University of Arizona officials announced changes to the athletics department — including cutting $500,000 in administrative costs and moving the marching band under a different department — and detailed how the controversial global campus will become profitable at an Arizona Board of Regents meeting Thursday.
Those plans are the results of the findings from two independent audits on the athletics department and the school’s online platform, called the University of Arizona Global Campus.
John Arnold, UA’s incoming senior vice president, chief operating officer and chief financial officer, also gave an update on the university’s financial status.
See the audit reports for yourself in these PDFs, obtained by Arizona Luminaria through a public records request.
Changes in the Athletics Department following audit findings
Desireé Reed-Francois, the UA’s new athletic director, announced several changes to the department based on Ernst and Young’s final report evaluating the campus.
“EY [Ernst and Young] outlined several opportunities for growth, and we’re committed to meeting those expectations so that we can meet long term objectives,” Reed-Francois said.
Arnold outlined university officials’ three goals for the audit: to verify information from the athletics department, review the department’s business practices and receive recommendations on improving the department financially.
UA faculty, the board and Gov. Katie Hobbs all requested an independent financial audit after the school’s financial crisis brought scrutiny to the department’s spending.
“We quickly discovered that athletics had the largest deficit on campus. I also had very limited insight into the budget structures and finances of the athletics department,” Arnold said during the meeting.
Despite the school’s financial straits, the department director announced two new high-level positions, Senior Associate Athletic Director for Revenue Generation and Chief Operating Officer.
“We want our CFO to start getting into the analytics space and not have to rely so much on just the operational, so we brought in two new people,” Reed-Francois explained.
She said they incorporated the financial firm’s findings into a five-point plan to cut costs and increase revenue through measures like cutting $500k in “administrative leadership personnel costs” by changing the department’s organizational structure.
Additionally she announced a new nonprofit organization, Arizona Sports Enterprise, as the school’s in-house corporate sponsorship program.
Reed-Francois also identified travel and lodging as places to cut in order to reduce the department’s overall spending. They’re also moving the marching band under the College of Fine Arts.
Integrating UAGC
Ernst and Young also performed the independent audit of the controversial University of Arizona Global Campus. Like the athletics department evaluation, the audit resulted from multiple requests from UA stakeholders and Hobbs.
The global campus’ total expense forecast for Fiscal Year 2024 is $225.7 million and is expected to make $226 million in total revenue. Arnold said they’re expected to break about even with a net revenue of $300,000.
Arnold said their objectives were to verify data, obtain operational recommendations and guidance on how to integrate the Global Campus into the university. He added the online campus is under heavy watch, much of it stemming from legal troubles predating its acquisition.
“We also have a very strong regulatory oversight of UAGC,” he said, describing several layers of oversight: the regents, the U.S. Department of Education, and the Western Association of Schools and Colleges, a school accreditation entity.
While the school already had an online presence, called UA Online, leaders decided to acquire the global campus when it was still Ashford University, a troubled for-profit online school.
The UA bought Ashford University, a for-profit school owned by the company Zovio for $1 in 2020 despite public opposition from faculty and staff. In August 2023, the U.S. Department of Education forgave $72 million in student loans for 2,300 former Ashford students, concluding that “Ashford and Zovio made numerous substantial misrepresentations during that period that borrowers relied upon to their detriment.”
At the Thursday meeting, Arnold explained the purposes of the initial purchase — expanding “access to higher education to a diverse group of students,” addressing the nationwide drop in students and diversifying the university’s revenue streams.
He said the audit gave them guidance moving forward in achieving these objectives.
“They found that all three of those goals are still viable, that we’re on track to achieve those goals, and that we’re not there yet,” Arnold said at the meeting.
Recommendations include combining UA Online and the University of Arizona Global Campus into a single brand and both entities’ capabilities into one. Arnold said in 2-3 years, the integration of the global campus could result in $12 to $21 million in annual cost savings by combining the two entities’ “back office functions,” such as IT and human resources .
UA financial update
The school’s budget deficit sits at $162 million for the end of this fiscal year but Arnold said that could be reduced to a $52 million deficit at the end of Fiscal Year 2025, a steep decrease from the original shortfall of $177 million.
He noted that the global campus is operating with 83 days of cash on hand while the university is operating at 73. For comparison, Arizona State University projects 163 days of cash on hand and Northern Arizona University projects 170. The board of regents requires schools to have at least 140 days of cash on hand.
The university’s projected cash on hand is a metric for the school’s cash reserves and one indicator of its financial health. The school’s cash-on-hand shortage in November of last year revealed the university’s financial crisis, which was caused by a significant budget deficit.
The school will continue to operate at a shortage as it reorganizes its financial infrastructure and continues cost-cutting measures. Once this work is done the school will start replenishing its reserves, Arnold said.
“We’re forecasting to end fiscal ’25 at 67 days. That’s about a $50 million drop in cash reserves to take us from about $550 million in cash reserves to $500 million in cash reserves, which is where, very much I would like to stop, that’s a good floor for us, and then reverse that number,” he said.
Policy in response to campus protests advances
The board passed on first reading, a controversial policy proposal regarding “support for foreign terrorist organizations” by student groups and organizations. The measure requires one additional approval at the next meeting before it becomes policy.
The proposal follows months of pro-Palestinian protests at universities across the country that have spurred heated discourse over freedom of expression.
Seventeen people spoke on their own or others’ behalf at the Thursday meeting, expressing their disapproval of the board of regents’ response to Pro-Palestine protests across all three campuses.
“You can’t stand students and faculty recognizing that this should not be the goals of higher education. You spend so much money, try and convince the public that you care about freedom of speech. But apparently, only when it’s before 5 p.m.,” Charlie Dors, a 2024 graduate of Northern Arizona University, said during the meeting’s call to the audience, a time when anyone can briefly address the board in public. “The board is a mess, and it’s shameful to say you’re working towards solutions to societal challenges when you refuse to tackle the actual issues on our campuses.”
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