Tucson: U of A Warns of State Funding Drop and $9 Million Arizona Promise Program Cost Shift

University of Arizona Chief Financial Officer John Arnold told the Arizona Board of Regents on Thursday that the state's flagship campus faces a dual financial challenge in fiscal year 2027. State funding will decline and the university must absorb nearly $9 million in new costs from the Arizona Promise Program.

State funding retreats after one-time revenue fades

Arnold said the UA received significant one-time revenues in fiscal year 2026 that will not repeat next year. The largest source was funding tied to the Center for Advanced Molecular and Immunological Therapies, or CAMI, a 205,000-square-foot bioscience research hub being built in the Phoenix Bioscience Core.

"We had a number of significant one-time revenues that came to the university in fiscal '26, specifically around the CAMI construction project that won't be there in fiscal '27. And so, we have that change," Arnold told the board.

Arnold noted that the expenditures for the CAMI project also disappear, so the net impact is a reshuffling rather than a straight loss.

Arizona Promise Program shifts $9 million cost to UA

The Arizona Promise Program is a guaranteed scholarship initiative that covers full tuition and mandatory fees for eligible low-income students at the UA, Arizona State University, and Northern Arizona University. The program received one-time state funding in fiscal year 2026. That money will not carry into fiscal year 2027.

Arnold said the cost will shift back to the university. The UA expects an increased expense of almost $9 million as a result.

Enrollment strategy changes tuition revenue

The UA is intentionally shrinking its incoming class. The fall 2026 class is expected to be smaller than last year's. The fall 2025 class was already 19 percent smaller than the fall 2024 class, driven by declines in out-of-state and international students.

Provost Patricia Prelock and other UA officials have publicly discussed shifting enrollment strategy for the past year. The university is distributing less merit aid to out-of-state students. Officials say the goal is to create smaller "right-sized" classes and give more access to Arizona students and those who need financial aid.

Arnold told the regents that the UA brought in the same amount of money with fewer students in fall 2025 by being more selective with merit-based aid. But the further enrollment decline this year is expected to lead to less tuition revenue overall.

New budget model takes effect July 1

The UA is adopting a new budget model called Arizona Forward on July 1, the start of fiscal year 2027. Arnold described the model as "more transparent, student-centered, data-informed, aligned with the strategic imperatives, and hopefully predictable and sustainable."

The Arizona Forward model will distribute specific revenue streams to academic colleges based on teaching, enrollment, and research activity.

Regents say discipline on expenses keeps universities afloat

Bradley Kendrex, vice president of business management and finance for the Arizona Board of Regents, said all three universities under the board's oversight are projecting positive financial results for the year, even if close to break even.

"All three universities are projecting to end the year with positive financial results, even if that's close to break even," Kendrex said. "And a thread that you'll see throughout is that discipline around expenses has really been the driving factor that's allowed that to be the case."

The financial update comes as the Arizona Legislature works toward a July 1 budget deadline. State funding levels for higher education remain a key part of those negotiations.

"We're headed towards a balanced budget in fiscal '26," Arnold told the regents. "As we look into fiscal (year) '27, we really approach the budget process through the strategic imperatives that the president (UA President Suresh Garimella) has outlined for the board and for our community — success for every student, research that shapes the future, and engagement with our communities."