Inside Iowa State

Aug. 6, 2008

Compensation increases make up largest piece of new dollars in FY09 budget

by Anne Krapfl

Iowa State's budget for the fiscal year that began July 1 will grow by 7 percent over last year. About 45 percent of the new funds are ISU's portion ($16.13 million) of the state salary appropriation and will help cover employee salary and benefits increases, president Gregory Geoffroy's top priority. Significant new tuition dollars will be used for student scholarships and financial aid ($4.03 million) and, under the new resource management model, allocated to colleges according to projected student enrollment increases ($4.67 million).

ISU leaders will seek approval of the proposed FY09 budget from the Board of Regents, State of Iowa, when the board meets Aug. 6-7 in Cedar Falls.

"We remain committed to a multi-year effort to improve the competitiveness of our faculty salaries among our peer universities," Geoffroy said. "Making progress is proving to be a challenge, but this remains a top priority for me."

He said Iowa State faculty salaries currently stand at about 95 percent of the mean of the 11 peer land-grant universities.

The proposed budget contains a net $35.80 million in additional dollars, including $21.52 million in anticipated new tuition and $16.29 million in new state appropriations. Interest income from university investments is expected to be about $610,000 less this year and adjustments totaling $2.06 million will align revenues with expenditures in the various responsibility centers to implement the new budget model. In addition to the new revenues, the university will report to the regents 1 percent ($4.83 million) in internal reallocations, as required by board policy.

With the new revenues and reallocations, the proposed General Fund budget totals $518.7 million. The total university enterprise -- including federal appropriations, private grants, the Ames Laboratory and auxiliary units such as athletics, residence, dining and printing -- is supported by a budget that surpasses $1 billion ($1.1 billion) for the second time.

Spending plans

As designed in the resource management model, recommendations for spending new revenues in FY09 came from the five budget advisory committees (library, student affairs, IT services, business and finance, and administrative support programs) and were reviewed by the broader University Budget Advisory Committee, chaired by executive vice president and provost Elizabeth Hoffman. Geoffroy and his budget cabinet made final decisions on the budget.

In addition to the spending priorities mentioned above, other larger ticket items that received new funds or reallocated funds include:

• $1.50 million for partial to full funding of new faculty positions, and faculty retention and partner accommodations
• $1.43 million in differential tuition to the College of Engineering to strengthen undergraduate and graduate programs
• $1.10 million to support research at Ames Lab, the Bioeconomy Institute and in the specific area of soybean rust
• $600,000 to the library's acquisitions budget, with the intent of avoiding any journal cancellations this year
• $800,000 to add lecturer, graduate assistant and adviser positions in the College of Liberal Arts and Sciences
• $1.10 million to strengthen the undergraduate and graduate curricula and add new degree programs approved in the past year by the regents
• $527,000 to enrollment services to permanently fund recruiter positions and for admissions marketing
• $315,000 for staff positions in public safety, student counseling center and LGBT service
• $2.45 million to cover rate increases for campus utilities and vehicle fuel and to open and use several new buildings, including the Seed Science Center addition, Lloyd veterinary medical center and College of Design addition

Associate vice president for budget and planning Ellen Rasmussen said the proposed budget includes $2.93 million for strategic priorities as they are identified during the year. Those dollars remain uncommitted at this time, due in part to several uncertainties:

• The financial strain on the state caused by storms and flooding this summer and any changes to the state budget driven by pending recovery plans
• Early indications that utility costs likely will be higher than budgeted because of rising costs for coal, ash and limestone
• The university's use, for the first time, of the new resource management model

"We believe we have done a thorough job of transitioning from the old model to the new, but we also want to be prepared for any unforeseen issues or mis-estimated costs," she said.

Building plans

Iowa State also received appropriations for specific facility needs at Iowa State. These are not recurring operating funds, but they include:

• $1.80 million to begin planning for phase 2 of the Veterinary Medicine Teaching Hospital renovation
• $14.75 million for the biorenewables research laboratory, on which construction begins this fall (this is the second of three installments totaling $32 million)

FY09 operating budget

New/reallocated revenues
Additional tuition	$21.52 million
State salary appropriation	$16.13 million
State targeted appropriations*	$1.16 million
Indirect cost recovery	$0.16 million
Management fee, Ames Lab	$0.50 million
Reallocations	$4.83 million
State operating appropriation	-$1.00 million
Interest income	-$0.61 million
Budget model adjustment**	-$2.06 million
TOTAL:	$40.63 million

New expenditures
Salary and benefits increases	$17.55 million
Student scholarships and financial aid	$4.03 million
Allocations to colleges***	$6.10 million
State targeted appropriations*	$1.16 million
Faculty support and retention	1.50 million
Teaching and research support	$3.60 million
Facilities, utilities, fuel	$2.45 million
Student recruitment and support	$0.71 million
Administrative and IT support	$2.12 million
Strategic priorities, to be identified	$2.93 million
Other adjustments for new budget model	$0.54 million
Budget model adjustment**	-$2.06 million
TOTAL	$40.63 million

*Vet Diagnostic Lab and regional Small Business Development Centers

**One-time accounting adjustment that aligns revenue and expense allocations

*** Sum of: tuition for projected enrollment increases and Engineering differential tuition

Iowa State's proposed operating budget for FY09 includes $35.80 million in new dollars and $4.83 million in internal reallocations (1 percents as required annually by regents policy).