January 23, 2009

Officials offer budget facts

Posted: January 23, 2009

Current budget provides ASU with full-time equivalent student funding equal to 1980.

The over $200 million budget cuts assessed by the Arizona Legislature over the past two years have had a significant impact on the University system, one which has resulted in higher tuition and fees for students.  ASU alone has seen a funding decrease from the state of over $100 million since the beginning of FY08.  In addition to the cuts, the state deferred the cash distribution of about 11% of the reduced funding into the next year, and is considering increasing that deferral to 22%.

The following list of facts and fiction is designed to put the cuts and the debate into better context and dispel some of the myths surrounding the university’s budget.

 
Fiction:
  The cut to ASU is a small fraction of the university’s overall budget.

Fact:  The actual percentages are 26% of the state General Fund appropriation per full-time-equivalent student in FY08 – the year that the state budget reductions began.

The percentages quoted by some legislators are based on a total budget that includes hundreds of millions of dollars in federal research funding as well as book store and meal plan purchases and even football ticket sales.  ASU’s research enterprise and its ancillary operations from the bookstore to the football team are – and must be – financially self supporting.    In fact, some of these activities subsidize a portion of the instructional budget.

If ASU were to close its dormitories and bookstore and stop doing federally funded research, the revenue associated with those activities would also end.  So it is a fiction that ASU has other revenue sources that could begin to replace the loss of state revenue. 

State revenue and the tuition paid by students accounted for 76% of ASU’s instructional and student-related budget last year.  To make up the mid-year loss of state funding in FY09, ASU received federal stimulus funding, and expects to receive a modest amount of federal stimulus funding for FY10 to help bridge the cuts.  An economic recovery surcharge, assessed in addition to tuition, was instituted in FY10 to mitigate the damages the cuts would have had on the university. 

For FY11, Arizona State University proposed a two-year tuition plan with the premise that the state investment it receives will remain at its current level.  Over two years, the tuition increases will serve to replace the temporary federal stimulus funds and to maintain the current (reduced) level of total funding support per student.  It does not restore the over $45 million of state budget cuts that have not been covered temporarily by stimulus and surcharge.  It will also maintain ASU’s commitment to financial aid and provide sufficient set aside so that the institution can continue not to exclude any student on the basis of need. 

 

Fiction:  The legislative budget cuts really didn’t hurt ASU.  The university has gotten a lot of new state money in recent years.

Fact:  The budget cuts took ASU state funding levels back 30 years when adjusted for inflation, from $8,111 per full-time-equivalent student at the beginning of FY08 to $5,970 in FY10.

The primary mechanism that the State of Arizona has used to fund its universities is an enrollment growth formula – if your enrollment increases your state funding increases by a proportional amount.

The State of Arizona has experienced substantial population growth and more qualified students are choosing to attend ASU every year, resulting in and enormous demand for and growth in the university’s enrollment – from 43,00 students in 1989 and 50,000 students in 2000 to more than 68,000 students today.  Enrollment growth funding over the last 20 years has not kept pace with actual enrollment growth.  So, most of the “new money” ASU has received in recent years is “catch-up” money, intended to bring full-time-equivalent student funding back to previous levels.

Furthermore, the state has no regular capital construction or maintenance budget for its universities.  Twice over the last ten years ASU has gotten a special appropriation to build badly needed new buildings.  These additions are in no way “excess funds” that the university can cut without there being drastic consequences.

 

Fiction:   ASU is unwilling to make cuts.

Fact:   ASU has taken more than $50 million in permanent state funding cuts, and has eliminated nearly 950 staff positions and 250 faculty associate positions.  We have disestablished schools and merged academic departments while managing to preserve academic quality.

 

Fiction:  These cuts are no more than short-term pruning or fat-cutting.

Fact:  The intended or unintended consequences of these cuts would be to more ASU away from being a research university – which it became 50 years ago by vote of the people of Arizona – and return it to levels of funding not seen for 30 years.

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Julie Newberg , julie.newberg@asu.edu
Media Relations