Feb. 18, 2010

Majority of ARRA education funds will cover personnel costs

by Anne Krapfl

About 70 percent of the $31.6 million in education federal stimulus funds awarded to Iowa State this fiscal year will be used for personnel expenses, including about $10.6 million that is paying salaries and benefits for employees whose positions are expected to continue -- on another revenue source -- after June 30.

Companion amounts -- $5.9 million and $5.8 million, respectively -- will be used to pay employees participating in the first retirement incentive option and those whose positions will be eliminated by June 30.

The figures reflect university plans for the ARRA (American Recovery and Reinvestment Act) funds as of Feb. 15, and change as expenditures are completed. As of this week, units actually have spent nearly $15.1 million. By June 30, the ARRA funds must be either spent or committed to an expense with a firm timeline to be spent.

As planned, the university also will spend about $8.1 million of federal stimulus funds on other one-time projects, including $2.2 million for classroom improvements, $1.6 million for research equipment, $1.8 million for bridge funding for regular programming (for example, in Extension 4-H, Study Abroad Center, Honors Program, university marketing), $993,000 for IT upgrades and $750,000 for faculty start-up costs.

What's ahead

At this time, about $1.1 million of the federal stimulus funds are not committed. That number has inched upward in the last month, due in part to salary and benefit savings created by mandatory unpaid days for employees whose salaries are covered this year by ARRA funds.

Finding uses for the "uncommitted" funds by June 30 will not be difficult, said Ellen Rasmussen, associate vice president of budget and planning.

She also expressed confidence that the university's budget will not face a "funding cliff" this summer when the ARRA funds are gone.

"We have been quite strict on this point," she said. "Units applying for ARRA funds know that these are for one-time non-recurring expenses, or that they must have a specific and stable revenue stream in mind after June 30."

Bridge funding this year

Iowa State is using the $31.6 million in federal stimulus funds as bridge funding to its FY11 budget. On July 1, 2009, the university's current budget year started with $38.3 million less in state funding than the previous year. An October reversion to the state of $24.5 million compounded the need for cuts or new revenue streams. Planning for the university's FY11 budget, under way for several months, is expected to accelerate next month as the Iowa Legislature moves toward approving a state budget, including appropriations to higher education.

Planned expenditures for ARRA funds, by function
(as of Feb. 15)

RIO-1 expenses1$5,905,341
Salary and benefits for eliminated positions2$5,779,313
Salary and benefits for continuing employees$10,611,553
Classroom upgrades, including technology$2,253,600
Other IT upgrades$993,000
Programming (bridge funding)$1,818,671
Research equipment purchases$1,579,500
Faculty start-ups$750,000
Student support3$413,224
Library materials and acquisitions$200,000
ARRA administration$127,000

1 Partial year salaries and benefits, vacation and sick leave payouts and the first year of health and dental benefits
2 Includes salaries and benefits through last day of work. Also includes resignations and retirements for positions that aren't being filled
3 Includes recruitment, support services and work-study aid

Planned expenditures for ARRA funds, by major unit
(as of Feb. 15)

Ag and Life Sciences$3,376,809
Human Sciences$1,344,160
Lib Arts and Sciences$3,430,610
Vet Med$3,080,659
VP areas
Research/ Ec Dev$1,444,383
Student Affairs$1,856,230
Exec VP/Provost$733,879
IT Services$1,454,435