Enrollment could be a driver in new funding formula

Student enrollment could be a primary consideration in allocating state funds among Iowa's three public universities under a very preliminary funding model discussed April 17 by a state Board of Regents task force. But the five members of the task force are divided, at least for now, on whether to count all students or in-state students only.

Meeting since October, the task force was asked to investigate a funding model that's based on performance measures, not simply tradition, as is the case now. Dating back to the 1940s, the current model divides the state appropriation on a perceived 40 percent/40 percent/20 percent (Iowa State/Iowa/Northern Iowa) split. This year's $479 million general education appropriation is divided on approximately a 36 percent/46 percent/18 percent split, mirroring at least the last decade.

Which students to count?

"This is the general education appropriation we're talking about. I think it has to follow the Iowa kids," said Mark Oman, retired senior executive vice president of Wells Fargo and Co. and Northern Iowa's appointee to the task force. He argued that other state funding lines help pay for mission-specific responsibilities – for example, a medical hospital or extension -- at the three schools.

"Iowa dollars support Iowa kids," concurred Cara Heiden, retired co-president of Wells Fargo Home Mortgage and Iowa State's appointee. "That feels good to me as a taxpayer."

"That's a good political slogan, but it doesn't embrace all the things we need to consider to make good policy," said Len Hadley, retired CEO of Maytag Corp. and Iowa's appointee. "I can't understand how we would build budgets without counting 35-40 percent of the students [a reference to nonresidents]."

He argued that recruiting out-of-state students is a boon to this state and that "Iowa dollars should follow Iowa scholars."

Hadley suggested an enrollment metric that counts all students and weights graduate and professional students to acknowledge the higher costs of instruction in, for example, Iowa's five health colleges. He said graduates of the state's professional programs in medicine, veterinary medicine, dentistry and law "make a huge contribution to our state and are leaders in their communities."

Regent Katie Mulholland, the board's appointee to the task force, noted that tuition levels and differential tuition provide the needed dollars to offer more expensive programs. She said that Iowa and Iowa State collect four times the tuition of Northern Iowa. Mulholland proposed that state funds follow only resident undergraduate students.

Noting that funding disparities exist "relative to resident students," task force chairman and former regent David Miles suggested a "starting point" that allocates dollars based on total resident student enrollments. But he also favored weighting graduate students "because the workforce data says we need to incent graduate degrees."

Oman said that focusing state dollars on resident students wouldn't discourage nonresident student recruiting. "Iowa and Iowa State succeeded at recruiting out of state when state funds were based on nothing. The universities still benefit financially from recruiting out-of-state students."

Hadley warned that providing state funds only for resident students "sets us up to have the Legislature reduce our overall state funding."

Fall 2013 enrollment


All students

Resident students

Resident undergraduates

Northern Iowa








Iowa State




Source: Each university's fall enrollment data

Measuring outcomes, too

In performance-based funding, enrollment is considered an input. Task force members discussed allocating 60 percent of the general education appropriation according to enrollment data, with the remaining 40 percent distributed according to outcomes. Four outcomes they looked hard at last week were:

  • Student progress toward degree, measured in credit hours completed (10 percent of funds)
  • Access to education, measured by targeted audiences served, for example, first-generation college students, transfer students or federal Pell grant-eligible students (10 percent)
  • Student graduates (all levels) placed in jobs in Iowa (10 percent)
  • Custom outcomes (university-specific), including board-directed (10 percent)

Requirements for any formula

The group's discussion began with outlining its premises for any new allocation formula. Members agreed that its metrics should:

  • Be measureable and transparent. How they're counted should be consistent across the three schools.
  • Be straightforward and easily understandable. Complexity may inhibit implementation.
  • Be equitable. They should recognize the unique missions of the three universities without favoring any one of them.
  • Link directly to the board's priorities as defined in its strategic plan and other documents
  • Be consistent, reliable and predictable so the universities can run projections and build their futures
  • Demonstrate accountability to legislators, the governor and Iowans

Up next

The task force will meet for what is expected to be the last time on May 5 to finalize a performance-based funding recommendation for the board. In the meantime, board staff are running calculations on various iterations of a funding model and retrieving other data for the task force. The task force also has yet to recommend to what portion of the general education appropriation a new formula would be applied -- all or some fraction.

A final recommendation is scheduled to be presented to the regents at their June 5 meeting in Ames.