Iowa Board of Regents universities facing an additional $2.8 million in state cuts

News comes days after University of Iowa rescinds scholarships

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The Board of Regents’ public universities learned Friday afternoon they’ll have to cut another $2.8 million from their current-year budgets as part of $11.5 million in Department of Management reductions that had to be parsed out among various state agencies.

The cuts are part of a statewide $117.8 million de-appropriation package lawmakers passed in January in response to budget shortfalls, but the Department of Management had 30 days to decide how to implement its $11.5 million in cuts.

The new $2.8 million in Board of Regents reductions are the largest among any agency in this second round of reductions, and they come on top of $18 million in cuts lawmakers already approved for the board in the current budget year. When divvied up, the $18 million took $8 million each from University of Iowa and Iowa State University and $2 million from University of Northern Iowa.

The new regents cuts are split as follows: $1.2 million from UI, nearly $1 million from ISU, and $522,500 from UNI. The Department of Management cuts announced Friday also took another $1.8 million from community colleges, which already were facing $3 million in cuts this year.

Including both rounds of cuts, higher education is losing a total of nearly $26 million to its base funding — meaning the money will come not only out of this year’s budget but out of subsequent annual budgets, save unknown increases that have yet to be approved by lawmakers.

Josh Lehman, a spokesman for the Board of Regents, said on Friday, “We were aware there might be additional budget cuts coming, which we have just received.”

“All cuts are hard, but we will manage them the best we can,” he said.

The news comes one day after university presidents reported to the Board of Regents measures being taken to adjust for their shrinking budgets. In addition to delaying deferred maintenance, leaving open vacant positions, cutting staff travel and training, and reducing other services, UI announced this week it was notifying 2,440 recipients of non-need and non-merit-based scholarships that their anticipated aid has been rescinded for the next school year.

By cutting the scholarship programs, the university expects to save $4.3 million. But UI President Bruce Harreld said — without increases in state support — he also will need to raise tuition sharply over the next five years in order to accomplish its strategic goals.

The UI announcement prompted sharp backlash from students and lawmakers, including House Speaker Linda Upmeyer, R-Clear Lake, who on Thursday called the UI’s student aid cuts “politics at its worst.”

“In January, (Board of Regents President Bruce) Rastetter said that the regent universities would be able to make reductions, based on the governor’s budget recommendation, with minimal impact on students,” Upmeyer said in a statement. “We then softened those reductions further.”

Instead of $25 million from the regents, as was proposed by Gov. Terry Branstad, the Legislature in late January decreased the hit to the regents to $18 million.

But weeks earlier, UI administrators warned lawmakers that a wide range of cuts could impact student scholarships, according to documents obtained by The Gazette.

In a report to the state’s Department of Management in December, the university laid out the potential impact of a 3 percent cut in appropriations, equal to $7.4 million, a 4 percent cut, equal to $9.9 million, or 5 percent cut, worth $12.4 million.

Any of those cuts, according to the report, would require the university to “deploy a much stricter resource allocation prioritization process over the next year and beyond.”

Specifically, according to the report, statewide services, academic services, and student financial aid would be reduced if state appropriations are cut.

“A permanent reduction of any magnitude in the University of Iowa’s appropriation will be difficult to manage given today’s extremely competitive higher education market, coupled with the university’s dedication to offering excellent academic programs to students from Iowa, the nation, and the world,” according to the report.

In it, administrators also warn about the need to increase tuition — should state funding continue to dry up.

“In order to maintain these programs and services, tuition increases would be needed to backfill the loss of state resources,” according to the university’s December report to the state.

Students directly impacted by the scholarship cut have spoken out about their losses.

“You just robbed me of $2,600 I earned for my academic performance,” one UI student wrote on his Facebook page this week. “Hopefully I can still afford to pay for my last year in school so I can still graduate — with honors.”

Upmeyer told The Gazette she hopes the university reconsiders its position on scholarships.

But Sen. Joe Bolkcom, D-Iowa City, said he thinks the Legislature needs to take some responsibility for its defunding of higher education in Iowa.

“The Legislature has not been very kind to the public universities for the last number of years,” he said. “They have managed as best they can with the resources they have, but at some point tough decisions have to be made that people are not going to like.”

“I’m afraid we are at this point,” Bolkcom said.

Although Bolkcom said he didn’t see the UI’s report to the Department of Management listing potential impacts of state funding cuts, he isn’t necessarily surprised that the late cuts came with some “negative consequences.”

And yet, Bolkcom said, he also understands the pain being felt on the part of students.

“I have gotten several emails from parents who were depending on this money to cover their college expenses, and they’re madder than heck,” he said. “I totally appreciate the perspective of those parents and students. It’s not right what’s going on here.”

University of Iowa response to additional cut

In response to a request from the Iowa Department of Management, the University of Iowa submits the following report to illustrate the potential impact of a 3%, 4%, or 5% cut to appropriations in SFY 17.

A permanent reduction of any magnitude in the University of Iowa’s appropriation will be difficult to manage given today’s extremely competitive higher education market, coupled with the university’s dedication to offering excellent academic programs to students from Iowa, the nation, and the world.

Just as the state strives to compete for talent and to attract companies nationally and internationally, so does the University of Iowa compete for the most talented faculty, staff, and students. To support this effort, both the university and the Board of Regents, State of Iowa, recently completed strategic plans that will pay long-term dividends for Iowans.

The SUI strategic plan for 2016 to 2021, if successfully implemented, will help the university achieve the results our students and alumni and the citizens of Iowa expect. Previous strategic plans were adopted with similar goals, however, the funding needed to fully implement them fell short. This lack of resources has led to a drop in national rankings relative to our peers over the last decade.

For SFY 17, the legislature appropriated—and the governor approved—$232.2M to the University of Iowa. This amount represents 31.5% of the university’s General Education Fund (GEF). Tuition and fees account for 62.5% ($459.8M) of the GEF, with indirect cost recoveries on federal research accounting for the balance ($44.1M, or 6.0%).

A 3% ($7.4M), 4% ($9.9M), or 5% ($12.4M) permanent reduction in the university’s appropriation will require the university to deploy a much stricter resource allocation prioritization process over the next year and beyond, in order to implement its strategic plan successfully.

In particular, the following programs and services will be reduced if state appropriations are reduced:

• Statewide services

• Academic programs

• Student financial aid

In order to maintain these programs and services, tuition increases would be needed to backfill the loss of state resources.

Over the past 20 years, nationally and in Iowa, there has been a shift in who pays for public higher education—from the public to the student. The difference between the University of Iowa and its peer group is the rate at which tuition has increased. The University of Iowa has continued to have the lowest resident undergraduate tuition among its peer group, and is more than $3,000 below the average tuition of its peers. The consequent lack of resources has constrained the university’s ability to carry out its mission for the citizens of Iowa.

This video about the University of Iowa budget provides context about this continuing trend.

Additional resources will be required in order to implement the strategic plans of the university and the Board of Regents, State of Iowa. In the absence of new resources—or increases in appropriations or tuition—the university will not be able to fully carry out its mission and fulfill its commitments to the people of Iowa, the nation, and the world.

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