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May 3, 2002
Volume 39, No.14


Answering difficult questions: University's budget dilemma isn't easy to explain
Old Capitol's recovery stage requires patience, precision
President: Look for vital messages on e-mail
Staff Council's new president: Let's work together
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Answering difficult questions: University's budget dilemma isn't easy to explain

dollar bill

You’ve probably been in this predicament.

You’re getting your hair cut, or at a party, or waiting in the checkout line at the grocery store and someone says, “You know what I can’t understand. The University has plenty of money to build new residence halls or pay coaches millions of dollars but not enough money to pay salaries. Why don’t they just transfer that money into salaries and stop the construction for a while? That’s what we have to do in business. We can’t always afford luxuries all the time…”

And there you are, wishing you knew the budgeting process much better than you do.

Here’s a brief primer on the way the budget dollars are sliced, avoiding complicated budgeting language as much as possible:

“Why does construction continue around campus, even though the University has been vocal about state allocations being cut?”

Football photo
Athletics and residence halls are two areas that generate revenues to pay for their own expenses. Coaches’ salaries come in part from ticket sales to fans; the money paid by students for board and room helps to finance renovation of residence halls. Photos by Tim Schoon and Kirk Murray.
Hillcrest Market Place

Even in difficult times, we must have first-rate facilities in order to provide a first-rate education to our students. It’s also important to know that new buildings are financed from a variety of sources. Academic buildings, such as the one that will house the School of Journalism and Mass Communication, do receive support from state tax funds. Other buildings do not receive state funds. For example, the proposed new westside residence hall will be funded out of residence hall fees and bonds. The new Pomerantz Career Center will be funded with private gifts.

“I’m not going to buy the University’s arguments as long as they pay (X coach) millions of dollars.”

Not all people who are state employees are paid from taxes collected from Iowa citizens. Most notably, Hawkeye basketball coach Steve Alford and football coach Kirk Ferentz are not paid with money from Iowa taxpayers. Their salaries come from revenue generated by the athletic department, including ticket sales, broadcasting rights, and gifts.

“I read the Salary Guide when it comes out in the Iowa City Press-Citizen, and most of the really big salaries go to physicians at the hospital. Is that the same thing?”

College of Medicine faculty who teach the next generation of health care providers and treat patients at University of Iowa Hospitals and Clinics get the lion’s share of their salaries from patient revenues and federal research grants. Less than 10 percent of their salaries come from Iowa taxes. It’s also important to note that in recruiting qualified people for these positions, we compete in a national market.

“To make up for the state cuts, tuition has been increased 19 percent for the 2002-03 academic year. It’s getting to be really expensive to go to Iowa, especially since residence hall rates have risen, too. Is it getting to be too expensive for kids in Iowa to attend?”

Evidently not. Applications for next year are coming in at a high rate. The 19 percent increase in tuition for 2002-03 is less than $700 for in-state students. Iowa is still the best bargain in the Big Ten Conference and one of the best values in public higher education nationwide.

One other thing to remember: For every tuition dollar paid, 16 percent goes into student financial aid.

Here’s a surprising fact: 38 percent of our undergraduate students graduate with no debt. Among seniors graduating with an undergraduate degree, the average need-based debt was under $10,000.

“I can’t imagine why the University needs to employ so many people. You’ve got 28,000+ students and, if you count the student employees, 23,000 employees. Do you really need almost one employee per student?”

That’s a very misleading figure. It ignores the fact that The University of Iowa employs the equivalent of 4,800 full-time employees at UI Hospitals and Clinics and that those employees serve more than 830,000 patients in a year’s time. Likewise, through its research, athletics, and cultural enterprises, the University attracts funding for the equivalent of another 5,800 full-time jobs. Those are all jobs not funded by taxes paid by Iowans and they are a real economic boon for the state. The employees pay taxes and make purchases from Iowa businesses that create additional Iowa jobs.

This spring, The University of Iowa employed a full-time equivalent of about 14,000 employees, excluding students. About 24 percent of those positions are paid from the University’s General Education Fund. Since state appropriations—money from Iowa taxpayers—account for about 60 percent of that fund, you could say that Iowa taxpayers are effectively paying the salaries of about 15 percent of the University’s nonstudent employees.

The University deeply appreciates the support of Iowa taxpayers, but it’s important to know that beyond the jobs provided by state support, our health care, research, athletics, and cultural enterprises generate revenues to provide more than 10,000 full-time equivalent jobs for nonstudents.

The other thing to say, of course, is that we need enough employees to do the counseling, advising, instructing, and service that a student expects. We need to have enough instructors to fill sections of the courses your student needs, so that four-year graduation is not a dream but a normal accomplishment.

“When the cuts first started this year, President Mary Sue Coleman voiced concern about becoming more of a private institution as state support waned. What’s wrong with that? Wouldn’t it give us a lot more control over our funding? Can’t we get along without the state?”

President Coleman said it best in her Convocation speech last fall: “Public education is the foundation of democracy, precisely because it is public and accessible. Public institutions are the expression of our collective will, what we hold in common for the greater good. Public institutions sustain our private and individual freedoms, our democracy.

“The public trust implied in higher education is thus reciprocal. The citizenry trusts that education will help create a better society. And the citizenry is, in turn, responsible for providing part of the resources necessary to accomplish that mission. This sense of mutual obligation that underpins the public university cannot change without a fundamental loss to our culture and to our democracy.”

Article by Steve Parrott and Anne Tanner

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