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Donors were given the opportunity to opt out of this change, says the letter from UA Foundation President and CEO John-Paul Roczniak.

The change, proposed by the university, will take effect at the end of this fiscal year on June 30, when the payout for “all non-scholarship endowments� will be transferred to legal ownership of the UA, the letter says.

Endowments are invested private donations designed to provide permanent, long-term financial support for the university. Rather than spend the original contributions — the principal — the UA Foundation invests the funds and the UA uses a percentage of the annual earnings to pay for programs, according to a UA website.

Under the long-standing current practice, the UA Foundation distributes the endowment payout funds on a monthly basis on the annual interest rate of 4.25% to a separate foundation account. The funds in this account are held by the foundation until they’re spent by the university for the “charitable purpose specified by the donor,� Roczniak’s letter says.

These funds will now be held under legal ownership of the UA instead of the foundation. The UA says they will still be distributed for the donor’s specified charitable purpose.

“The change does not impact the endowment principal, which will remain at the UA Foundation under the fiduciary oversight of its Board of Trustees,â€� UA spokesperson Mitch Zak told the ÃÛÌÒÓ°ÏñAV Monday.

The change “provides the university with more direct visibility into endowment payout funds, helping ensure donor resources are used in a timely manner and in accordance with the terms of each endowment agreement,� he wrote in an email. “This allows the university to more efficiently put philanthropic support to work for students, research and other donor-specified priorities.�

Zak said units at the UA, which can spend or reinvest endowment interest payouts, may continue to reinvest unspent distributions when appropriate. To the Star’s follow-up questions, he said these funds are not “endowment principal funds, and they do not become unrestricted university funds.�

“However, because they are university-held cash balances designated for donor-approved purposes, they are included in liquidity measures,� Zak said. “The change improves visibility into those resources without altering the restrictions governing their use.�

While Roczniak’s letter to donors, first reported by , says the interest money will be used for purposes specified by the donor, it also says the money will help the UA meet the days of cash on hand target mandated by the Arizona Board of Regents and the UA’s bond rating agencies.

UA’s current 78 days' worth of cash on hand is 65 days lower than the 143 days of cash on hand that the Arizona Board of Regents requires the UA, Arizona State University and Northern Arizona University to have.

A donor to the UA Foundation, who asked that their name not be used, told the Star they question whether the foundation has the legal authority to transfer the funds to the UA, and expressed concerns about use of the funds for the days' worth of cash on hand metric.

“The big question also is, this is not what the days of cash on hand is meant to measure. Because these monies are not available to the university,� the donor said of the endowment interest payments, which have specified charitable purposes.

They said donors have always been assured in the past, even after the UA’s 2023 financial crisis of a massive budget deficit and low days of cash on hand, that their donations are separate from the university and can’t be used to help shore up the university’s finances.

The donor said the $70 million being transferred by the foundation is the total amount from approximately 700 donor accounts, and that only a minority of these donors were reached out to and given a chance to opt out of the change. They said the accounts reached out to were single-donor accounts whose donors are still living.

Zak did not answer the Star’s questions on if the UA Foundation has the legal authority to transfer these funds to the UA; how many donors have opted out of the change; if the accrued interest could now be used however the UA wishes; and how these funds can be used to increase the UA’s days of cash on hand.

The UA Foundation is a non-profit 501(c)(3) corporation, a specific type of charitable organization that is exempt from paying federal income taxes, and is a legally separate entity from the university itself. It serves the university by maintaining relationships with donors and raising money for the university.

The Arizona Board of Regents, which oversees the state’s three public universities including the UA, said in a statement Monday to the Star: “University foundations are legally separate and independent non-profit corporations whose charitable purpose is to aid and promote universities. The board does not run them, but sets clear expectations for how universities work with foundations to make sure donations are handled properly.�

A day’s worth of readily available cash is generally defined as the amount needed to cover operating expenses for a day. According to , “monthly days cash on hand represents the number of days the university can fund expenses with cash and investments that can be liquidated within one month.�

UA Senior Vice President and Chief Financial Officer John Arnold said last week that the university hopes its number of days' worth of cash on hand, now 78, will be a little higher by June 30, and six days higher by the end of next fiscal year.

In fall 2024, Arnold had said the UA would take a “decade plus� to restore its cash reserves, after facing a $177 million budget deficit revealed in 2023 by former UA President Robert Robbins and eliminated in June 2025.

“Because we’re fixing a lot of things at the same time that the cash on hand has gone so low, that it doesn’t make us comfortable at all. … But we don’t want to somehow hit that number in unhealthy ways, and so, we’re thinking very carefully about it,� and opting for a longer-term strategy, UA President Suresh Garimella said in fall 2024.