Inside Iowa State

Aug. 6, 2009

Regents approve ISU budget, tweak radio station's budget

by Anne Krapfl

The state Board of Regents today approved an Iowa State operating budget for the fiscal year that began July 1 that is $16.3 million (3 percent) leaner than its operating budget a year ago. That loss includes decreases in state funding ($38.3 million) and investment income ($1.2 million), countered by incremental increases in tuition and fee income ($22.5 million) as well as indirect cost recovery income on research funds ($0.6 million).

However, the university will use $31.6 million in one-time federal stimulus funds during FY10 as bridge funding to development of the FY11 budget. The funds give units time to phase out or reconfigure programs or positions, or find alternative funding sources for them.

"The intent of the stimulus funds is to use one-time funds to cover one-time costs," said David Biedenbach, director of university budgets. "Our goal is to avoid any decision that sets up a funding cliff at the end of this fiscal year."

For example, stimulus funds will be used to cover the partial FY10 salaries, vacation and sick leave payouts and first year of health and dental benefits for the 210 employees approved to participate in the retirement incentive option. Under the guidelines of the program, they all will retire by Jan. 31, 2010.

About $9.4 million of the federal stimulus funds haven't been committed yet, but will be early in the fiscal year, based on the impact other stimulus funds achieve. Across campus, the federal stimulus funds will be administered and accounted for separately from other revenue and expenditure streams.

Cost increases

Recurring funds will be used to cover three key cost increases to the FY10 budget:

• Faculty promotions, merit step increases and benefit cost increases for all employees, $3.2 million. There are no cost-of-living or performance-based salary increases this year for ISU employees, including administrators.
• Student financial aid, $5.4 million (approximately 24 percent of new tuition revenue)
• Projected utility increases and compliance with safety regulations, $4.3 million

Position reductions still changing

Associate vice president for human resource services Carla Espinoza said plans for budget-induced position eliminations at the university continue to be in flux. She said she hopes to have a clearer picture of this variable in the budget by the middle of the month. Any reduction in force involving merit positions requires notification of AFSCME (American Federation of State, County and Municipal Employees), the state department of administrative services and, ultimately, the governor's office.

The board approved Iowa State's budget without questions or discussion.

Public radio budget

After considerable discussion, the board approved a change to the Iowa Public Radio (IPR) FY10 budget on a 5-2 vote, with regents Robert Downer, Craig Lang, Rose Vasquez, Bonnie Campbell and Michael Gartner approving and regents Jack Evans and David Miles opposing.

Noting the proposed declining university support of IPR from FY09 levels, Downer said each university's support of its campus station shouldn't be reduced at a rate that exceeds the total percentage of state appropriation reductions for that school this year.

Vice president for business and finance Warren Madden, who also serves as a member of the IPR board, said the plan all along has been that the three universities would phase out their support of IPR, and the radio group would seek direct state support and expand its private fund-raising capacity. He said Iowa State's proposed $400,000 allocation to IPR this year -- $100,000 less than last year -- has nothing to do with tight budgets, but is following the phase-out plan.

Madden said the board's vote means Iowa State will pay approximately an additional $25,000 to IPR this year. The university's support of IPR comes from an endowment set up at the time Iowa State sold WOI-TV in 1994.

Iowa Public Radio's FY10 budget will be resubmitted for approval at the regents' September meeting.

In other business, the board of regents:

• Approved Iowa State's proposals for $1,732,500 in Grow Iowa Value Funds for FY10. This is the fifth year of a proposed 10-year program approved by the 2005 Iowa Legislature. Seven university teams will share a total of $679,663 in commercialization competitive grants. [See related story]. Another $103,490 will be distributed to four FY09 approved projects to help address a 20 percent reduction to GIVF last August. Another $750,000 will be distributed among the ISU Research Park, Pappajohn Center, Institute for Physical Research and Technology, post-doctoral entrepreneurial program, and the office of the vice president for research and economic development for staff and activities to grow technology transfer and commercialization efforts. Finally, the vice president's office will allocate the final $199,347 in ISU's grant to projects that arise during the year.
• Gave final approval to the Vet Med college's $45.1 million Small Animal Hospital Renovation and Addition project, phase 2 of about $93 million in facility upgrades at the Vet Med campus. The project will involve renovating 80,254 square feet of existing space and constructing a 12,000-square foot addition. Construction is scheduled to begin in February, with a completion goal of June 2012. Funding sources include $25 million in public bonds (two sales), $14.8 million in state appropriations (two years) and $5.3 million in private gifts.
• Approved Iowa State's request to purchase 40 acres located south of Highway 30 and west of University Boulevard for $580,000. The land is adjacent to land owned by the university and would be used over the long term (50 years) to expand the College of Agriculture and Life Sciences' animal activities. It will be funded with facility overhead funds.
• Approved the athletics department's proposal to pay for the basketball practice facility on South Dakota Avenue in west Ames from operating revenue and donor pledges. The $6.9 million price of the facility will be paid via two components through the master lease program administered in the ISU treasurer's office: $5.9 million at a fixed rate and $1 million at a lower variable rate, which also would allow early repayment without penalty.

"The intent of the stimulus funds is to use one-time funds to cover one-time costs. Our goal is to avoid any decision that sets up a funding cliff at the end of this fiscal year."

David Biedenbach, director of university budgets