Regents endorse new state funding formula
On an 8-1 vote, the State Board of Regents on Wednesday accepted a task force recommendation to change how the state's general university appropriation is allocated among the three regent universities.
Beginning on July 1, 2015, 65 percent of the appropriation – which totaled about $479 million this year – will be allocated according to enrollment. The remaining 35 percent will be tied to performance outcomes. Over its three-year implementation period, the change will transfer millions of state dollars from the University of Iowa to Iowa State and the University of Northern Iowa.
Regent Robert Downer of Iowa City cast the lone dissenting vote, saying the funding formula doesn't adequately recognize high program costs, particularly in the health sciences programs, nearly all of which are at the University of Iowa.
Downer said that tuition for the expensive programs "can't be raised indefinitely, particularly if we want those graduates to remain in Iowa to work." He said high student debt at graduation often compels graduates to take higher-salaried jobs out of state.
President Steven Leath called the change "a positive" for Iowa State. He noted that he's been talking about the need to assure access and affordability, as well as quality, for students since he arrived in Ames. The additional funding, he said, will help Iowa State "maintain a quality educational experience while enhancing access and affordability."
The funding formula
The board accepted the task force's proposal that 60 percent of the general university appropriation be linked to the universities' enrollment of resident students. It also approved regent Larry McKibben's proposal to distribute another 5 percent of the appropriation according to resident graduate and professional student enrollment. All would be counted equally, regardless of their acadmic program.
This 5 percent replaces the task force's proposal to link dollars to the three school's success at placing their graduates in Iowa jobs or further higher education in the state. Task force chairman and former regent David Miles acknowledged that the task force hadn't come up with a way to track or measure this outcome.
The rest of the funding formula follows these performance measures:
- 10 percent: College access provided to targeted resident student populations (to be set by the regents, but could include low income, ethnic minority, veteran or Iowa community college transfer students)
- 5 percent: Progress to degree by resident students (counted by thresholds of 24-48-72 credit hours completed)
- 10 percent: Degrees completed by resident students
- 5 percent: Sponsored research levels, recognizing universities' contributions to state economic developmet
- 5 percent: Custom metrics set by the regents for each university
If the amended funding formula was implemented in a single year, an estimated $47.7 million would be reallocated from Iowa to ISU and UNI, down from about $59 million under the task force's original formula. The implementation of the new formula limits reallocations to 2 percent of a school's 2013 general education revenues. Board staff member Patrice Sayre said that translates to no more than $12.9 million moving from Iowa to the other two universities in a single year.
The task force
Meeting from October to May, the five-member task force was asked to investigate a funding model that's based on performance measures, not simply tradition plus inflation, as is the case now. Dating back to the 1940s, the current model divides the state appropriation on a perceived 40/40/20 percent (Iowa State/Iowa/Northern Iowa) split. But this year's general university appropriation is divided on approximately a 36/46/18 percent split, mirroring at least the last decade.
Miles told the board that the existing system "penalizes institutions for taking on more resident students when the state funding level doesn't change."
He said the task force considered two questions:
- Does the current method provide funding to cover the difference between resident tuition paid and cost of instruction?
- Does the current method incent the universities to educate Iowans?
Questioned about the new formula's short-term negative impact on the University of Iowa, Miles said he considers Iowa to be the state's flagship university "and truly a jewel in the crown of higher education." But he said the board has "an obligation to govern all three institutions for the benefit of the state."
The universities have an Aug. 8 deadline to prepare their new general university appropriation materials. Those will be reviewed at the board's September meeting to meet the annual Oct. 1 deadline for state funding requests.