If youve been following the headlines in Iowa news media recently, you know that the state of Iowa has a budget shortfall caused by slowing state revenues. It has caused Gov. Tom Vilsack to impose a 4.3 percent cut across-the-board on all state agencies, including The University of Iowa, in the current fiscal year that ends June 30, 2002. This cut comes on top of an earlier reduction of $18.7 million in the Universitys appropriation for this year.
As a result, The University of Iowa has had to find places to cut an additional $13.5 million from its current budgetwith only two-thirds of the budget year remaining.
To do that, officials announced a plan in November. The plan specifically exempts the four-year graduation plan, student financial aid, and library acquisitions from any budget reductions. Then it asks University administrators to cut their budgets by about 2.3 percent while the Universitys colleges trim about 1.6 percent. It also asks department heads to review existing programs to see if some can be reduced or eliminated.
The state is facing serious revenue difficulties and the University needs to be part of the overall solution, President Mary Sue Coleman said. However, with several state budget cuts in the last three years, I am concerned about the future of long-term public support for our state universities in Iowa.
How Do the Cuts Affect Students?
To gain more revenue, an 18.5 percent increase in tuition and fees has been approved by the Board of Regents, State of Iowa. Its the largest increase in more than 20 years, and it comes on the heels of a 9.9 percent increase last year. In-state students would pay $4,191, up from $3,522, and out-of-state students would pay $13,833, up from $11,950.
Student financial aid, which was exempted from reduction, will gain some funds because of the tuition increase. The University devotes 17 percent of each dollar received through tuition to financial aid. That policy will continue.
While the number of merit-based scholarships grew during 2000-01, 77 percent of all money that came to the Office of Student Financial Aid from tuition was awarded in need-based scholarships. The remaining 23 percent went to merit-based scholarships, but the recipients of about 48 percent of the merit-based awards also demonstrated financial need.
Another factor in the budget picture is the $2.5 million in unanticipated revenues that came to the University when a near-record freshman class enrolled in fall 2001.
While tuition and financial aid revenues directly affect students, other effects of the budget cuts are more subtle. For example, Coleman announced in October that six research grant programs have been suspended, saving $1.2 million. But one of those programs financed undergraduate research experiences.
The University plan for budget reductions also may mean deferred maintenance of campus buildings. Maintenance funding already is running at only half the standard minimum that University officials believe is necessary. This may mean that undergraduates attend classes in less-than-optimum conditions.
The College of Liberal Arts and Sciences also is considering a proposal to cut the number of semester hours required for graduation from 124 to 120. Over time, this would achieve a considerable savings in needed staffing and facility space, considering that the Universitys 18,000-plus undergraduate students would need one fewer class apiece to graduate.
How the Budget Works
Coleman, in a message to the University about budget cuts, noted, Perhaps the most common (misconception about the budget) is that money from one area of the University can be used to replace money cut or decreased in another area. Nearly all the money that comes into the University is designated for a particular purpose.
Student tuition payments and appropriations from the state of Iowa go into the General Education Fund, which primarily funds salaries for faculty, 61 percent of the total salaries paid; professional and scientific staff, 19 percent; and general service salaries, 20 percent. Other General Education Fund revenues pay such expenses as utilities, building renewal, equipment, and student financial aid.
A grant totaling $1 million from the National Institutes of Health for cancer research must be used for that purpose, Coleman said. It cannot be used to pay an English professor or a secretary in the College of Liberal Arts and Sciences. The vast majority of gifts received by the University are likewise restricted in use.
Thats true of funds brought in by athletic ticket sales or from the rights to television broadcasts, she noted. Coaches salaries tend to be paid from external sources of income, such as endorsements. General Education Fund money pays for scholarships and salaries for womens athletics.
Its also true of University of Iowa Hospitals and Clinics, which have a $573 million budget. Of that, only $47.3 million is paid by the state for care of the indigent, the Psychiatric Hospital, and the Center for Disabilities and Development. The remaining revenue comes from patient charges, including payments made by insurance companies, Medicare, and self-paying patients.
Are Layoffs Coming?
Since most of the state-funded budget areas have to do with salary expense, one solution is to curtail University jobs. In response to the earlier state appropriations reductions, 107 unfilled positions have been held open for this fiscal year. It is anticipated that 158 more positions will be lost as a result of the new budget reduction.
The University has postponed searches for several top University jobs, including the vice president for University Relations, registrar, and assistant vice president for human relations.
Coleman has said that, as much as possible, the cuts will be made through normal attrition. The University has about 1,700 faculty members and about 13,000 staff people.
Other likely reductions include:
If you have questions on budget matters, check Colemans page on the University web site. Look for the link to Budget Issues, which is updated regularly: www.uiowa.edu/president/budget.
While these changes will have strong effects for the University, the situation could have been much worse. Another proposal that was considered suggested that the Regents institutions absorb 43 percent of the revenue shortfall in cuts, which would have made The University of Iowa reduce by $21.9 million.
There is a very big difference in the consequences of reducing our budget by $21.9 million versus $13.5 million, said Douglas K. True, UI vice president for finance and university services.
By Anne Tanner