Late last week Chet Culver, the governor of Iowa, announced an immediate, across-the-board 10-percent cut in the budgets of all state agencies that report to his office. As far as I can tell, this cut is retroactive to the beginning of the fiscal year last July, which makes it even worse, as this year’s budgets are already probably 25-percent spent.
There’s some comfort, perhaps, in the knowledge that historically, Iowa almost always lags behind most of the country in going into a recession, hitting the bottom, and in recovery as well. While we had tough times last year, they were nothing like those afflicting much of the rest of the nation. So this pattern may mean that other states are on the road to recovery, which would be good news.
However, the other bit of news—less openly discussed—is that the state government is preparing for another round of cuts for fiscal 2011, which strongly implies that our state leaders don’t think Iowa’s economy has bottomed yet. If that is true, then Iowa’s status as a lagging indicator is perhaps not so comforting for other states.
These budget cuts are a problem for all the higher-education institutions in the state, not just the three public universities. For them—the University of Iowa, Iowa State University, and the University of Northern Iowa—these cuts will be devastating. They have never been “rich” as public institutions go, and have a long history of excellence and fiscal responsibility that has left them very little “fat” to cut.
They are, beyond a doubt, tremendous engines of economic development for Iowa, and any further disinvestment in them will have significant negative consequences for the state for a long time. All three will have to cut course offerings, lay off faculty and staff members, and restrict other expenditures in painful ways to make it through this budget year.
But Iowa’s many private institutions will face challenges as well. Most importantly, the state government has a program called the Iowa Tuition Grant, which gives need-based grants of up to $4,000 annually to Iowa undergraduates attending Iowa private colleges. The ITG spares the state from having to support at least one, and probably two or three more good-sized public universities. (This subsidy makes a lot of sense fiscally: Oklahoma, for example, has about 12 public four-year institutions and numerous branch campuses to serve a population only 20 percent larger than Iowa’s, and obviously spends significantly more money to do so.) It’s an inexpensive program that helps keep educated Iowans in Iowa, but it may have its funding cut this year.
My university and most or all of the other small private institutions in the state receive some support from the ITG that makes a difference in our budgets. Our share of the cut for our on-campus students is enough to hire about four faculty members. If we absorb the cut, we will have to find the money somewhere else.
The public institutions in the state have it a lot worse, and I feel for them. I married into a family of Iowans, all of whom attended the public universities in the state. They are excellent institutions that serve the state and the nation very well indeed. This year’s budget cuts are bad for everyone who cares about higher education here and hopes to keep Iowans in Iowa for their educations and, later, careers.
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7 Responses to More Bad Economic News
superdude - October 15, 2009 at 11:55 am
I would argue that the ITG is a waste of taxpayer money. With three excellent publics in the state, all of which could easily absorb every single undergraduate at the privates, spending public funds to support privatized education is silly. The state should be promoting its own institutions rather than providing public money to pursue privatized gains.So the ITG fails regarding efficiency and a more normative argument.
david_r_evans - October 15, 2009 at 12:26 pm
Superdude, respectfully, I think you’re wrong, for several reasons.First of all, on the efficiency front, the maximum ITG is $4,000, and the average grant before the cut is around $3,195, according to the Iowa House Republicans website (http://iowahouserepublicans.com/private-college-students-lobby-for-the-iowa-tuition-grant/comment-page-1); the total appropriate is about $48 million. I would venture that the state spends considerably more than that per student at the Regents Institutions, probably on the order of $10,000-$12,000 each. This assertion is supported by several factors, the easiest of which is that the 2007-2008 in-state tuition at Iowa was $6,293, while the out-of-state tuition was $19,465. Generally (I don’t know if this is true for Iowa), state universities try to have their out-of-state tuition be close to 100% of the expenditure per student. There is some subsidy to in-state students built into this, since most formula funding is on a per-capita basis without regard to in-state or out-of-state status, but the ultimate point is that Iowa spends much less than half as much to subsidize an Iowa student at a private than it would to provide a space for that same student at Iowa, ISU, or UNI.Moreover, there are well over 30,000 undergraduates in Iowa’s private institutions. I don’t know the overall percentage of them who are actually Iowa residents, but I’m certain that over 20,000 of them are. ISU and UNI are both at or over their physical capacities now, though Iowa is slightly under-enrolled. But the three together could not accommodate an influx of 20,000 new students without very significant capital expenditures.Finally, from a public policy standpoint, one of the main goals of the Iowa government is, and should be, to keep Iowans in Iowa. We have a real problem of an aging population, out-migration, and other issues that will, in the longer term, pose serious problems to Iowa’s ongoing fiscal sustainability. The ITG is a huge incentive to keep Iowans in-state to go to college, and at least our records show that the tremendous majority of our grads do, in fact, stay in Iowa, and in the longer run a signicant number of them return. So relative to maintaining the tax base and economic vitality of the state, our alums represent a great investment of tax money in terms of payoff in a 5-10 year timeframe.The privates in Iowa are Iowa’s own institutions. The culture of the state, and the structure of the Regents Institutions, reflect a long history of collaboration between the state and both the public and private schools. The entire budget of the state was about $6 billion before the forthcoming cut. $48 million of that is significantly under 1%, and it costs each Iowa a bit less than $16 each year. It’s a cheap way to strengthen education in Iowa, keep educated Iowans here, and support institutions that contribute very substantially to many communities across the state.It’s a bargain and it’s very smart public policy.
david_r_evans - October 15, 2009 at 12:28 pm
PS: Sorry for the typos. It’s hard to proofread a long post in the comment section.
jruiz - October 15, 2009 at 7:12 pm
Is Buena Vista still part of the college consortium which offers tuition reciprocity to children of faculty? This, I thought, was a tremendous attraction for faculty who may have wanted their kids to go to St. Olaf, Gustavus, or Luther.
11218946 - October 15, 2009 at 8:48 pm
As a multiple degree UI gruduate, I discontinued my donations when I learned that the major sports coaches were paid amounts that far exceeded the salaries of the University’s President, the most pretigiuus faculty, etc. I understand that my paltry donations were segregated from athletics but I wondered “If the state is in such financial difficulty, why not restructure its athletic operations, limit the athletic budget, etc.? Can athletics exist without the University? Can the University exist without athletics? Should coaches be paid in excess of one million dollars? Why? Is there a shortage of good, experienced college coaches who would happily be at UI for 1/2, 1/4, 1/5 or__ of the salaries of those presently under contract?
david_r_evans - October 16, 2009 at 11:07 am
J, we’re members of several consortial tuition-exchange programs. I’m not sure about Olaf and Gustavus, but we have a program with the Iowa Conference (Coe, Cornell, Central, Luther, BV, Loras, Dubuque, Simpson, Wartburg) and we participate in the CIC tuition exchange as well, which probably does include the other schools you mention.It’s a huge deal for employees. The reciprocity isn’t just for faculty but for staff as well, for whom, generally, it’s an even better deal.
shanewa01 - October 31, 2009 at 1:52 pm
I discontinued my donations when I learned that the major sports coaches were paid amounts that far exceeded the salaries of the University’s President, the most pretigiuus faculty, etc===========================================shaneMLS