Regents air grievances over budgeting process, say governor is ‘not happy’

URBANDALE — Following a contentious discussion about growing university budgets and the process for reviewing and approving them, the Board of Regents on Wednesday OK’d FY2026 budgets while also agreeing to review the numbers and processes going forward in hopes of digging deeper into the expenses and revenues driving the state's public institutions.

"I first saw these budgets when the docket was first sent to us about 10 days ago,“ Regent Chris Hensley told her fellow regents Wednesday — referencing her relative newness to the board, having joined in September. "We're talking about an $8.4 billion budget. Yet I, as a regent, have not had any exposure to any of this."

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Hensley wasn’t the only regent to voice concern over the sparse public discussion and board involvement in the budgeting process and said she’s not the only person with questions about the 7-percent total regent budget increase from $7.8 billion last year to $8.4 billion this year.

"I had the opportunity to be with the governor yesterday,“ Hensley said, sharing that at the end of their meeting, Reynolds ”did pull me aside and wanted to share with me her thoughts on the budgets that we were going to be approving today.“

“She was quite concerned about the budgets being approved and the percentage of increase, and wanted me to know that she was not happy about it,” Hensley said, comparing the regent increase to a smaller state budget bump for the 2026 fiscal year. "So her comment to me was, ‘Chris, press will be reaching out to me after the regents take action, and my answer will be, no, I'm not supportive’."

In respond to a request for comment from The Gazette, Mason Mauro -- spokesman for the governor’s office -- said, “Ten days does not allow the Board of Regents the adequate time to conduct a comprehensive review of state universities’ finances to decide whether a 7-percent increase for FY2026 is reasonable or necessary.

“Like state government, our regent institutions need to be reviewing their operations to ensure taxpayers and students are getting the best value for their money.”

But Board of Regents Chief Business Officer Brad Berg cautioned regents from jumping to negative conclusions about the increase.

“At the end of the day, the budget growth is coming from the fact that we're going to be educating more students,” Berg said, referencing a line in the University of Iowa portion of the budget documents anticipating “a larger incoming freshman class than the previous year, with a higher percentage of non-resident students” this coming fall.

“The hospital has certainly expanded their footprint in the State of Iowa to provide patient services to more Iowans,” Berg said. “So I don't view budget growth as a bad thing.”

‘No longer acceptable’

Regardless, Regent David Barker said he too would like more board involvement in the budget process — especially as it pertains to variance and risk.

“As I've said in past meetings, higher education finance is changing quickly and dramatically,” Barker said. “The president is finally taking a much needed hard look at federal spending, the Iowa Legislature is focusing on higher education more than it has in 50 years, and that will require changes in how we approach our budget.”

Acknowledging this year’s budget process looks much the same as it has for decades, Barker said, “Even if that process was acceptable in the past, I think business as usual is no longer acceptable because of our changing relationship with state and federal governments.”

And, Barker added, “I do not believe that the budget that's been presented to us adequately accounts for the risks of changes in federal and state funding.”

Praising the seriousness with which Iowa State University Athletics addressed funding risks in its portion of the budget documents — anticipating a $147 million deficit through 2031 will require ticket price increases and an indefinite pause on facility upgrades — Barker said, “We need more frank discussion like this.”

Where UI Health Care proposed a nearly $3 billion budget for 2026 — up 9 percent over last year’s $2.7 billion budget — Barker said he was disappointed to see no mention of potential losses in Medicaid directed payments, given federal threats to that program.

“A reduction of directed payments could move UIHC’s net income from net positive to net negative,” he said. “And we are counting on positive net revenues to finance the new tower.”

The last UIHC budget presentation to the board in June showed the enterprise without directed payment revenue would be $47.8 million in the red — although it maintains a 9 percent operating margin thanks to the $302.5 million in directed payment income.

Although UIHC didn’t mention that revenue stream in its portion of the budget, officials did address staffing shortages.

“UI Health Care has had to overcome vacancy challenges by providing market adjustments to ensure competitive salaries, investing in higher cost premium pay for staff, and continuing to supplement full-time staffing with temporary agency labor,” according to the budget. “Agency costs have continued to rise in conjunction with nationwide health care staffing shortages.”

‘Unbelievable’

In airing her grievances with the board’s budgeting process, Hensley cited a portion of the regent mission to oversee “the financial operation of the universities.”

“How can I sit here and say I really have done my job, because I haven't,” she said. “I really don't know how any regent can sit here and say that. Because you have not had the opportunity to really sit down with the CFOs and whoever else is appropriate to have some good in depth discussions.”

Asking basic questions like, “How did we go about making this?,” Hensley said she finds it “unbelievable” regents were given the proposed 2026 budget without actual numbers for the 2025 budget.

“I had no actuals. No actuals on any of the numbers that were presented to the regents,” she said. “That is not acceptable. How can we make and look-forward budgets when we don't have actual numbers to know did we overspend? Do we have deficits? Where are we at?”

Hensley and Barker both voted no on the 2026 budget, and Regent Robert Cramer said he, too, would like more involvement in the future.

“I do have similar concerns, and actually did think that a committee was doing a little deeper dive than what we were seeing,” he said. “So I definitely would like to change the process.”

Vanessa Miller covers higher education for The Gazette.

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