Inside Iowa State

April 30, 2009

Geoffroy outlines plans to absorb cuts and use federal stimulus dollars

by Anne Krapfl

A net loss of $38.3 million in state support for Iowa State for the year beginning July 1 will be offset with an estimated $31.5 million in one-time federal stimulus dollars. President Gregory Geoffroy outlined to the state Board of Regents April 30 Iowa State's strategies for absorbing the cuts and using the stimulus dollars.

Other key differences between Iowa State's current and next budgets are an estimated $22.5 million in new tuition revenues and an estimated $11.7 million in unavoidable cost increases, such as utility costs, annual step increases for merit employees, faculty promotion increases and ongoing costs incurred when new buildings go into use.

The regents asked to see a "summary level" FY10 budget at their June 11 meeting, with final approval of a detailed budget planned for the Aug. 5 meeting.

Strategic use of stimulus dollars

ISU vice presidents and deans have been working with reduction targets for several months. Earlier this week, Geoffroy said, they were asked to develop proposals for spending federal stimulus money to offset some of their budget reduction plans. Those proposals are due in the office of the executive vice president and provost next week. Spending priorities for the stimulus funds include:

• Protect educational programs to ensure students have sufficient course offerings and remain on a path to graduation
• Protect jobs as much as possible
• Continue key program areas while the search continues for funding in FY11 and beyond (such as grants, private funds or stronger state revenues)
• Complete infrastructure projects that improve the student experience and reduce future operating costs (such as classroom renovations)

Patrice Sayre, chief business officer for the regents staff, said she expects federal stimulus funds to arrive within four weeks.

Potential losses

Geoffroy said positions will be lost because changes still must occur, "but we will avoid the need for an immediate reduction in force," he said. "We know those funds are going to go away." Without federal stimulus dollars, he estimated Iowa State could have been forced to vacate -- or leave vacant -- as many as 200 positions in FY10.

He provided board members with other examples of the kinds of decisions being proposed at Iowa State to reduce costs. Some of those include: eliminating class sections and, in some cases, courses (a combined total of around 350), reducing journal and book budgets at the library, eliminating the part-time Saturday MBA program and reducing summer course offerings.

Beginning July 1 for new employees, Iowa State also proposes to change minimum eligibility for benefits from one-third time to half-time appointments and to change the vesting for the university contribution to employee retirement plans from the employee's start date to his or her three-year anniversary date. Geoffroy said these two changes could save an estimated $2 million annually.

Geoffroy also identified several areas university leaders hope to protect as final budget decisions are made. They include:

• Student financial aid
• Student recruitment
• Student services (such as career services, advising)
• Campus safety
• Tenure-track faculty numbers
• Research and service programs that have a high impact on Iowans

ISU Extension

The board unanimously approved ISU Extension's proposal to restructure itself, and gave permission to begin to implement the changes. ISU Extension is facing a 10.7 percent ($4.15 million) reduction in state support in FY10.

As proposed, 92 county directors and five area directors will be replaced with 20 regional directors in population regions of three to eight counties. Local extension councils still may maintain county offices. And five overarching program areas will be consolidated into three (agriculture and natural resources, families and 4-H, economic development).

The intent is to reduce administrative costs in favor of funding programs and services. Geoffroy said the goal is to complete the changes by December. He noted that federal stimulus funds would be used, especially to protect the 4-H program as much as possible.

Board members were complimentary of the proposal.

"We all know money is short. I think you've done an excellent job of repositioning Extension for the future," said regent Craig Lang. He did express some concern about a potential lack of local leadership.

Regent Robert Downer said the plan "puts more resources on the ground."

Task forces for special studies

At regent Michael Gartner's suggestion, the board will organize two task forces to study between now and December:

• Opportunities for more consolidation and "interplay" among the three universities
• Benefits programs, including retirement plans, paid vacation and health benefits offered to employees at the three universities

Gartner said the goal is to find ways to save money. "[With the federal stimulus money] We've bought a year to avoid the cliff, but we need to take a hard look at some of these costs," he said.

Each task force will include three board members and university representatives. Board president David Miles asked for preliminary findings at the board's September meeting.

Changes to reallocation requirement

The board also approved several amendments to its own policy book regarding mandatory internal reallocations at regent institutions as part of the annual budget process. The changes remove a mandatory target at each school, set annually by the board. In recent years, that had been 1 percent of the institution's previous year operating budget.

Miles said the intent is "to give maximum flexibility to university leaders during these hard times."

Budget presentation

FY10 Budget Summary, presented to the Board of Regents by President Geoffroy, April 30 (PowerPoint)

Extension plan

• ISU Extension plans to restructure (news release)
• Restructuring details
• VP for extension and outreach Jack Payne's video message to Extension staff

Other agenda items

A summary of other items on the April 30 agenda

"We all know money is short. I think you've done an excellent job of repositioning Extension for the future."

Regent Craig Lang