Accomplishments for Students – Held Tuition Increase to 6% Increased Financial Aid Rescinded $100 Surcharge Accomplishments for All Iowans – Enhanced Collaborations, Efficiencies, Savings Early Retirement Incentive Programs Reduced Retirement Plan Contributions

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

The Board of Regents recognized the State’s unprecedented economic circumstances and the need for an effective response. We expressed a commitment to absorb our share of the budget reductions for the benefit of Iowa and its citizens.

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.

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.

With respect to academics, the institutions consolidated or downsized academic programs and adjusted teaching loads. While we realized additional efficiencies as a result, our students were left with the unfortunate effects of reduced class offerings, eliminated programs, larger class sizes, and reduced library hours.

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.

• Moderate Tuition Increase – In February 2010, the Board of Regents voted to hold the tuition increase for students at Iowa’s Public Universities to 6% (well below national trends) for 2010-2011. Restoring total university budget reductions of $132 million through tuition dollars would have required a tuition increase of up to 26%, and although double-digit tuition increases were becoming the reality in many other states, the Board of Regents did not ask students to shoulder more than a fraction of the budget burden.
• Increase in Student Financial Aid – Iowa’s Public Universities increased available financial aid to unprecedented levels, particularly to benefit students with the greatest needs. We committed to increasing total tuition revenue set aside for financial aid to approximately $132.5 million annually, and to increase need-based grant aid to resident undergraduates by more than $1 million at each university.
• Rescinded Tuition Surcharge – In April 2010, the Board of Regents rescinded a $100 spring semester surcharge (reluctantly approved by the Board in December 2009 in response to appropriation reductions) when the legislature allocated one-time supplemental funds to leverage federal funding.

Our Response is Ongoing

As the global and national financial crisis continued at the close of FY 2010, the Board of Regents pledged to continue its response to the economic downturn, particularly for the benefit of Iowa and its citizens.

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.