New budget relies on reallocations

The operating budget university leaders built for the new fiscal year will rely more on reallocations than new revenue to achieve top priorities and needs. Meeting telephonically Aug. 1, the state Board of Regents approved an Iowa State budget that includes $10.1 million in incremental revenue and $8.1 million in reallocations to cover priorities such as salary increases, faculty promotions and support for academic programs as well as mandatory cost increases. An additional $12 million in reallocations created the 10 service teams that launched July 1 in the improved service delivery model.

President Wendy Wintersteen's top budget priority, salary increases for faculty and staff, will cost about $7.8 million. The July 1 and Oct. 1 salary increases for faculty, professional and scientific staff and post docs will cost an estimated $7 million; the July 1 increase for merit staff about $816,000.

Wintersteen told the regents Iowa State will enroll fewer students this fall than a year ago, causing a decline in base tuition revenue despite rate increases. However, that will be offset by additional differential tuitions for students in engineering, business, industrial technology, architecture and other programs that cost more to offer. That differential tuition, approximately $6.7 million, will go directly to the respective programs to maintain or enhance their quality.

Wintersteen said she wants Iowa State to be known for student innovation and entrepreneurship across all colleges and disciplines, not just its STEM programs. A much-anticipated priority is the spring opening of the Student Innovation Center.

"Students and faculty will have an exciting hub to test theories, build prototypes, pitch ideas and spin off exciting new businesses to help grown Iowa from the ground up," Wintersteen said. With more than 18,000 ISU students each year coming from within the state -- and nearly two-thirds of them typically remaining in Iowa after graduation -- "Imagine the impact they will have on the future of this state when they take their innovations and entrepreneurial ideas to the next level."

Reallocations will fund the estimated $1.4 million cost of opening the Student Innovation Center.

FY20 General Fund: Incremental revenue

FY20 General Fund: Strategic and other costs

*Examples: insurance premiums, CyRide subsidy, fire protection contract

Big picture

Iowa State's general fund operating budget for the year that began July 1 is $742 million, an increase of about 1.4% over a year ago. The top revenue sources are tuition and fees ($471.3 million, 64%) and state appropriations ($230.6 million, 31%), nearly identical ratios to the last few years. The restricted budget, made up primarily of auxiliary units and other operations that receive no state funding -- residence, athletics, parking or the bookstore, for example -- is nearly $787.9 million this year. The restricted side of the budget includes state appropriations totaling $19.5 million for two building projects:

• $12.5 million for a new Veterinary Diagnostic Lab, year two of a six-year commitment
• $7 million for the Student Innovation Center, year four of a six-year commitment

Iowa State's overall budget is $1.53 billion, an increase of about 1.6% over last year's budget. About 60% of the growth is in restricted budgets.

Other business

The regents unanimously approved ISU requests to:

• Begin planning a new teaching, research and faculty office building on the west edge of campus for the industrial and manufacturing systems engineering department. The department currently shares Black Engineering Building with the mechanical engineering department, and a 2014 space study indicated both departments need more space. The estimated cost, about $40 million, would be covered by private gifts.
• Purchase an 18,200-square-foot warehouse on about four acres at 2105 East Lincoln Way to serve as ISU’s central receiving facility. It currently shares a building on Airport Road with the surplus unit. The proposed price is $1.45 million, covered with lease revenue funds.
• Lease to the city of Ames, for $1 annually, 9.5 acres at the northwest corner of the Scholl Road/Ontario Road intersection so the city can develop it for the proposed Healthy Life Center. This lease would be the university's contribution to the project.
• Change the name of two master's programs, for consistency. The master of engineering and master of science programs in information assurance would become the master of engineering and master of science in cybersecurity. The change aligns with the new bachelor's degree in cybersecurity.