Despite hikes, tuition income falls short

Vanessa Miller

The Gazette

With Iowa’s Board of Regents virtually certain to raise tuition again, the state’s public universities reported news this week that’s sure to complicate the debate over how much of an increase is appropriate:

Despite hikes last year, they fell millions short in raising the tuition revenue forecast.

That gap is largely because the regent universities actually are hurt financially by admitting students from Iowa — who pay the lowest tuition rates. For the last academic year, resident students made up a larger proportion of enrollment than projected.

As documents released this week by the Board of Regents show, tuition increases do not assure more revenue. The regent system requires admission to its universities for Iowa students who meet certain academic requirements.

The University of Iowa’s tuition revenue, for example, totaled $453.8 million — which was $6 million under budget “due to a higher number of resident versus non-resident students in the entering first-year class.”

Iowa State University’s tuition revenue came in close to $1 million under budget. And the University of Northern Iowa’s tuition revenue fell $1.3 million short.

And that was despite a 2 percent tuition increase for resident undergrads, and other larger increases for other classes of students.

When coupled with deep cuts in state support for the institutions — amounting to $20.8 million in fiscal 2017, which the Legislature took back midyear — the Board of Regents’ general fund revenues came in 1.5 percent under budget at $1.64 billion. (That excludes UI Health Care’s operating revenues of $1.4 billion.)

At the same time, the board’s general fund expenses exceeded planned spending by $4.1 million.

Adding its state revenue reduction, the board’s expenses exceeded revenues for the year by $28.6 million, the report said.

The board’s fiscal shortcomings were precipitated by those at the state level, which saw worsening declines in revenue projections that prompted lawmakers to pull back money from departments statewide.

Because each university is unique — with different student dynamics, priorities and losses — each university absorbed the cuts differently.

They all saved on supplies, services and equipment. The UI and UNI also reduced building repair expenses, but ISU saw a significant increase in those costs — coming in nearly $29 million over budget — due largely to expenses associated with the Bioscience Facilities and Student Innovation Center projects now under construction.

The $88 million work is being funded both by the state and ISU, with the state’s $50 million spread over four years.

“The timing and amounts of the expenditures in relation to the availability of the appropriations and other revenue sources for the project resulted in a larger amount of university funds being expensed for the project during FY 2017,” said board spokesman Josh Lehman said.

ISU dipped into its reserve accounts, but issued bonds in September in order to recoup costs incurred in the biosciences facilities projects, board documents show.

Although UNI reduced salary spending by more than $7 million, the UI and ISU increased salary and wage expenses.

The UI spent $2.1 million more to pay its employees — as President Bruce Bruce Harreld has made it a priority to improve faculty pay amid other cuts. ISU spent $2.5 million more on salaries.

Both also increased student financial aid, while UNI decreased it.

The drop in state aid continued the trend of tuition revenue accounting for more of university operating revenues than legislative support.

Tuition revenue today accounts for 59 percent of the regents’ $1.62 billion operating revenues, while state appropriations account for about 35 percent. In 1981, appropriations made up 77 percent of regent general education funding, while tuition was 21 percent.

The shift has university presidents calling for more tuition increases, should lawmakers decline to increase support. And the UI’s Harreld also has asked for more campus control over admission standards that could affect how many students from Iowa the university accepts.

The board is crafting proposed tuition rates for next academic year, but has given no time frame for when it will vote.