Members of the state Board of Regents had little reaction to a proposed 3 percent tuition increase for spring 2016 semester for resident undergraduate students at their Aug. 5 meeting. The increase would raise spring tuition $100 for most Iowa State resident undergraduates; up to $133 for programs with previously approved differential tuitions. If approved, it would raise an estimated $1.65 million in additional revenue for Iowa State. The board will vote on the proposal at its Sept. 9 meeting.
In December, the board approved a third straight tuition freeze for resident undergraduates, while approving increases ranging from 1.2 percent to 3.2 percent for all other students. The freeze anticipated the Legislature's support for the regents' proposed performance-based funding model, which didn't occur. In fact, new state dollars in the three public universities' operating budgets total about one-tenth what the increases were a year ago.
The diminished state appropriations, coupled with three years of frozen tuition for resident undergraduates -- which make up just over half of ISU's student body -- compelled all three universities to reallocate dollars to pay for priorities in their new budgets.
If approved, the increase would reestablish base tuition for ISU's resident undergraduates at $6,848.
More off-campus apartments
The board approved the residence department's request to rent 12 apartment units (48 beds) in the building at 3732 Tripp St. from Jensen Five L.C. from Aug. 6 through July 31, 2016, for additional student housing. This brings the total number of leased off-campus beds to 1,502 this fall. Rental rates will be consistent with those the board approved in April for other off-campus buildings the residence department is leasing. Senior vice president for business and finance Warren Madden said the department's priority is to house freshmen on campus and assign returning upperclassmen to off-campus housing.
President Steven Leath told the board he made a commitment to students to not use residence hall dens as sleeping rooms on a long-term basis. If students need to be housed temporarily in hall dens, he said they'll be "in real beds in real rooms" within the first two weeks of fall semester.
When asked about anticipated fall enrollment, Leath said that the increase in student numbers could be similar to recent years. In the last two falls, enrollment was up 1,400-2,200 over the previous year.
Compensation for President Leath
The board unanimously approved a 5 percent salary increase for Leath for the year that began July 1, bringing his salary to $525,000. The board also approved a five-year deferred compensation plan for him (July 1, 2015-June 30, 2020) with an annual contribution of $125,000, and a five-year appointment for Leath covering that same time period.
Student Innovation Center design to begin
Board members gave Iowa State the green light to proceed with planning for the Student Innovation Center, a proposed $80 million, 175,000-square-foot facility to be built south of Sweeney Hall. The site was selected for its proximity to undergraduate academic programs. The board also approved demolition of the Nuclear Engineering Laboratory and the south portion of the original Sweeney Hall to create space for the new building.
Madden said the project will be paid for with university funds ($20 million), a $20 million anonymous gift and state appropriations ($40 million over four years, FY17-20, approved by the 2015 Legislature).
Student health center update
Leath provided an update to board members on changes instituted at the Thielen Student Health Center in response to what he termed a "highly critical but accurate report" completed this spring by university-hired consultants, Keeling and Associates. Those changes include:
- Hiring a new interim director, Mary Hensley, who retired in 2012 from the University of Minnesota medical center and is certified as a healthcare executive, healthcare finance professional and medical practice executive
- Hiring a quality improvement officer
- Hiring certified medical assistants to serve at the front desk
- Exploring a partnership with McFarland Clinic that could add physicians to the health center staff
Leath expressed gratitude to medical college leaders at the University of Iowa for valuable advice and assistance. He said Hensley and associate vice president for student affairs Martino Harmon, who preceded Hensley as interim director, would provide a more in-depth update to the board at its Sept. 9 meeting.
The board approved Iowa State's proposal to, in cooperation with the ISU Foundation, set up a nonprofit ISU Facilities Corporation that will finance large building projects when cash funds or state appropriations are not available and the usual regent-issued bonds not appropriate for the project. Unlike the regents' academic revenue bonds or enterprise bonds, which use tuition and fees for service, respectively, to repay the debt, the facilities corporation bonds would use other sources -- for example, private gifts or income from sponsored research -- to pay off the bonds.
"We see this as an effective way to move ahead with some major building projects, particularly with interest rates as low as they are now," Madden said. The corporation would own a building until the bonds are repaid, with the university as tenant and the board as lessee. The corporation's first bond issue, an estimated $20 million for the Advanced Teaching and Research Building, would occur in 2016.
Cremation garden for ISU cemetery
The board approved Iowa State's five-year agreement with the company Fans4Ever to design, construct and market a columbarium and garden adjacent to the east side of the university cemetery. A cremation garden responds to two needs: the alumni association has received requests from alumni and friends to bury cremated remains on campus, and, at the current interment rate, available spaces in the cemetery could be filled in five years.
The university will set rules about who may use the cremation garden; an early estimated cost per niche is around $6,000.
Madden said the garden could include an area that held stone markers to memorialize individuals with a tie to the university, such as when a current student dies unexpectedly.
Madden said that nationwide, about 50 percent of interments are of cremated remains. He said industry experts predict that will grow to as high as 75-80 percent. The project will not proceed until there are enough presales to cover the development costs.
"We'll test the market and see if there's a demand for this before we move forward," Madden said.
The board received written reports from two consultants, Huron Consulting and Chazey Partners, in its two-year-old Transparent, Inclusive Efficiency Review (TIER). The former was hired to find efficiencies and savings in the three universities' purchasing operations; the latter to review and "validate" university-specific plans to improve processes in financial services, human resources services and IT services.
In analyzing 10 purchasing categories -- such as copiers, scientific supplies or food -- Huron found opportunities for greater collaboration for process efficiencies and price leveraging.
Huron calculated total annual savings of $3.9 million to $7.8 million for seven of the 10 categories across the three schools.
Huron Consulting will be retained to assist with technology recommendations and new vendor negotiations in seven of the 10 categories, and to help the schools transition to a center-led service model, in which purchasing strategies would be coordinated by the board office but the actual purchasing would be handled by each school. The additional contract will cost $510,000; the work will take an estimated nine months.
Chazey Partners estimated the up-front investment to implement changes to the three processes at $20 million for the three universities. Once changes are implemented, the consultants estimated annual savings of $14 million at the three schools, beginning in FY2017.
In other action, the board:
- Approved Iowa State's purchase of an Aberration-Corrected Scanning Transmission Electron Microscope ($3.66 million) for the nearly completed Sensitive Instrument Facility at the Applied Sciences Complex. Funding sources include university general funds, the College of Engineering and Ames Laboratory.
- Received an update on the University of Iowa's presidential search. Meeting Aug. 4, the search committee whittled 46 applicants down to nine candidates who will be interviewed off campus. The goal is to announce by early September no more than four finalists who will be brought to campus for interviews.
- Approved budgets for the fiscal year that began July 1. Iowa State's operating budget is $675 million; its total budget, including restricted funds and auxiliary units, is just under $1.4 billion. In comments to the board, Leath noted that 85 percent of about $19 million in reallocated dollars in the operating budget came from salary savings from retiring faculty.
- Approved a 20-year lease between the board and the ISU Research Park Corp. for about 17,000 square feet on the first and second floors of the 42,000-square-foot Hub Square Facility scheduled for completion next year. The research park will own the building and Iowa State will reimburse construction costs up to $12 million (the amount of the 2013 state appropriation for the facility and considered a prepaid base rent for the first 20 years.) Iowa State will pay its share of operating costs.
- Appointed Mark Braun, University of Iowa vice president for operational efficiency and regulatory analysis, as interim chief operating officer for the board of regents, effective Aug. 5. Braun served as the TIER (Transparent Inclusive Efficiency Review) project manager in the board office from August 2014 to April.