Who’s really paying for our public universities?

By Alan Brody

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The buzz around the Corridor lately is a story about how a gift of athletic tape helped lure Dan Gable to coach wrestling at the University of Iowa instead of at his alma mater, Iowa State. Gable at the time was working as a temporary coaching assistant at ISU while he prepared for the 1972 Olympics.

UI athletic officials learned that Gable's expectations of a permanent ISU coaching appointment and his requests for athletic tape to wrap an injured knee were caught up in ISU red tape instead. They sent him a box full of athletic tape that lasted him through the Olympics, and opened the door to a coaching offer he decided not to refuse.

Gable brought the UI more than three decades of wrestling fame, and not a small amount of fortune to Corridor businesses. Last weekend's hosting of the 2012 national Olympic wrestling trials in Iowa City is but one more return on that $100 investment in athletic tape 40 years ago.

The story illustrates the difference made by a little strategic vision and timely, innovative investment, keys that help institutions (and states for that matter) to thrive.

The petty stinginess evident in the Iowa Legislature's recent fights over funding for higher education suggests too many Iowa legislators don't understand such lessons.

They know Iowa's prosperity rests upon twin pillars of a strong farm economy and a growing knowledge economy, but don't seem to realize that the intellectual and social capital that Iowa's universities help create are an essential foundation of economic growth.

For years, the Legislature has been reducing its share of funding to its public universities. The UI has partially offset reductions by recruiting more students out-of-state and internationally, while socking them with tuition fees more than three times what in-state students pay. Outsiders are now 45 percent of UI enrollment, but account for more than 70 percent of the university's tuition income. They contribute about $350 million a year into the UI General Fund, 50 percent more than the Legislature's contribution!

These outsiders pay the UI a premium based on the university's reputation, what marketers nowadays call the brand. Successful companies and non-profits alike know the importance to prevent erosion of brand heritage, but our politicians don't seem to get it.

Iowa universities' good reputations are like rich Iowa soil giving high yields, while those in charge of them are like bad farmers who fail to put back in what they are taking out.

The University of Iowa's “cost of goods sold” for educating one UI student for one year comes in at about $18,400. Outside students pay around $25,000, providing a $6,600 profit, while Iowa residents' pay $7,765, making for a loss of more $10,600. The state general fund appropriation covers about $8,000 of that loss, leaving a $2,600 deficit on each in-state student. The UI covers the rest of the deficit by fees from outsiders, and by cutting corners on educational quality.

Iowans need to understand, before it's too late, that you can't milk a brand forever. An honest and courageous Board of Regents would stop using out-of-state tuitions to subsidize Iowa residents, and insist that profits from those tuitions instead be plowed back into programs that sustain university areas of excellence, including teaching. That would help ensure Iowa's universities can deliver on promises of a top quality education for all their students, whether from Iowa or beyond, today and for the future.

Ending those subsidies would result in a $2,600 increase in annual in-state tuition (depending upon the size of the Legislature's allocation). That prospect might be just what it takes to change the conversation between legislators and their constituents!

Alan Brody is a former UNICEF representative who lives and writes in Iowa City. Comments: brody.alan@gmail.com