University of Iowa has used $25M in P3 funds for hiring, retention

Nearly half of $15 million the University of Iowa has withdrawn for the upcoming budget year from a $1 billion P3-related endowment fund — created for and committed to supporting the UI strategic plan and its core teaching, research, and scholarship missions — will go toward faculty compensation and a $10 million renovation of its Performing Arts Annex.

“The updated facility will better support the needs of students and faculty in the department and encourage further collaboration with other performing and visual arts programs,” according to a UI announcement detailing how the campus will allocate funds from its public-private utilities partnership in the fiscal 2026 budget year that begins July 1.

The $3 million in P3 funds going in the new year toward the Performing Arts Annex renovations — which are expected to wrap in August 2026, providing a new home for the Department of Dance — adds to the more than $6 million the university already committed to the project from its P3 endowment fund in previous years.

Additionally, the university has committed $4 million in FY26 to an ongoing “High Impact Hiring Initiative,” aimed at helping colleges and departments recruit and retain elite faculty. That $4 million adds to $21.25 million UI has pulled from its P3 endowment fund since 2021 to hire and retain faculty — amounting to nearly a third of the more than $80 million the campus has distributed to date from its P3 endowment toward strategic plan initiatives.

“The success of the (hiring initiative) project has led to continued funding and an expansion of the initiative,” according to the university, reporting its support of 75 faculty recruitments and 32 retentions across 10 colleges since 2021, when the university first started allocating P3 funds.

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UI P3 allocations support facility upgrades, faculty recruitment and retention

‘Key infrastructure’

At the public-private partnership’s inception in 2020 — when the university agreed to let Engie operate its utilities system for the next 50 years in exchange for a $1.165 billion up-front payment, which the university placed into an endowment — the campus expected to distribute $15 million annually from that fund “through an open and transparent grant process.”

“Anyone in the campus community will be able to submit a proposal for a one- to three-year grant that supports the university’s strategic plan,” UI officials said in 2021. “Proposals will then go through a vetting process.”

The university that first year funded five projects, with the biggest award of $4.25 million going toward the hiring initiative. It funded eight projects in 2022 and another eight in 2023, including $7.5 million for the hiring initiative.

Before the start of the 2024 budget year, the university changed its P3 guiding principles to state “remaining funds may be used for campus projects of high strategic importance, such as key infrastructure projects.”

In every year since that change, P3 funds have gone toward the Performing Arts Annex renovation. The university also that year changed its distribution methods to allow funds to be reserved and awarded throughout the year — instead of all at once.

With only one project of 11 applicants chosen for P3 funding so far for FY 26 — in addition to the Performing Arts Annex and the hiring initiative — the university still has $7.36 million to distribute.

‘Lack of transparency’

And, going forward, the university has committed to be more transparent and organized about its handling of P3 funding after internal auditors earlier this year found the program to lack clarity, structure, documentation, and broad oversight.

“There have been annual changes to documents and procedures causing misunderstandings of the P3 management process by stakeholders,” according to the audit. “These procedures include management activities such as fund pullbacks, budget revisions, and no-cost extensions to projects.”

The program didn’t immediately need “fund pullback” procedures for projects with remaining funds or that are not developing — “due to not being required for two to three years after the initial awards.”

“These procedures are now necessary but are not yet finalized due to the lack of an agreed upon process,” according to the audit.

Another finding criticizing P3 program oversight notes, “Responsibility for the day-to-day oversight of awarded funds and related expenses is not clearly defined and communicated to department and organizational stakeholders.”

“The lack of clear oversight increases the risk of misappropriation of assets and projects that do not deliver stated objectives,” according to the audit.

Because financial oversight expectations haven’t been documented, financial information isn’t consistently provided to project stakeholders — including approved budgets, revisions, subaward accounts, and other data.

“The lack of transparency has resulted in four of 17 reviewed awards having one or more incomplete monthly account reconciliations,” according to auditors. “Additionally, expenses have exceeded the awarded amount for one project, and remaining funds were inappropriately transferred from one project to another account that has since been identified and corrected.”

The university agreed to implement all the suggested changes to the P3 program, with the latest target completion date for the corrections set for August.

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com