Education

Hancher not alone in becoming self-sufficient

Iowa campuses look for ways to stretch tight budgets

People move their belongings out of Currier Residence Hall March 9 during a scheduled move-out from the University of Io
People move their belongings out of Currier Residence Hall March 9 during a scheduled move-out from the University of Iowa. The University Housing and Dining operation is self-sufficient but has taken a financial hit after dorms were shut down in the coronavirus pandemic. (Rebecca F. Miller/The Gazette)

IOWA CITY — Although the University of Iowa has charged its acclaimed Hancher Auditorium with becoming independent of general fund support by 2024, the performing arts venue will not stand alone on campus in being self-sufficient.

Other enterprises across Iowa’s Board of Regents system have become self-sustaining in recent years — like the athletics departments on the UI and Iowa State University campuses, their respective residence and parking systems and UI Health Care.

Self-supported systems, or those close to it, often share the common denominator of having other revenue options — like parking passes and fines for transportation units; game attendance and conference contributions for athletics; housing contracts and dining packages for residence hall systems; and — for an enterprise like Hancher — ticket sales.

In moving the campuses’ athletics operations toward self-sufficiency more than a decade ago, the regents sought to “optimize resources in response to significant reductions in state appropriations,” a challenge the universities are facing again today.

Prompting a recent $8 million state cut for the public universities, and compounding it, is the COVID-19 pandemic that has the institutions projecting tens of millions in losses — largely due to expected enrollment declines driven by safety concerns and fears of another online-only semester.

The universities’ shrunken budgets have prompted layoffs, furloughs, pay cuts, hiring freezes, construction delays, program eliminations and retirement incentives.

And they are forcing independence not just for Hancher but for Iowa Public Radio, created in 2004 by the regents. IPR isn’t losing its regents support over a three-year period like Hancher — the entire $873,940 regent contribution was eliminated immediately in the budget year starting July 1.

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Even the self-supporting UI and ISU athletics enterprises — once perceived as insulated from state budget woes — are facing so many losses and revenue unknowns that they’ve imposed across-the-board pay cuts, including to top football coaches Kirk Ferentz and Matt Campbell.

Independent athletics

The UI Department of Athletics was first to establish independence in 2007, boasting on many occasions since — in every facility project and marketing endeavor — that it has relied on no UI general fund dollars.

In hopes of aligning its other campuses with that model, the Board of Regents in 2010 directed ISU and the University of Northern Iowa to evaluate the feasibility of substantially reducing or eliminating general fund support for their athletics departments — and create a plan to do so.

“The presidents were requested to return to the Board at the September 2010 meeting with their assessments, plans, and timelines,” according to regent documents.

ISU reported that its general fund support of athletics had been dwindling for years — dropping from nearly 11 percent of the athletic budget in 2001 to 3.8 percent by 2011.

“It is anticipated that the remaining general fund support ($1.6 million) will be eliminated during the 2010-11 fiscal year by utilizing student financial aid set aside reimbursement, similar to the University of Iowa athletics program,” according to a 2010 board document.

Cutting campus-athletics ties did not prove so simple for UNI, which determined “intercollegiate athletics should not be treated as a self-sustaining auxiliary.”

It did, however, propose a four-year time line to reduce university general fund contributions to $4.2 million — amounting to a nearly 18.3 percent decrease from fiscal 2009.

“Athletics would not receive more than 2.4 percent of the university general fund budget in future years,” it said.

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Maintaining self-sufficiency at the UI and ISU, though, became increasingly reasonable over the years as conference contributions and media contract revenue skyrocketed, reaching a combined $61.5 million for UI Athletics in the 2020 budget year.

With ticket sales and donations, among other things, UI athletics’ total income reached $124.9 million last year. ISU’s total income topped $87.5 million in fiscal 2020.

With their main campuses financially struggling in recent years amid shrinking state support and growing competition, UI Athletics began making direct contributions back to the university’s general fund — including $2 million provisions in fiscal years 2017, 2018 and 2019, for a total $6 million.

Those contributions ceased in 2020 “due to the financial impact of COVID-19,” according to UI Senior Associate Athletic Director of Revenue and External Relations Matt Henderson.

Woes and pros

While the universities’ various self-supporting entities could use some general fund help right now, the campuses are in no position to give it.

UI Housing and Dining, for example, has temporarily laid off 112.

“As you know, over the last three months, the University of Iowa and University Housing and Dining have taken deliberate steps to protect our students, their parents, and staff during this global pandemic,” UI Housing and Dining Senior Director Von Stange wrote in a message announcing the layoffs. “In so doing, we created several financial challenges we must now address.

“Given the continuing financial and operational impact of the pandemic within the University Housing and Dining system, we — in consultation with University Human Resources — have made the difficult decision to implement cost reduction measures to ensure our long-term financial health.”

In announcing Hancher’s directive to establish financial independence, its Executive Director Chuck Swanson acknowledged, “This change presents a significant challenge.”

But self-sufficiency doesn’t always translate into trouble.

For the UI Labor Center, initially facing closure, self-sufficiency last year became a vehicle for survival. Following months of protests over UI President Bruce Harreld’s announcement to cut general fund support for the statewide service center, he and the UI College of Law worked out a deal to move it toward financial independence in four years.

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“I am excited for the Labor Center to move forward under this new agreement,” Center Director Jennifer Sherer said in February 2019. “I am grateful that we worked together to find a way for this work to continue.”

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

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