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Committee offers new way to fund state universities

University of Iowa

By Sharyn Jackson

A committee tasked with recommending a new way to fund Iowa’s three universities finished up its proposal to the Iowa state Board of Regents Monday, but not without disagreement.

The board is seeking to move toward performance-based funding, which links taxpayer dollars to measures like graduation rates and minority enrollment, rather than a fixed distribution of money to the universities. But disagreement arose over basing the metrics on students from Iowa vs. all students.

The budget model the group proposed would consider above all the enrollment of Iowa residents in full-time degree programs in each of the three universities.

For decades, taxpayer money in Iowa has been split about the same way: 42 percent, University of Iowa; 42 percent, Iowa State University; 16 percent, University of Northern Iowa.

The fixed funding “that has been unexamined for decades is not working, and has gone terribly out of whack,” said David Miles, a former regent and chair of the four-person task force. “There’s no question in my mind that we must change what has been the past practice.”

The group has studied metrics over the last eight months to determine the best way to award funding based on performance, a discussion that is underway in a majority of states. Experts say performance-based funding brings greater transparency and accountability to public higher education.

“The bottom line is it’s going to be better for our universities and our students,” said Katie Mulholland, Board of Regents president pro tem and a member of the committee.

The Board of Regents will review the task force’s recommendations, then submit its final funding proposal to the Iowa Legislature for inclusion in the state budget during next year’s legislative session. The changes to university funding would begin in fiscal year 2016.

Under the task force’s proposed model, funding would be based 60 percent on enrollment; 5 percent on degree progress; 10 percent on graduation rates; 10 percent on access of education to minorities, low-income students and veterans; and 5 percent on job placement of all students within five years of graduation. The last 10 percent is split — half based on sponsored research at the university, and half based on customized measures of quality determined by the universities and the Board of Regents.

But one member of the committee, Len Hadley, retired CEO of the Maytag Corporation, disagreed with the idea that only resident students should be part of the equation. He also wanted the degree levels to be weighted, with more points going to graduate degrees.

“I’m disappointed because of that,” said Hadley, who plans to submit his own recommendations to the Board of Regents.

At the University of Iowa, which has higher out-of-state enrollment than the other schools, as well as more students in advanced-degree programs, there would be less reduction under Hadley’s plan than under the proposal approved by the rest of the committee.

“It greatly affects the allocation of funds by schools, because the weightings are different,” Hadley said. “Some of the concerns about how do we ease the pain at University of Iowa? Well, if we do it my way, there wouldn’t be any.”

Hadley also felt there should be a different model entirely for the UNI, which largely enrolls Iowa residents.

The other task force members — Mulholland; Cara Heiden, retired co-president of Wells Fargo Home Mortgage; and Mark Oman, retired senior executive vice president of Wells Fargo and co-chair of the Board of Trustees of the UNI Foundation — agreed that only in-state enrollment should be considered when it comes to allocating state tax dollars.

The transition time to implement the new funding would take two to four years, and reallocation would be capped at 1 percent to 2 percent per year, as per the group’s recommendations.

“I think it’s a tremendous step forward for the regents and the institutions,” Miles said.

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