take the dollars it would have spent in that area and allocate it elsewhere, he said.

The UA is also committed to increasing the numbers of grants and contracts through strong research projects that could also bring in more money, Roberts said.

The state agreed to allocate $14.2 million this year to pay for new buildings on campus that will be used for multidisciplinary research, Roberts said.

This research will help the UA earn more grants and contracts, which officials hope will lead to more outside investments in the university, Roberts said.

“There’s a better chance to solve the problems if you have more dollars,” Roberts said.

Seeing the effects of this plan takes time, though, Davis said.

“It takes years to try to overcome such cuts when money isn’t replaced,” Davis said. “But I think there are a lot of hopeful signs.”

Likins also said Focused Excellence and balancing the sources of funding are better for the university in the long run.

“You won’t feel it next year, but 10 years from now, 20 years from now, we will be a more successful university,” Likins said.