Iowa universities at beginning of significant transformation

By 2030, the number of 15- to 19-year-old Iowans - when many either are planning or starting to attend college - is expected to be 16 percent below what it was in 2000.

The number of 20- to 24-year-old Iowans - those of traditional undergraduate or graduate school age - also is projected to drop by more than 15 percent, according to the U.S. Census Bureau.

Total college enrollment across the country and in Iowa has been falling in recent years, according to the National Student Clearinghouse Research Center.

And the proportion of Iowa's public university budgets coming from state appropriations has dropped dramatically since 1981 - from 77.4 percent to 35 percent in the current budget year.

In light of 'severe economic constraints” changing the higher education landscape, Iowa's Board of Regents recently embarked on two significant projects aimed at 'strengthening and reinventing our universities.”

'The status quo is unsustainable and therefore unacceptable if we are to maintain our high standard of academic excellence,” board President Bruce Rastetter and regent Larry McKibben wrote earlier this year in a letter launching an 'efficiency and transformation” review of Iowa's public universities. 'The significance of this transformative review cannot be overstated.”

In addition to the efficiency review, the board also recently changed its method for allocating state dollars to the University of Iowa, Iowa State University and University of Northern Iowa.

The previous model was history-based, with funding increasing or decreasing each year from the previous year's allocations. This year under that funding model, UI received 46 percent of the state support, ISU received 36 percent and UNI received 18 percent, according to regent documents.

The new model - approved in June to begin in the 2016 budget year - proposes distributing state dollars based on enrollment and performance metrics. Enrollment will account for 75 percent of the allocations, under the new model, with 60 percent tied to resident enrollment, 5 percent to graduate and professional resident enrollment, and 10 percent to access, which is measured by enrollment of specific types of students, such as low-income, ethnic and veteran students.

Another 20 percent is based on performance metrics, such as progress toward a degree, degree completion and research contributions. The last 5 percent is left up to the board to decide.

Regents have said their aim with the funding change and efficiency review is to link support with its mission and goals while maximizing resources in hopes of keeping the campuses 'viable, productive and sustainable.”

Whether their methods will work depends on whom you ask.

‘A much better way of budgeting'

ISU leaders said they have an internal budgeting system that distributes resources to colleges based on the students they're serving.

'In that respect, we are a microcosm of the new state performance-based funding model,” said ISU Associate Vice President Miles Lackey.

And, Lackey said, it's effective.

'It's a much better way of budgeting all together,” he said. 'When you can scale your revenue and have a revenue source that is flexible to account for incremental costs …

it's a more intuitive way of budgeting.”

Because residents make up a greater percentage of the ISU and UNI student bodies, the new funding model would benefit those schools while taking millions from UI. If rolled out over one year, the new model would pull $46.5 million from UI and divide it between the other two campuses - ISU would get an additional $22.8 million and UNI would receive an extra $23.7 million.

To minimize that effect, the board has capped the amount of money that can change hands at 2 percent of a school's 2013 operating revenues - meaning no more than $12.9 million could be reallocated from UI in a single year.

The Board of Regents has asked the state to provide an additional $12.9 million in the next budget year to prevent any hit to the UI, and the university's administrators have said they plan to grow in size and enroll more resident students in hopes of decreasing the losses in subsequent years.

But some have raised questions about how the focus on enrolling in-state students might affect the campuses, their programs and the state, and whether it will ramp up competition among public, private and community colleges.

Lackey said he doesn't think the new funding model will drive up competition because students still are looking for a school that matches their interests. ISU has surpassed UI as the largest public institution in the state, now recording 34,732 students compared with UI's 31,387 students.

Behind that surge is demand for the types of programs ISU offers, Lackey said.

'There is more demand for engineers and graduates in the agriculture and life science enterprises than anyone could have imagined,” Lackey said.

Because in-state tuition doesn't cover the full cost of those students' education - as out-of-state tuition does - Lackey said it makes sense to fund based on enrollment.

'There does need to be a revenue model in place that recognizes that,” he said.

With additional resources, Lackey said, ISU will support its programs experiencing growth.

'We will invest those in a way to ensure that we continue to deliver on that promise to provide students with a great educational experience and great college experience - inside the classroom and outside,” he said. 'Having a flexible and responsive funding model helps make that possible.”

As to how the changes of today will affect the campuses tomorrow, or in five to 10 years, Lackey said it's hard to say.

'I would hate to speculate about what students would have attended one college before and now would attend another,” he said. 'That's impossible to know.”

‘Not at all sure'

The University of Iowa has said one way it will look different in the future - based on the change in state funding - is its size. It is going to get bigger, UI President Sally Mason has said.

The goal is to grow by about 4,000 students in five years, said Joseph Brennan, UI Vice President for strategic communication. And the aim is not just to increase Iowa residents but out-of-state students as well, he said.

In preparation for more bodies on campus, UI administrators are moving forward with plans to build another new residence hall on the east side of campus - in addition to one underway on the west side. And, Brennan said, more students will require more faculty.

'But the growth that we will do will not change our fundamental mission as a research institution that provides undergraduate, graduate, and professional degrees,” Brennan said. 'We will just be a bigger version.”

Should the Legislature allocate higher education resources for the next budget year as proposed by the Board of Regents - without providing the additional $12.9 million to shield UI before it can increase resident enrollment - Brennan said the campus will manage its losses.

'No one wants to have budget cuts, but we have managed budget cuts in the past,” Brennan said. 'And we can manage our way through this.”

Savings incurred from the board's efficiency review also could help the university in that endeavor, according to Brennan.

'Our strong commitment to quality education and the important research work we do will not change, regardless of how the revenue mix might,” he said. 'We are committed to it not having an impact on the educational mission of this institution.”

But regent Bob Downer, who has asked the board to revisit the model, has concerns.

'There are a number of factors in this that have not been given sufficient consideration, and I really am not at all sure how this is going to play out,” Downer said.

His primary concerns lie with the potential effect on graduate and professional programs. Without 'substantial funding over and above the allocation of state appropriations that this formula would provide,” Downer said, graduate and professional colleges and programs are going to take 'a tremendous hit.”

'Unless there are other funding sources determined, I don't know how these programs can maintain their quality with tuition at the present levels,” he said.

And increasing tuition could force graduates to leave Iowa in search of higher-paying jobs or cater only to students who are independently wealthy, or both, Downer said.

'I don't think either of those is in the public interest,” he said.

‘A good first shot'

Among the main problems the Board of Regents aimed to fix with its new allocation model is the funding inequity that long has existed for UNI. Because 91 percent of its students are undergraduates from Iowa, it has been hit harder by the steep decline in state support.

Based on the current year's allocations, the UI gets $14,469 per resident student, ISU receives $9,155 per resident student and UNI gets $8,758 for each of those students.

With additional resources, UNI spokesman Scott Ketelsen said, administrators first would put money into scholarship opportunities.

'That would be our top priority,” he said.

UNI also would put money toward enrollment management, where it could 'see a return on investment in students coming to UNI,” according to Ketelsen.

How the new model might affect competition from its public university counterparts is 'certainly a topic of discussion,” Ketelsen said. But, he said, UNI is in favor of the new model, as it makes more sense and puts the focus on Iowa students.

'What we have been doing is not sustainable and doesn't make sense, and it isn't acceptable,” Ketelsen said.

Still, he said, there could be room for improvement in the new model - making it difficult to guess how it all will shake out in the coming years.

'This is our first educated guess,” he said. 'We might need to adjust it. But this is our first shot. And it's a good first shot.”