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<p class="MsoNormal"><span style="font-size:12.0pt">Dear Colleagues,</span><span style="font-size:12.0pt"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">The University’s unprecedented response to COVID-19 will have a significant impact to division and unit finances. This is not business as usual. To paraphrase Laura Scaramella, “this is business as
<i>unusual</i>,” and we need to adjust our mindset to flexibly respond for years to come.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Fortunately, the direction that ALVSCE began prior to the pandemic is still the right solution. Invest in ourselves and invest in instructional mission delivery in non-RCM areas: online, distance, global.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">CFO Rulney and Provost Folks expect something I’m calling a “flight to safety” by non-resident and foreign students. Students are expected to seek higher education close to home. These students represent
39% of the undergraduate student body. Yet, their financial impact is disproportionately higher, generating about 50% of the total net tuition revenue. Tuition revenue generates over $650 million annually of our $2.1 billion university budget.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Perhaps the flight to safety will work in the inverse and Arizona students who were enrolled out of state will turn to the University of Arizona for their education. We simply won’t know until we see who
enrolls this fall. Regardless what happens at the Tucson campus, online, distance, and global allow us to meet student needs where they are.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt">What to expect in FY20 – Current Fiscal Year<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Expect additional budget cuts on top of the RCM tax increases and budget reallocations we knew about at the beginning of this month. I have no idea how much more or when we will know.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt">What to expect in FY21<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:12.0pt">The revenue losses coupled with increased costs from COVID-19 will be significant. Expect deep budget cuts. The structure of support functions at the University will likely change to extract savings and
remove duplications.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Tax revenues to the state will decline due to the closure of restaurants, bars, and other businesses. My concern is that the state may enact budget rescissions to cope with the lost tax revenue. I will continue
to watch tax revenues closely. My concern aside, there could be a financial stimulus package from the federal or state governments that offsets declining revenues. Again, I don’t know.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt">What units must do<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Units must <b>aggressively invest all resources in our people immediately to advance critical mission growth, especially in distance, online, and global, and position our research to roar back as this crisis
abates</b>. Spending must be focused to achieve this, which includes hiring. If reductions in force become necessary, and a unit leader hires faculty, these people would NOT be the first to be laid off, so unit leaders who hire are implicitly choosing to
lay off faculty or staff currently employed.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Unit business offices must track all expenses incurred due to COVID-19, including unexpected financial impacts like lost revenues, all cost-shares/matches, and lost efficiencies and effectiveness.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="margin-bottom:12.0pt"><b><span style="font-size:14.0pt;color:#0C234B">Jeffrey M Ratje</span></b><span style="font-size:10.0pt;color:#767676"><br>
</span>Associate Vice President, Finance Admin Operations<br>
Division of Agriculture, Life and Vet Sciences & Cooperative Extension<br>
THE UNIVERSITY OF ARIZONA<span style="font-size:10.0pt;color:#767676"><br>
<br>
Forbes, 314c<br>
PO Box 210036 | Tucson, AZ 85721<br>
Office: 520-621-1468 </span><span style="font-size:9.0pt;color:#767676">| <br>
</span><a href="mailto:jmratje@email.arizona.edu"><span style="color:#767676;text-decoration:none">jmratje@email.arizona.edu</span></a><br>
<b><a href="https://www.compass.arizona.edu"><span style="color:#8B0015;text-decoration:none">www.compass.arizona.edu</span></a></b><span style="font-size:10.0pt;color:#767676"><o:p></o:p></span></p>
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