Inside Iowa State: Iowa State University

May 2, 2003

Budget picture clears as session winds down
Increased administrative fee among strategies for a balanced budget

by Anne Krapfl
Standardizing the administrative fee the university charges to its auxiliary, self-supporting units is one of the revenue-generating recommendations made this spring by the advisory committee on budget and planning and approved by President Gregory Geoffroy.

Since last fall, the advisory committee has been researching and weighing ideas for cutting costs or generating additional revenue for the university. Despite the prospect of yet leaner budgets, a committee objective remains to enhance the excellence at Iowa State, said vice president for academic affairs and provost Benjamin Allen, who chairs the advisory committee this year.

The administrative fee, which covers university services such as payroll, accounting and security, ranges from about one-half percent to 2 percent of the units' external revenue. (Private gifts, student tuition and course fees are excluded from the tally.) Currently, the fee is charged only to some of the auxiliary and self-supporting units. The goal is to assess the fee to all units and, over several years, increase it to 4 percent, identical to the "overhead" fee the university collects on sponsored research income and within the range of administrative fees charged at other Big 12 Conference universities.

The committee's survey of Big 12 schools showed that most have administrative fees between 2 percent and 5 percent.

All auxiliary units use the university's administrative services. They include departments such as athletics and residence, WOI Radio, Iowa State Center, university museums, the veterinary clinic, and continuing and extended education.

"The idea for a consistent administrative fee came as one of the 'good ideas' e-mailed to the committee," Allen said. "The committee's rationale for our recommendation is that, if so-called 'subsidies' exist on campus, they should be done in the form of a direct appropriation to the unit, not through differential fees."

According to the proposal, the rate initially will be standardized at 2 percent, with subsequent annual increases of 1 percent until the 4 percent goal is reached.

The administrative fee currently brings in revenues of about $1.2 million for Iowa State, Allen said. Standardizing the fee would bring in an additional $1.6 million in FY04.

"The committee's charge is a difficult and, frankly, sometimes thankless one, but I think the group is doing a commendable job of finding and reviewing strategies for trimming our budget without sacrificing our commitment to excellence at Iowa State," Geoffroy said. "I want to thank them for the thoughtful recommendations they have forwarded to me."

Other good ideas
Allen said 80 cost-cutting or revenue-generating suggestions have been submitted this year to the advisory committee (e-mail to goodideas@iastate.edu). Committee members discuss and rank all suggestions they receive, and select a smaller group for further study, he said.

"We thank the university community for your ideas and we encourage you to keep sending them," Allen said. "Some will take some time to pursue, but they all receive our attention."

The committee was meeting this week to consider a list totaling about $500,000 in proposed savings. The proposals in the list focused on shifting operating costs to other funding sources.

Following are other committee recommendations that Geoffroy has approved this spring:

Establish an office of chief information officer (CIO and support staff) to coordinate all information technology resources for better efficiency and effectiveness. Start-up costs are expected to be offset by efficiencies the CIO will identify and implement.
Implement the guidelines and process that support Geoffroy's goal of creating, through central funding, additional faculty positions. The proposed positions, which can be developed at the department level and will be prioritized at the dean and provost level, will enhance existing programs and support emerging areas of strength at Iowa State. According to the guidelines, developed by the advisory committee, the proposals also should support Iowa State's strategic plan, land-grant tradition and commitment to increasing diversity. (Departments will continue to create and fund other faculty positions as well.)
At the time an employee leaves Iowa State, treat vacation payout and maximum sick leave payout as a termination payment, not a wage or salary payment (which would be consistent with the way most universities handle it). This eliminates the cost of employer TIAA-CREF retirement contributions, for an estimated savings of about $120,000 per year.
Change the type of employee disability contract ISU has, to reduce premium costs by 25 percent. (ISU would forego interest payments it receives on reserves held by the insurance carrier. Current market conditions make this option less lucrative anyway.) The administrative change would not alter employee benefits but would save an estimated $550,000.