Regents Hold Special Board Meeting, Authorize Certain Debt Options, Table Others, for COVID-19 Financial Relief

The Arizona Board of Regents held a special board meeting on August 20 to address several critical items heading into the start of the Fall semester. The primary focus was on various university debt financing options that universities would like to explore to help mitigate the fiscal impact of COVID-19. Regents and university presidents received an extensive presentation from the system’s bond counsel on the various debt authority each university may legally pursue, including system revenue bonds and commercial paper for capital projects, and lines for credit for certain liquidity purposes. ABOR policy only allows university debt to be refinanced if a certain amount of overall savings is experienced. Given the significant financial losses due to the effects of COVID-19, the universities requested ABOR allow each university to restructure their debt to allow for savings in the current and next fiscal year even if the restructuring does not result in overall savings. The board approved this proposal which will allow the University of Arizona to free up cash over the next two years and contribute to the university’s overall fiscal health.

The board also engaged in a robust discussion around whether to seek statutory authority to issue debt for non-capital purposes, such as operational costs and covering budget shortfalls. Multiple regents expressed concern with this approach citing that funding day-to-day operations with incurred debt is not among best financial practices. One regent noted that universities should look first at reducing operational costs before considering additional debt. University CFO’s and Presidents noted that several universities in states that permit this kind of borrowing have utilized similar financial approaches. The discussion concluded with regents opting to table the proposal temporarily to allow for further discussion.

In addition to the general debt discussion, Regents also adopted a set of expectations surrounding reporting requirements and a notification process for updates regarding UArizona Global Campus, discussed the Arizona Teachers Academy and awarded UArizona $150,000 in state funding for Adaptive Athletics.

President Robbins Recently Appointed to State Board of Education & Attends First Meeting

The three public university presidents each serve a rotating four-year term on the state’s top K-12 education board, the State Board of Education, which was most recently held by Northern Arizona University President, Dr. Rita Cheng.

The SBE is responsible for adopting state education standards, testing requirements and the general governance of AZ public schools. University presidents who serve on the board often are looked to for insight on college readiness of K-12 students and cultivating a college-going culture in the state’s secondary schools. Robbins attended his first meeting as a board member on August 21st, where the SBE discussed online distance learning plans for the 2020-2021 school year, the state’s education savings account system, known as Empowerment Scholarship Accounts, and continued efforts to reform statewide assessments in AZ high schools.