Gov. Katie Hobbs now owns UA's budget crisis, and that could be a good thing

When Gov. Katie Hobbs pushed the nuclear button on the people who are working to save the University of Arizona from its budget disaster, we expected firings and forced resignations to follow.

Why?

Her words were tipped with warheads.

“Appalling and unacceptable,” she called the actions of the Arizona Board of Regents in her Feb. 26 statement.

University leadership has been “clueless.”

“Regents appear more concerned with saving face than fixing the problems they created.”

“Time for them to come down from their ivory tower.”

Gov. Katie Hobbs wailed and waited

When the governor had spoken, Arizona awaited her next move.

Nothing happened.

Hobbs set a meeting for March 6 to discuss next steps and then spent the week in Mexico on a trade mission.

That seemed like a mistake.

When you roar as loudly as the governor had in her statement, you signal that heads are about to roll.

When those heads don’t roll, you leave yourself with leaders whom you’ve undercut and publicly humiliated, who must now manage their reputational damage along with the financial crisis before them.

Developments since then have begun to change our mind.

Then, UA's budget crisis grew worse

First, the crisis grew worse.

The university’s troubles caught the attention of the bond market. Moody’s this week revised its outlook on the university’s bond rating from stable to negative, according to the trade newspaper The Bond Buyer.

Also, this past week, the U.S. Department of Education signaled it intends to force UA to pay back millions in student loans from its acquisition of the online and scandal-ridden Ashland University, a for-profit operation.

Judging the governor’s anger by this more complete picture makes it a bracing slap that speaks to the seriousness of this issue.

University administration through poor budgeting practices, risky ventures and mismanagement had already blown a $177 million hole in the UA budget and will now have to balance their mistakes with layoffs and program cuts.

For their part, the Arizona Board of Regents failed to provide the oversight that might have caught the problems.

UA and Regents participate in the pain

Second, when the governor shook the rafters with her strong words, she also roused the Regents and UA administration to take their own independent actions.

Fred DuVal announced that he would step down as chairman of the Board of Regents and said he would continue to work with UA in the two years left in his board term.

John Arnold stepped away temporarily from his job as Regents executive director, and will continue in his temporary role as UA’s chief financial officer.

Robert Robbins, UA president, told Regents he wants to take a 10% pay cut and cuts in bonuses.

With these moves, the three leaders signaled they heard the governor and respect her leadership.

More importantly, they participate in the pain they will soon inflict on the university family with layoffs and program cuts.

While that is not likely to appease UA students, staff and faculty who chant “chop from the top,” it does send the signal that sacrifices will be felt at all levels.

The governor owns UA's problem now

The governor’s damning statement on the Regents and UA administration had another aroma to it. It seems like it could be a move to distance herself from a problem she didn’t create.

If that in fact was the intent, it has had almost the opposite effect. Through the headlines she generated, she has lashed herself even more tightly to the UA budget crisis.

Hobbs will be expected to see this through until it is solved, because she has assertively taken ownership.

That’s good for higher education.

The University of Arizona is one of the oldest and most important institutions in the state. Its current leaders foolishly fell for a scheme executed by a number of for-profit schools to merge with state universities to gain respectability and take cover from creditors and lawsuits.

Many of these for-profit schools had acted in predatory ways, charging high tuition to students for degrees of little worth.

Their reputations ride on this now

As other public universities in other states eye similar deals, UA has become an object lesson — a horror story — for what happens when you surrender your good reputation to chase revenue streams in the murky world of for-profit education.

To her credit, Hobbs and her staff have been vigilant. The university and Regents told The Arizona Republic editorial board they have been in constant contact with the governor’s office, meaning the Ninth Floor appears to be flyspecking every move.

With her very public display of pique, Katie Hobbs has put everyone on notice that their reputations ride on the outcome of this enterprise to rescue university finances.

Including her own.

This is an opinion of The Arizona Republic's editorial board.

This article originally appeared on Arizona Republic: Gov. Katie Hobbs now owns UA's budget crisis. That could be good