Regents approve budgets but don't rule out changes

In a non-unanimous vote, the Iowa Board of Regents approved university budgets July 30 for the fiscal year that began July 1. Regents Christine Hensley and David Barker voted against approval, mostly as a means to share their concern for the process. Barker was uneasy about a lack of contingency planning in the operating budgets given funding uncertainty at the state and federal levels. Hensley, a former Des Moines City Council member, said she was surprised to have less than two weeks to study and understand the proposed university budgets. She also shared concern about the growth in the general university operating budgets (5.7% at Iowa State, 5.9% at University of Iowa). 

The board's chief business officer, Brad Berg, said budget growth shouldn't be perceived negatively. The universities are educating more students and the University of Iowa's hospital footprint has grown, both positive trends, he said.

Following a 7-2 vote to approve the university budgets, the regents approved a second motion directing its investment and finance committee (Barker, Hensley and Nancy Dunkel) to meet in the next month to both review the board's budget review process and receive more detail about the university budgets, possibly in sessions with each university's chief financial officer. Depending on what they learn, the regents could consider amendments to the fiscal year 2026 budgets at their next meeting. 

Budget challenges for athletics

The FY26 budget of the athletics department, a self-supported auxiliary unit that receives no state funds, is $141.1 million, $27 million (23%) more than last year. Key factors in the increase are new contracts for the football and men's basketball staffs, bond payments on the Scheman renovation project (Johnny's at Scheman) and an additional road game for the football team in the 2025 season. But the big one is an initial $20.5 million in required revenue sharing with Cyclone student athletes.

Compensation for student athletes is one piece of the June settlement of a 2020 class action lawsuit by college student athletes against the National Collegiate Athletic Association (NCAA) and five athletic conferences, including the Big 12 Conference. The student athletes argued successfully that the NCAA and the five conferences restricted their ability to profit from their publicity rights, also known as name, image likeness (NIL). The settlement provided a funding model for universities to directly compensate their current student-athletes with a cap that will increase annually -- and starts at $20.5 million/school for the 2025-26 school year. Division 1 schools also will receive less in revenue sharing from the NCAA over the next decade, their contributions to $2.8 billion the NCAA must pay to student athletes from the 2016-24 era.

Six additional schools in the Big 12 Conference and a new revenue distribution model for the national college football playoffs that negatively impacts the Big 12 are additional factors in the athletics FY26 budget deficit.

To balance this year's budget, the athletics department will use a one-time transfer of $26.7 million from its reserves at the ISU Foundation; this will not be an option next year or subsequent years. Other strategies to boost revenue or cut spending in the new budget include:

• Cease the practice of absorbing state sales tax on event tickets, to generate $1.5 million.
• Implement 20% increase to all membership levels in the Cyclone Club, to generate $3 million.
• Implement cost reductions in all sports; most significant change is to travel for Olympic sport teams.
• Postpone two previously approved or proposed building plans: a $25 million renovation to Hilton to widen the outer concourse and upgrade concessions spaces (2019), and a $20 million renovation of and addition to the Lied recreation facility for the wrestling and track and field programs (2023).

Special meeting to discuss diversity in curriculum proposal

Board president Sherry Bates announced the regents would hold a special meeting to return to a policy proposal on diversity, inclusion and critical race theory in course curricula at the universities. That meeting subsequently was scheduled for Tuesday, Aug. 12 (1 p.m., board office in Urbandale). A second reading wasn't in the board's July agenda due to ongoing discussions, she said. The regents' June meeting included a first reading and board discussion.

Instead of adding a new section to chapter 3 in the board's policy manual, a revised proposal (PDF) adds language to two existing sections on academic freedom and notification of students on class content, respectively.

"It's become clear we would be better served by something more comprehensive. Our universities must continue to be places where the free flow of ideas and opinions matter, both inside and outside the classroom," Bates said. "We do not want our students to be indoctrinated."

The most important thing is to get the policy right, she noted.

Bates also addressed a July 29 television news story that featured video of a University of Iowa employee discussing strategies for working around state and federal restrictions on diversity, equity and inclusion. Gov. Kim Reynolds subsequently directed Iowa attorney general Brenna Bird to investigate the potential violation of state law. 

"Following the law is not optional, nor is working around the law. Any attempt to skirt the law needs to be dealt with swiftly," Bates said.

The board supports Bird's review of the incident and will "take any action needed to correct this very problematic situation," she added.

As part of her regular report to the regents, Iowa president Barbara Wilson reported that the university launched its own investigation and contacted Bird's office to coordinate their efforts. If policies or laws were violated, Wilson said university leaders will take the necessary corrective actions "to reinforce the trust that's placed in this university."

After the regents approved a plan for the universities to comply with the new state law (Senate File 2435) at their November 2024 meeting, President Wendy Wintersteen stated, "we will comply with the law as we continue to support the educational success of all students and cultivate an environment where all members of the Iowa State community feel they belong."

In other action July 30, the board:

• Directed each university's senior vice president for finance and operations to complete a facility analysis of their campus' presidential residence. Because it's in the middle of a presidential search, Iowa State's report is due by the September meeting; the other two universities have until the November board meeting to prepare a report that includes a review of routine maintenance, deferred maintenance, necessary upgrades and renovation recommendations (if any), including cost estimates and renovation alternatives. The most recent replacement projects and exterior renovation of the Knoll were completed in 2016-18.
• Approved the University of Northern Iowa's request to charge resident tuition ($8,792 base tuition) to new non-resident undergraduates (first-year or transfer) from the six states bordering Iowa, starting this fall. Returning non-resident students will continue to pay out-of-state tuition rates ($20,950 base tuition).