The University of Iowa is changing its policies around student course fees – and reviewing hundreds of previously approved fees – after an internal audit found some students were paying for unspecified costs or for expenses that would not be allowed today.
From now on, all course-related fees will sunset after five years – meaning course officials will have to reapply for fee approval if they want to continue charging students. And all existing course fees approved before 2009 – those they would be expiring under the new guidelines or would have already –will be reviewed by the UI’s Miscellaneous Fee Committee.
That review of more than 250 course fees will require course officials to reapply for fee approval if they want to continue charging students the older fees, said Beth Ingram, associate provost for undergraduate education and member of the Miscellaneous Fee Committee.
“And after this year, if a course fee is not re-approved, it just goes away,” Ingram said.
As a result of the audit, conducted in November, the UI also will start keeping all its course fees in separate accounts instead of commingling some of them. And it will assign budget officers at the college level to provide an additional layer of review of course fee expenses and revenues.
Ingram said auditors did not find evidence that course fee revenue was being misspent or inappropriately charged. But, she said, fees approved today by the fee committee require detailed paperwork outlining a budget for the revenue.
Prior to 2009, they did not.
“I don’t think there was concern that the money was being misused,” Ingram said. “But we don’t have the paperwork that tells us how it was being used.”
Ingram said officials could go back to the departments and ask for receipts related to older course fees to rectify expenses. But no one has done that. And now, going forward, that information will take place up front when a course official applies for a fee.
“There isn’t a sense that we were paying for things that weren’t approved,” she said. “But they want documentation to say the money was being used for X – not X and Y.”
The changes, according to Ingram, could result in lower or higher fees for students.
“I think they will pay more appropriate fees,” she said, adding that course costs going forward are more likely to rise or fall based on expenses each year.
Officials with the Board of Regents, which oversees the audits, said the review of student course fees comes at a time of rising tuition costs nationally and efforts locally to keep education affordable.
“We owe it to our students to charge them reasonable rates and provide services to that amount,” one auditor said.
The UI in the current academic year has about 640 course fees expected to generate about $1.6 million. Ingram joined the Miscellaneous Fee Committee, which governs course fees, in 2009. Around that time the group began requesting more detailed budgets for new course fee requests, she said.
Since that change, fee requests have gotten more specific, according to Ingram.
“I have noticed departments being more responsible and careful about what the expenses have been and what they need to support those expenses,” she said.
According to the audit, “the combination of the continuous nature of course fees and the shifting policy parameters has led to current course fees that were approved without adequate documentation.”
In some cases, fees were being charged for and used for expenses that no longer are considered acceptable by the committee, according to the audit.
Auditors reviewed a sample of 57 course fees from four colleges, which generated about $262,690 in the 2013 budget year, and 37 were fees approved before 2008. Of that 37, 21 did not specify what expenses the course fee would cover, according to the audit, and five were approved for expenses that since have been disallowed for other courses.
Auditors recommended creating an expiration date for course fees and reviewing the older fees.
All course fees going forward will sunset after five years, and Ingram said the committee plans to review about 250 old course fees by July 1. The UI is creating an electronic process to do that.
“We sent the list out to the colleges and departments about which fees are being reviewed,” she said. “But we haven’t started asking them to resubmit because we are waiting for them to be able to submit electronically.”
Ingram said she expects some officials won’t reapply for fees that have been in place for years.
“But I haven’t heard from colleges about which fees those might be,” she said.
Board of Regents officials who conducted the audit said they found no evidence that course fees were being misspent. But there wasn’t adequate documentation to show how the money was spent.
“Generally the sense was there was not enough specificity,” one auditor said. “If they went before the committee today and tried to request those fees, they wouldn’t fly … and how can we assess whether something is reasonable if we don’t know what it’s being spent on?”
Auditors also reported concerns with how fee revenue was being held – some fees were being grouped together into larger files.
According to the report, auditors in 2013 found 102 files being used for 316 courses charging fees. About 41 percent of those files were collecting fees for more than one course. A detailed review of eight files covering multiple courses revealed that commingled fees were different rates and for “distinctly different purposes.”
Auditors identified one course fee that had been commingled with revenue from activities other than course fees, according to the audit.
Terry Johnson, UI associate vice president and controller, said part of the reason for grouping multiple fees into one account was for convenience and cost-saving purposes. If, for example, multiple art courses needed clay, fees might be grouped together so the material could be purchased in bulk.
“They would get lower pricing … and share it across all departments that needed the supply item,” he said.
Based on audit recommendations, the UI is revising its policy to require files for each course fee and a verification process to make sure multiple fees are not being grouped into the same account. Johnson said the idea is to make fees easier to track while still getting good deals.
“We still are going to try to get the lowest pricing,” he said. “But all the expenses will be tracked at a pretty low level of detail.”
In response to auditor concerns that the UI’s budget officers were not consistently monitoring course fee activity on a course-by-course basis, the UI also is making collegiate budget officers responsible for reviewing course fee expenses, Johnson said.
The fee committee’s purpose statement says collegiate budget officers must make sure a review is performed at least annually on each course fee. Ideally, according to the statement, a course fee will achieve a break-even balance over a three- to five-year period.
But, when auditors interviewed seven colleges about the course fee review process, they found three reviewed course fees for “reasonableness” and four reviewed individual course fees annually. Three colleges monitored expenditures at the department level only – with no budget officer review.
And six of the seven conducted an undocumented analysis of whether the fee revenue was breaking even with course expenses over a period of time.
“A formal documented analysis was not conducted by any of the colleges selected,” according to the audit. “One collegiate budget officer was unaware of the break-even guideline.”
Johnson said the UI is implementing a more standardized review process by integrating collegiate budget officers into its course fee monitoring.
“That doesn’t mean they were done inappropriately in the past,” he said. “But we can improve our consistency in the review process.”
Johnson said the university hasn’t been inappropriately charging students because all the fees – old and new – went through the approval and checks processes that were in place at the time.
But auditors did report that some expenses do not always conform with the fee committee's definition of allowable expenses. In one case, according to the audit, a fee was charged in excess of actual costs with "no fee modification requested as of October 2013."
The UI is working with staff to make sure approved course fees align with justified expenses. And Johnson said the changes being implemented demonstrate why it’s good to review processes.“We are trying to set the stage where it’s easier to track them on a course fee-by-course fee basis to make certain that everything is in accord with the original intent,” Johnson said.