Legislators press universities for scholarship funding options

Lawmakers ask if tuition dollars could help fund student scholarships

Diane Heldt
Published: February 12 2013 | 5:40 pm - Updated: 28 March 2014 | 11:23 am in

Several state legislators on Tuesday said they wonder if existing endowments at Iowa's regent universities could help fund student scholarships in place of tuition set-aside dollars.

One of the lawmakers also suggested the state Board of Regents could return to the practice of using tuition dollars to fund scholarships for students, just at a lower rate than 20 percent of tuition money being redistributed. The regents voted to end that practice, called tuition set-aside, several months ago after criticism of the program last spring from some lawmakers and parents.

The regents have requested $39.5 million in state money to form a new scholarship fund for Iowa's neediest students that would replace tuition set-aside. Gov. Terry Branstad recommended $5 million in state money for that new fund in his Fiscal Year 2014 budget proposal, well short of the regent request. The regents say they would lower tuition at a rate commensurate with the level of state support for the plan.

"Is there any reason, sitting on a $1.5 billion combined endowment portfolio, that you cannot take the money out of the endowment, from unrestricted funds?" Rep. Ron Jorgensen, a Republican from Sioux City, asked Tuesday during the education appropriations subcommittee meeting, where regent and university leaders made their FY 14 budget pitches.

After the meeting, Rep. Cecil Dolecheck, subcommittee co-chairman and a Republican from Mount Ayr, said perhaps scholarships for needy Iowa students can be funded through a combination of state money and a return to the tuition set-aside practice, but where a lower rate of tuition dollars are used for that purpose, such as 15 percent, he said. Dolecheck also said he assumed much of the "very large endowments" of the universities were restricted for specific purposes, but he wondered still if smaller amounts of unrestricted money could go to scholarships.

Members of the education appropriations subcommittee gave little indication Tuesday about where they stand on the $39.5 million request to fund scholarships.

"We as a Legislature will have to decide whether we want to go down that road, start to appropriate that ... or whether we want to have the universities take care of that," Dolecheck said.

In response to the question about endowment dollars, the presidents of the University of Iowa, Iowa State University and the University of Northern Iowa said most money in the university endowments is earmarked at a donor's specification, for things like new buildings or programs, and it cannot just be taken and used for scholarships.

But the presidents said they are working to raise more private money that is targeted for scholarships. The idea that the state might contribute $39.5 million toward a scholarship fund for Iowa students is bringing interested donors to the table, ISU President Steve Leath said.

"We're looking at it like a partnership," Leath said. "We're really hoping you're able to help because it's what's generating all these gifts now."

Separate from the request for scholarship funding is the regents request for a 2.6 percent increase in state general education funding for the universities. In exchange for that funding level, plus an additional $4 million to help UNI deal with budget challenges, the regents have approved a tuition freeze for next year.

The university presidents told lawmakers they would use the additional state money to hire more faculty, focus on academic program strengths and build on student success initiatives that improve retention, graduation and job placement rates.

Beyond the freeze planned for 2013-14, the regents want to keep future tuition increases at or below expected inflation, board President Craig Lang said.

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