Arizona Forward: A Q&A on the university's new budget model
By Andy Ober, University Communications
Arizona Forward creates incentives for colleges to support student success and enrollment growth by encouraging them to develop new programs and expand research activity.
The University of Arizona will adopt a new budget model called Arizona Forward for distributing specific university revenue streams to academic colleges based on teaching, enrollment and research activity. On July 1, the start of the new fiscal year, Arizona Forward will be incorporated into the university’s budget and planning processes to strengthen financial planning.
In this Q&A, Richard Cate, senior advisor to the president for operations, outlines the incentive-based approach, discusses its benefits and explains how employee input helped shape the model.
What is Arizona Forward, and why is the university implementing a new budget model?
Arizona Forward is the university's new budget model that helps determine how net tuition revenue and facilities and administrative cost recovery revenue are distributed to colleges and units. ‘Net tuition revenue’ is the actual income we retain from tuition after deducting financial aid and other discounts, while ‘facilities and administrative cost recovery revenue’ is the funding the university receives from research grants to cover the overhead costs of supporting research.
Richard Cate
The new model calculates how these revenue and funding sources are allocated to colleges based on key factors including student credit hours, student enrollment and research activity. Support and administrative units will continue to receive resources through central allocations connected to the work and services they provide throughout the university. Other revenue sources, such as state funding and gifts, remain outside the formula.
Arizona Forward will bring greater transparency to how resources are allocated and encourage academic units to strengthen their teaching and research activity and offerings. The model creates incentives for colleges to support student success and enrollment growth and improves our long-term financial planning and accountability.
How is money allocated under Arizona Forward?
Arizona Forward determines how net tuition revenue and facilities and administrative cost recovery revenue are divided among colleges, but it does not change the total amount of revenue the university receives.
For the net tuition that undergraduate students pay, the funding is shared between the colleges that own the courses and the colleges where students' majors, minors and certificates are housed. For graduate net tuition, the model uses a similar approach, with the funding shared between the colleges that own the courses and the colleges offering the graduate programs, including minors and certificates.
With research grants, indirect cost recovery funding is also distributed through the model. The majority of that funding goes to the college with a portion supporting the Office of Research and Partnerships. This incentivizes research activity and supports the university's overall research infrastructure.
The All Funds process remains the university's primary budgeting process, where university senior leaders review revenues, expenses and strategic priorities together. The model helps inform the final budget decisions that are made through the All Funds process. The formula will use a three-year average of undergraduate student credit hours and enrollment activity to prevent large swings in funding at the college level. Arizona Forward is about long-term incentives and transparency, not surprise short-term changes.
What are the main objectives and benefits of this model?
Arizona Forward aligns resource allocation with core university activities. This activity-based model allows academic units to see clearer connections between their activity and the resources they receive. It also encourages colleges to develop new programs, grow enrollment and expand research activity, and advance student success.
The budget model's funding structure incentivizes research activity and supports the university's overall research infrastructure.
This model takes effect on July 1. What does day one look like for colleges?
This transition is designed to avoid disruption. The first year will focus on helping colleges understand the model and incorporate it into their planning processes. Fiscal year 2027 budgets will be set through the All Funds process, and we will use the first year of Arizona Forward to incorporate the model into long-term financial planning and evaluate it as part of the university’s budget and planning processes.
How was the campus community involved in shaping the model?
A working group with representation from across the university helped shape the model. Over half of that group is made up of faculty and staff from academic colleges. Over the past eight months, we have hosted more than a dozen campus presentations and gathered feedback from academic leadership, faculty governance, Staff Council, finance officers and other campus leaders.
In all, Arizona Forward reflects more than a year of design, testing and scenario analysis along with direct input from college financial partners and shared governance groups that helped refine the model.
To find out more about the new budget model, check out the Arizona Forward Overview document or visit the Arizona Forward page on the Office of Budget and Planning website.