Iowa universities project budget increases thanks to state, enrollment, tuition hikes

IOWA CITY — With a new increase in state appropriations — after lawmakers withheld one last year — paired with a strong enrollment outlook and recently-approved tuition increases, all three of Iowa’s public universities are anticipating a revenue boost in the new budget year.

Combined, the general education operating budgets for Iowa’s three public universities this fiscal year are expected to reach $1.72 billion — up from last fiscal year’s $1.66 billion. Five years ago, the total was $1.59 billion. A decade ago, the total was $1.46 billion.

The university budgets have continued to swell despite recent cuts in state aid and lawmaker rejections of the universities’ full appropriation requests — thanks in part to tuition hikes and a teeter-tottering of the campuses’ reliance on student vs. state money to fund their operations.

“State operating appropriations and tuition revenue have historically provided the core operating funds for the regent universities,” according to language included in not just this year’s Board of Regents budget report, but those published in 2023 and 2022. “Dynamic changes in state funding patterns significantly altered the proportion of these revenue sources for higher education.”

Where in 1981 nearly 77 percent of the universities’ general education funding came from state appropriations and 21 percent came from tuition, those percentages have flip-flopped today — to 65 percent reliance on tuition and 29 percent from state appropriations.

After rejecting the board’s ask for a $32 million appropriation increase last year, holding university appropriations flat — lawmakers in the most recent legislative session earlier this year increased state support by $12.3 million, just shy of the board’s $14.8 million request and marking its biggest appropriations increase in a decade.

For the University of Iowa, the legislative bump amounts to a $5.5 million increase; Iowa State University is getting $4.4 million more in state aid; and the University of Northern Iowa will see a $2.5 million bump — all 2.5 percent increases over last year.

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Enrollment outlook

In sharing its outlook for the new budget year in recently-released regent documents, UI officials revealed expectations for a “slightly larger incoming freshman class than the previous year, with a higher percentage of non-resident students“ — who pay more in tuition.

Helped by a 3-percent tuition increase for resident undergraduates this fall — plus varying hikes across other student categories — the UI anticipates generating $16.8 million more from tuition, growing its total operating budget by nearly $21 million.

ISU’s tuition hikes, paired with enrollment projections, have that campus expecting $28 million more in tuition revenue — for a total operating budget boost of $34.4 million, when combined with state aid increases.

And UNI — which saw its budget contract last year thanks to a decline in tuition revenue — this year is expecting a $7.1 million increase, including $4.5 million more from tuition thanks to “an expected enrollment increase.”

The majority of the campuses’ general operational spending goes toward instruction, academic support, scholarships and plant operations.

Residence hall outlook

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The anticipated enrollment bumps could help each of the campuses’ residence systems — even though they’re self-supported operations that don’t receive state-appropriated funds or tuition revenue for operations or improvements.

Combined, the three residence systems are expected to house about 19,900 students — compared with 19,300 last academic year — thanks to increases expected at all three campuses.

The UI system projects residence hall occupancy to reach 6,435 this fall — up from 6,245 last year, boosting net revenue $2.6 million. ISU is projecting 312 more students than last year at 10,258 — also generating $2.6 million more in net revenue.

And UNI is projecting an increase to 3,200 residence hall students this fall, meaning $1.2 million more in net revenue.

All three would see bigger gains if not for parallel rises in expenses for food and staffing.

“The slightly lower net revenue projection from the preliminary budget received by the board in February 2024 is due to a higher than originally projected increase in food costs, as well as additional merit staff positions in dining to allow for increased service hours to meet student demand,” UI officials said.

UI Health Care outlook

The main campuses’ operational budget projections exclude the massive and ever-growing UI Health Care operation, proposing a fiscal 2025 operating budget of $2.7 billion — more than all three campuses’ general education operating budgets combined.

“Going into FY25, UI Health Care will be working to effectively integrate two new hospital campuses into its operations,” according to board documents, citing UIHC’s Downtown Campus — obtained through a $28 million bankruptcy sale of the former Mercy Iowa City — and a $525.6 million hospital campus in North Liberty expected to open in 2025.

“Recruitment and retention remains a key focus to fill critical vacancies in staff,” according to board documents. “As a result of staffing shortages previously mentioned, UI Health Care has had to overcome vacancy challenges by investing in higher cost premium pay for staff as well as temporary agency labor. Agency costs have continued to rise in conjunction with nationwide health care staffing shortages.”

Justifying a recent 6 percent rate increase for patients, UIHC officials said “medical and surgical supply costs are estimated to rise almost 4 percent due to standard inflationary increases. Pharmaceutical cost increases are anticipated in the 4 percent range.“

Vanessa Miller covers higher education for The Gazette.

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