In Our Budget Response
As a result of the national and global financial crisis, Iowa’s Public Universities and Special Schools realized unprecedented reductions in State appropriations, beginning in FY 2009 and throughout FY 2010. At the close of FY 2010, the reductions totaled an enterprise-wide $133.6 million, a 19% cut from the start of FY 2009. While $80 million in one-time federal funds from the American Recovery and Reinvestment Act (ARRA) restored a portion of our FY 2010 appropriation, State support for Iowa’s Public Universities and Special Schools had eroded to FY 1997 funding levels (without adjusting for inflation). And, as we enter FY 2011, that one-time ARRA funding is no longer available.
Total FY 2009 – FY 2010 appropriation reductions of $133.6 million to Iowa’s Public Universities and Special Schools represent the greatest appropriation reduction to the Regent enterprise in 20 years.
Iowa’s Public Universities and Special Schools faced new challenges with each loss of appropriation dollars, particularly with respect to preserving high-quality student instruction, a hallmark of our outstanding institutions. Also at risk were our efforts to support Access, Affordability, and Student Success.
We Responded for Iowans
In doing so, the Board of Regents charged the presidents and superintendents of our institutions to undertake comprehensive, strategic reviews of their very complex operations. We asked leaders to re-think and re-focus academic and business functions for the near term and the long term, identifying additional efficiencies and operational savings, maintaining appropriate alignment of their programs with their institutional missions, and ensuring the long-term livelihood of the institutions for the benefit of all Iowans—all while minimizing any negative impact on educational quality and costs to our students.
Accomplishments for All Iowans–Enhanced Collaborations, Efficiencies, Savings, Early Retirement Incentive Programs, Reduced Retirement Plan Contributions
Under strong leadership, our institutions explored and developed new approaches for delivering education and other services. They made difficult choices as they undertook extensive program reviews and resource reallocations, charging task forces with months-long analyses of business operations and academic units.
With respect to business operations, the institutions initiated efficiency and productivity improvements, enhanced facility utilization, streamlined back-office operations, strictly limited salary increases, deferred filling open positions, implemented furloughs, and eliminated positions. The results included estimated savings of $127 million (over five years) from Early Retirement Incentive Programs, and projected savings of $13 million from reduced retirement plan contributions.
In reviewing another important component of their business operations, Iowa’s Public Universities and Special Schools continued to enhance efficiencies in their many longstanding collaborative operations. Specifically, the Regent enterprise used its purchasing scale of over $1 billion annually to negotiate strategic supplier contracts with favorable pricing, and leveraged its Information Technology systems to create business process efficiencies while maintaining its top peer ranking in productivity and efficiency. These collaborations save millions of dollars each year and have proven essential to the effective operation of Iowa’s Public Universities.
We Responded for Students
Despite the unfortunate but unavoidable academic outcomes for our students, our comprehensive response to appropriation reductions yielded other positive and significant results for our students, all consistent with efforts to promote Access, Affordability, and Student Success.
Accomplishments for Students–Held Tuiton Increase 6%Increased Financial Aid Rescinded $100 Surcharge
Our Response is Ongoing
The Board directed Iowa’s Public Universities and Special Schools to maintain their positive momentum and identify additional efficiencies and cost savings through collaborative initiatives within and between the institutions. This directive included a special focus in areas with the potential for substantial cost reductions – Information Technology, Purchasing, Human Resources, and Facilities.
In addition to benefiting the State, these initiatives will remain important factors in minimizing tuition increases and providing financial aid support for our students.
We are doing our part for Iowa’s students and their families. However, we cannot do this alone.
To minimize future tuition increases and continue financial aid support, the Board of Regents and Iowa’s Public Universities will continue their efforts, to the extent possible, to identify and implement efficiencies and savings.
The Case for Future State Support
The FY 2010 economic crisis, and the major appropriation reductions that resulted, had an unprecedented impact on Iowa’s Public Universities and Special Schools, particularly as they followed previous years of State funding cuts.
In FY 1981, 77% of our general education funds came from State appropriations. In FY 2010, for the first time ever, the State of Iowa’s contribution to the general education budget for Iowa’s Public Universities fell below the amount paid by student tuition (41.5% vs. 51.9%, respectively), as illustrated in the following graph.
The State’s total dollar contribution at the close of FY 2010 was consistent with FY 1997 funding levels (without adjusting for inflation).
In recent years, our elected leaders made unprecedented investments in Iowa’s Public Universities. However, the economic downturn of FY 2009 and FY 2010, and the resulting $133.6 million reduction in State support, eroded all of their good work. An October 14, 2010, Issue Review prepared by the Legislative Services Agency found that more than $259 million in additional State appropriations would be required to move tuition and fees at Iowa’s Public Universities back to FY 2000 levels (adjusted for median household income).
Iowa’s Public Universities will continue to do their part to minimize future tuition increases through operational efficiencies and savings. However, we cannot effect a greater change on our own. State support is critical in this effort.
Any future budget reductions will only harm our ability to protect students from greater tuition increases.
Ensuring the affordability of an education at Iowa’s Public Universities supports Iowa’s future workforce needs. By 2018, the number of new Iowa jobs requiring postsecondary education and training is projected to grow by 101,000 over 2008 levels. A total of 1.1 million Iowa jobs will require postsecondary education (including 471,000 jobs specifically requiring a bachelor or graduate degree) representing 61% of Iowa’s 1.8 million jobs in 2018. 2
The Board of Regents recognizes the need to address this changing demographic by encouraging additional State funding for Iowa’s Public Universities, which in turn supports Access, Affordability and Student Success and contributes to highly qualified graduates for Iowa’s jobs of the future. This critical contribution to the State’s economy benefits all Iowans.
We all share the goal of doing what is best for Iowa. The projected economic outcomes for 2018, and the contributions of Iowa’s Public Universities, will be measured within the current decade. We must begin now to respond to this economic need for our state.
The State of Iowa cannot afford to continue on the path we have traveled for too many years. As the financial storm begins to clear, the State must chart a different course, reprioritize and re-invest, and begin to move forward to preserve and protect the outstanding quality of Iowa’s Public Universities and Special Schools. Our children’s futures, as well as the continued prosperity of our State, depend on it.
We all have a critical stake in this effort, for our students, and for all Iowans.
2 Help Wanted: Projecting Jobs and Educational Requirements Through 2018, Georgetown University Center on Education and the Workforce, June 2010.