The Clinton Herald, Clinton, Iowa

June 4, 2014

Iowa regents back funding change at 3 universities

RYAN J. FOLEY
Associated Press

AMES — Iowa's three public universities will be financially rewarded for enrolling in-state students and meeting performance goals under a funding model adopted Wednesday that will shift tens of millions of dollars away from the University of Iowa.

The Iowa Board of Regents voted 8-1 during a meeting at Iowa State University in Ames to adopt the plan, which marks the biggest change to the state's higher education funding in decades.

Starting next year, a majority of nearly $500 million in state funding would go to the state's three public universities based on the number of Iowa students they enroll. The rest would be based on performance measures such as the number of degrees awarded.

If adopted immediately, the plan would shift $47 million from the University of Iowa that would roughly be divvied up evenly between the University of Northern Iowa and Iowa State University. But it would be implemented over three years, giving the university time to minimize the impact. No more than $13 million could be shifted away from the University of Iowa in one year.

Supporters say the new model gives universities more incentive to recruit Iowa students and meet the state's goals for higher education. Critics, including some regents, said they worried the plan would hurt the recruitment of out-of-state students who pay much higher tuition rates as well as graduate and research programs that are more expensive to operate.

A task force appointed by the board to study the funding model recommended most of the changes.

"Its implementation is a real step forward in the governance of the institutions," said task force chairman David Miles, a West Des Moines businessman and former president of the board. "It creates a direct and transparent link between the dollars invested by the state in this very public good and the achievements of the state's priorities."

He acknowledged that it would cause the University of Iowa "to make some near-term sacrifice" for the greater good of the regents' system. He said that, over time, all three schools "will be stronger, more successful and frankly better funded by the citizens of Iowa."

Miles' panel concluded that the state's longtime funding model, in which the universities seek funding increases based on their prior year's level, no longer made any sense.

That approach, dating to the post-World War II era, punished the universities for enrolling in-state residents because their tuition rates do not cover the full cost of instruction, he said. The result was that the University of Northern Iowa was "chronically underfunded" because the vast majority of its students came from in-state, and often required special funding fixes to make up the gap, Miles said.

The University of Iowa received $14,000 per in-state student compared to about $8,000 at the other two schools, even as the number of its in-state students dropped by 3,200 over the last 30 years.