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Shelton memo explains how UA will use stimulus funds

President tries to quell confusion over use of money

Employees at the University of Arizona who are counting on the influx of federal stimulus money to save their jobs may be misunderstanding how the stimulus funds can be used, UA’s president warned Friday.

Also, students should prepare themselves for an increase in mandatory fees, if not a tuition surcharge, despite the money UA may receive from the stimulus.

Those were the unspoken messages in an all-campus memo from President Robert N. Shelton on Friday meant to quell “considerable and justifiable confusion” about use of the funds.

“With the intent of clarifying how the federal stimulus funds will impact FY2010 budget planning for The University of Arizona, I write to share what we currently know and the steps we are taking to manage the very challenging budget imbroglio that we face,” Shelton stated in the memo.

Congress passed the $787 billion Economic Recovery and Reinvestment Act in February, $53 billion of which is earmarked for a “state fiscal stabilization fund.”

Arizona’s portion of that fund is about $1.2 billion, and about $840 million is earmarked for public education.

But it isn’t just a blank check, Shelton explained in his memo.

“These temporary funds cannot be used to replace cuts that have been taken this year from our permanent state appropriation,” Shelton wrote. ” . . . From an operational perspective, there is a huge difference between permanent and temporary funds.”

The state’s higher education system budget has been cut about $190 million this fiscal year, which began July 1. UA’s portion of those cuts was about $77 million, resulting in departmental mergers, layoffs of at least 200 people and leaving about 400 positions unfilled.

Because the money is a one-time funding boost, it cannot be used to fill permanent positions, Shelton emphasized.

” . . . we can hire people on permanent funds because the money is built into our base budget and we will (barring cuts to the appropriation) have those funds available in future years,” Shelton wrote. “Temporary funds are non-recurring, limiting their use, in practical terms, to one-time expenses (e.g., renovating a building).”

Shelton also said that the stimulus funds will not resolve “significant permanent gaps in its funding,” hinting that students should expect increased mandatory fees to cover the hole between what UA needs to operate and what state appropriations and the stimulus provide.

“To address this gap, the Board of Regents has asked (state universities) to develop funding models that would allow for increased surcharges in tuition and fees to cover the gap in operational revenue,” he wrote.

However, the stimulus will help keep that tuition or fee increase lower than it would have been, said UA Assistant Vice President, Budget Director James Florian.

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