Questions arise around higher education funding changes

IOWA CITY — Critics, including at least one regent, are calling on the Board of Regents to reconsider a new funding model it approved in June that will change the way state dollars are allocated to Iowa's public universities and could pull $47.8 million from the University of Iowa over several years.

In emails obtained by The Gazette, university faculty, Iowa residents and Regent Bob Downer question the process and timing involved in developing a new way of funding the UI, Iowa State University and the University of Northern Iowa. A UI representative on the task force that proposed the new funding model also expressed concerns to Gov. Terry Branstad, calling the process 'flawed.'

Just days before the new model was approved, Downer in an email told a constituent that he thought the Board of Regents was moving too quickly and the issue warranted more analysis.

'Unless the proposal is derailed, it will come up for a vote on Wednesday,' Downer wrote in the May 30 message. 'How this can be done after only a 2-3 hour discussion is stunning.'

Downer in that email said he expected the proposal would be amended in several respects and possibly postponed to a later meeting.

'The submissions for the budget aren't due until October 1, so I think this is a manufactured emergency,' Downer wrote.

But the issue was not tabled, and the board on June 4 — following a presentation and discussion that lasted just over an hour — approved the new funding model, which ties 60 percent of state appropriations to in-state enrollment, 15 percent to progress and attainment, 10 percent to access, 5 percent to sponsored research and 5 percent to graduate and professional student enrollment. The remaining 5 percent is left for the regents to decide.

The approved model did include one amendment, as Downer predicted. Instead of tying 5 percent to job placement and continuing education, as originally proposed, it associates that portion with graduate and professional enrollment.

If the new formula was implemented over one year, the UI would lose about $47.8 million. But the approved funding model is set to roll out over three years beginning in 2016, with an annual 2 percent cap on the amount of money that can move from one university to another.

With the cap, if enrollment figures remain unchanged, UI could lose $12.9 million a year, and ISU eventually would become the top-funded university in the state.

UNI would see the biggest boost — nearly $24 million — to its overall allocation.

Downer told The Gazette that he supports reviewing the funding model, which has been allocating state dollars using a base-plus formula since 1945. But he thinks the board can find a better solution that works for everyone and said that can take more time.

'Given the fact that the previous model was in place for so long, I don't understand why there was such a rush to change it,' Downer said. 'I did not see where there was the emergency that caused this to be dealt with precipitously.'

Downer said one of his primary concerns with the new funding model, as adopted, is its potential impact on graduate and professional programs. He said tuition into those programs has been climbing.

'This is a concern that I think is exacerbated, or will be, if this is adopted — both from a standpoint of increasing costs and, very likely, a decline in quality,' Downer said.

Such an effect, he said, could have a significant impact on Iowa's communities.

'The focus, I think, is rightly on students, but it also has to be looked at in how graduates of our institutions serve the populace of the state,' Downer said. 'I did not see that as a factor that was given much consideration in these discussions.'

Instead of moving forward with the new funding model as approved, Downer said he'd like the board to engage in further discussion aimed at creating a solution that addresses everyone's concerns.

'What if the legislative leadership said, 'I want all of you to get into a room and not come out until you have a product upon which everyone agrees,' Downer said. 'I don't think that's unrealistic.'

Questions about process

The task force convened to explore a new way of funding higher education and draft enrollment and performance metrics for the Board of Regents included Chairman David Miles, a former regent; UI representative Len Hadley, retired chief executive officer of Maytag; ISU representative Cara Heiden, retired co-president of Wells Fargo Home Mortgage; UNI representative Mark Oman, retired senior executive vice president of Wells Fargo and Co.; and Board of Regents President Pro Tem Katie Mulholland.

In a July 10 letter to Gov. Branstad, Hadley expressed his concerns with the task force and the process involved in developing new funding metrics.

'You should be disappointed on a number of levels as the process was flawed,' Hadley wrote.

He said the task force's original charge included supporting the three universities distinct missions, linking dollars more directly to priorities, helping UNI adjust to budget cuts, and considering future funding needs for each campus.

Hadley also said the task force was supposed to have nine members.

'None of the above happened as scripted,' Hadley wrote in the letter. 'The task force was 5 members with a quick 2 to 1 core (UNI/ISU) viewpoint developing.'

He accused the UNI and ISU representatives of having a professional relationship that 'I would consider a conflict of interest.'

'The assignment I thought I signed up for was quickly reduced to one word — redistribution,' Hadley wrote.

A meeting in March — at which the three presidents gave their take on a new funding model — morphed into UNI and ISU proposing a '$50 million take-away from UI to be split between them,' according to Hadley.

'It thought it was unprofessional and unwarranted,' Hadley wrote to the governor.

In the letter, Hadley goes on to question Board of Regents President Bruce Rastetter's leadership, calling him a 'loose cannon.'

'I do not think you are being well served by him,' Hadley wrote.

Branstad did not respond to Hadley by email regarding his concerns, as of last week, but his communications director Jimmy Centers told The Gazette that Branstad 'believes it made sense for the regents to reexamine the funding methodology of our state universities.'

He did not respond to direct questions about concerns in the process. Addressing the comments about Rastetter, Centers said, 'Branstad appreciates the service and leadership of the regents and Regent President Bruce Rastetter.'

Hadley told The Gazette that another reason the new funding model should be tabled relates to the ongoing efficiency review of the three public universities.

'The sequence is wrong,' he said. 'There is no way we should be able to spread money around until we know how much money is required. And there is no way we can know how much money is required until the efficiency review is completed.'

Hadley seconded Downer's concerns with how and when the model was approved, adding, 'The barn is not on fire.'

'There was very limited discussion or challenging questions,' he said. 'It was not kicked around by board members. And there is a lot to chew on.'

Questions of bias

After the Board of Regents approved the new funding model, Mulholland — the regent representative on the task force that studied the issue — sent thank-you notes via email to every member of the group except Hadley.

In her message to Oman, who represented UNI, Mulholland said, 'I truly appreciated your assertive, but respectful, responses to Len's proposal and comments. Your strategies were awesome.'

'I wish we did not have to change the post graduation Iowa job placement, and I am sure you know how that fit in to finding a solution to move forward,' Mulholland wrote in the email. 'If we were playing dodge ball, you'd be my first pick!'

In Mulholland's message to Heiden, who represented Iowa State, she wrote about the board's decision to use graduate and professional program enrollment instead of post-graduation job placement as a metric for 5 percent of the funding.

'So, we have two wins — President Steven Leath and a funding formula that recognizes Iowa State's increase in enrollment,' Mulholland wrote. 'Now, we just need to get a ton of constituents (to) send out email blasts supporting the PBF (performance-based funding) recommendation to the legislators across the state so it doesn't get changed.'

When asked about those messages, Mulholland told The Gazette that she does not favor any of the universities and was simply communicating with the individuals with whom she previously had corresponded via email.

'Each one had reached out and had communicated with me,' she said. 'Mr. Hadley never had any personal communication with me. It's a reciprocal thing. And I didn't have his email.'

Mulholland said she also knew Hadley was 'very aggravated' at that point and she didn't want to exacerbate the issue.

According to a statement on 'external influences' by the Washington, D.C.-based Association of Governing Boards of Universities and Colleges, 'Boards must police themselves in assuring the highest level of ethical behavior among their members, including avoiding any board member assuming the role as an advocate for a special interest in the outcome of a board's decision.'

Merrill P. Schwartz, vice president for Association of Governing Boards Consulting, said regents are charged with serving the system as a whole.

'Even if they have a degree from one of the three institutions or are chosen by a faculty group or are faculty at one of the institutions, they are charged to work in the best interest of the system as a whole,' Schwartz said.

As to concerns about the speed with which the Board of Regents approved the funding model, Mulholland said the task force had been meeting for months in public. She said discussion about how funding metrics could best serve the institutions and the state were open and transparent.

'We wanted everyone to see the whole process,' she said.

Board President Rastetter told The Gazette that he believes the task force was 'very thoughtful' in its review of performance-based funding, which took several months and included participation and input from speakers from across the country.

'Regent Mulholland also provided regular updates on the task force's work during full board meetings,' Rastetter said in written comments to The Gazette.

The final vote included an amendment that came in response to concerns raised by Hadley and UI faculty members, Rastetter said.

The Board of Regents has no specific plans to reconsider the performance-based funding model, according to Jeneane Beck, a spokeswoman for the board. But it is scheduled this week to vote on 2016 appropriation requests of the state, which will include performance-based funding metrics.

'If a regent proposes an amendment, we would expect full discussion,' Beck said.