The state government general fund shortfall in the current fiscal year is projected to be between about $550 million and $1 billion. This shortfall will need to be eliminated through spending cuts and/or revenue enhancements. The Legislature has demonstrated a preference for spending cuts. However demand does not decline during a recession for most public-sector services, including university services. Any reduction in funding for universities will have a negative and direct effect. A reduction in state government spending for universities of around $200 million would cause direct and indirect job losses of approximately 4,000. A substantial decrease in state government funding for universities will have negative consequences beyond these short-term effects.

Enrollment in degree-granting institutions of higher education in Arizona as a percentage of the state’s population was about equal to the national average in 2003. The Arizona figure was higher than the national average at private for-profit institutions, slightly greater than the national average at public institutions, but considerably below average at private not-for-profit institutions. Total revenues and expenditures per student at Arizona institutions of higher education were far below the national averages in 2003, among the least in the nation. Among public institutions, Arizona’s higher education revenues and expenditures were not as far below average, but still ranked among the bottom 10 states in the nation.