Questions arise around efficiency savings and tuition freeze for Iowa universities

From the beginning of a comprehensive efficiency review of Iowa's public universities in March, members of the Board of Regents have reiterated that any savings incurred as a result of the initiative will be reinvested into the campuses where they were realized.

But several regents - anticipating millions in savings, including some in the near future - already have identified one possible use for them: supporting an unprecedented third straight tuition freeze for undergraduate residents.

And that has at least one regent concerned.

'It seems to me this is contrary to commitments made to the institutions at the time this was approved that this was money that was going to be reinvested in the institutions,” Regent Bob Downer said. 'It was not going to be taken away from them and sent back to Des Moines.”

Downer said it's one thing if university leaders say they want to take savings from the efficiency review and apply them toward a tuition freeze, 'as opposed to hiring additional faculty, putting it into infrastructure and a multitude of other things.”

'But I don't think we are being true to the commitment made to them at the time this was approved,” Downer said.

He also expressed concern with relying on savings before they're realized.

'I'm not in favor of counting savings from the (efficiency) study until we know a great deal more about this is going to play out,” Downer said.

The Board of Regents to date has agreed to move ahead with 12 of the most-promising efficiency opportunities identified by a consultant hired to conduct the 'Transparent, Inclusive Efficiency Review” - or TIER. Those opportunities include improving sourcing and procurement practices across Iowa's three public universities, streamlining finance, human resources, and information technology operations, and creating a common application portal for students interested in applying to more than one of the institutions.

Deloitte Consulting LLC has said those efficiencies could save $30 million to $80 million a year, although much of that isn't expected to materialize right away. Still, Board of Regents President Bruce Rastetter said the universities already are proceeding with the efficiency suggestions - including some from a longer list of 117 possible opportunities - and he and other board members have said early savings could help the universities manage a projected loss of $4.5 million in revenue from a proposed third consecutive tuition freeze.

'Board members have expressed optimism that the universities can offset cost increases internally after implementing efficiencies outlined in the TIER study,” board spokeswoman Sheila Koppin said in an email last week.

Iowa State University Associate Vice President Miles Lackey said he thinks ISU could see some efficiency savings in time to support a tuition freeze for the next academic year. And, Lackey said, using some of those savings to offset lost tuition revenue is 'ultimately going back to the benefit of the institution in one way or another.”

'In that respect, it's fair to say that if you are using part of that to offset a tuition freeze, it is benefiting the institution,” Lackey said. 'It's certainly benefiting its customers.”

The University of Iowa would have seen about $1.4 million from a 1.75 percent tuition increase for undergraduate residents, which originally was proposed. And UI President Sally Mason has said her institution can absorb the loss of that anticipated revenue, if a freeze is approved.

But University of Northern Iowa views it a little differently, as 91 percent of its student body is comprised of undergraduate residents - compared with 65 percent at ISU and 55 percent at UI, according to regent documents. It doesn't have the same level of out-of-state and graduate-level tuition to fall back on, said university spokesman Scott Ketelsen.

'That is $1.3 million to $1.4 million that UNI would have had as far as increased tuition revenue,” Ketelsen said. 'If you wipe that out … we have to find that.”

Although savings from the efficiency review might help, Ketelsen said, that wasn't necessarily what UNI officials had in mind when the study began in March.

'When we started this whole process, a tuition freeze was not part of the conversation,” Ketelsen said. 'We were talking about becoming more efficient and effective and taking those dollars saved and reinvesting them into the universities.”

If UNI saves $1 million, for example, it would love to put that money toward scholarships, Ketelsen said.

'That's something we've identified as a need,” he said. 'But we might not be able to do that because we have to make up for lost revenues because of a tuition freeze.”

The Board of Regents has asked the Legislature for a 1.75 percent inflationary increase in appropriations, along with an additional $12.9 million to help roll out a new funding model that will benefit UNI and ISU in its first year. If the Legislature approves the additional support, Ketelsen said, 'That's a completely difference scenario.”

'But it's to be determined,” he said.

Regent Larry McKibben, who heads the efficiency review for the board and proposed freezing undergraduate resident tuition at the last board meeting, said he thinks it's 'very likely” that all three institutions will have realized some savings from the efficiency review by the time a third tuition freeze would impact them financially.

'That gives them the opportunity to use some of that, if they need to, from an operating standpoint,” McKibben said.

But, he added, 'usage of the (efficiency review) funds is up to the universities.”

'That will not be micromanaged by the Board of Regents,” McKibben said.

As for his support of a third tuition freeze, McKibben said, it comes down to lowering student debt in Iowa.

'We have to make sure that this is an affordable opportunity for students and families who want to get a higher education and have been priced out of the opportunity,” he said. 'I feel very very strongly that the debt level is unacceptable.”

The board is scheduled to vote on a proposed third tuition freeze at its meeting next week.