Budget finalized for 2008
Chris Coplan - May 1st, 2008With the April 18 signing of Arizona’s fiscal year 2008 budget by Gov. Napolitano, a door has been opened for the Arizona Board of Regents to decide the budget cuts for the university system.
Despite being less than expected, state and university officials are still stressing the impact of budget reductions, as well as what is to come as the state legislature decides the fiscal year 2009 budget.
The ABOR passed the budget cuts to be made for the remainder of 2008, with the fiscal year 2009 beginning July 1. ASU and U of A saw a cut of more than $11 million each, with roughly $10.5 million of U of A’s share being part of the Phoenix Biomedical Campus.
NAU will manage a nearly $2.2 million cut from the budget, which represents about 1.3 percent of general funds appropriated to NAU by ABOR.
Even with the cuts being less than previously discussed at the legislature – which at one point proposed $16 million to be removed from NAU’s budget – NAU President John D. Haeger said the cuts are still significant.
“Cuts are never easy,” Haeger said. “There are going to be lots of things the university will have to do without.”
For now, the loss of funding for the university is softened by debt service money left over that will be used as a substitute for a portion of the cuts. Moreover, university vice presidents must reduce .5 percent of their budgets, and the university has either postponed or cancelled searches for new administration.
In addition, Christine Thompson, ABOR’s assistant executive director for government affairs, said the cuts could have a larger effect that will not be seen immediately because of the proximity to the end of this fiscal year.
Consequently, Rep. Tom Boone, R-District 4 and the Arizona House Majority Leader, said the cuts should have been more expected.
“The governor and her committees have been involved with negotiations,” Boone said. “Some things will have to be cut more immediately and other things not as much.”
Another agenda item supported by the board of regents is the recently released construction stimulus program. The proposal for the program would create $1.4 billion in building and maintenance projects for all three universities as well as generate more than 30,000 jobs statewide.
Christy Farley, NAU’s director of government affairs, said several Flagstaff groups have supported the program, including the business owners’ coalition of the Flagstaff 40, as well as the city council and Mayor Joe Donaldson.
Farley added that several businesses in Tucson have come together to support the project.
Thompson said the program could not come at a better time. With the majority of NAU’s $310 million worth of the project based around maintenance, Thompson said deferred maintenance desperately needs additional monetary assistance, with the university system’s funding for it only at 23 percent capacity.
“I know for sure that there are many buildings on NAU that need to get fixed or will be torn down,” Thompson said.
But Farley said the program is needed, despite the doubts some may have.
“There is some skepticism about the impacts of the program,” Farley said. “If you are working or employed in jobs that weren’t there before, that can only help but stimulate the economy. And for the most part, surprisingly and overwhelmingly, people are saying this is the state’s responsibility to maintain.”
Boone said the legislature has only discussed the program superficially, and said he is unsure as to whether the House and Senate will support the program.
Farley said the House will hold a pubic meeting today for citizens to discuss the ramifications of the construction program and whether the public at large would support the massive capital investment.
With fiscal year 2008 out of the way, legislative officials now have the task of figuring out the budget cuts necessary for 2009.
“There have been a lot of meetings,” Farley said. “Legislators are doing budget meetings and going to the floor for other bills and having office hours. But we’re still not even that close to a decision.”
Boone said each day for the legislature varies. One day, a total of 15 of the nearly 200 state agencies receiving cuts may be discussed, while another day may have up to three hours spent on K-12 education alone.
Another issue compounding the problem is the expected budget shortfall for 2009 continues to change.
“We have the largest percent budget fall for all the states in the country,” Boone said. “In August, when we started, we expected $600 million for 2008. Now we have an expected $1.4 billion shortfall. We went from working with $1.7 billion for 2009 to now working with $1.9 billion.”
Part of that change, Boone said, is the increasingly falling revenues for the state, especially the corporate sales tax, which can be expected in an economic downturn, Boone said.
In terms of how much of a shortfall for 2009 to expect, Boone said he could not guess, as it is still too far away. Thompson said the last number given was $100 million cut from the university system, but added the end cut could be between that amount and $0, though that could change.
Whatever the budget cuts turn out to be for 2009, they may be much worse than the 2008 amounts.
Farley said $487 million of the state’s ‘rainy day funds,’ used for emergencies, was used to help reduce cuts from other agencies.
Additionally, the legislature used fund sweeps, or took money back that was appropriated to state agencies that had not yet been used.
“While the rainy day fund is not entirely expended, I would say a significant portion has been utilized,” Farley said. “Before we swept out the majority of funds, I want to say there was about $700 million in the fund.”
Even without a set amount of cuts or a timeline for the budget to be announced, Haeger said NAU is already preparing for larger budget cuts, particularly by using various models of potential cuts.
One model that Haeger presented was the possibility of a 2 to 3 percent cut for all offices and departments on campus, which would amount to a total of nearly $3.5 million in reductions.
Haeger added it could also mean “large strategic cuts” from the campus, but he declined to comment which areas may see a cut. Haeger also stressed that all of the options are currently just ideas and he would not have more of an idea until late May.
Boone said whatever the cuts may be for 2009, one possibility for the legislature is to decide on a set amount and have the universities and ABOR make the cuts again, further adding more decision-making responsibilities to the universities in a time of uncertainty.