DES MOINES — Several state legislators said Tuesday they wonder if existing endowments at Iowa’s regent universities could help fund student scholarships in place of tuition set-aside dollars.
One lawmaker also suggested the state Board of Regents could return to the practice of using tuition dollars to fund scholarships for students, but at a lower rate than 20 percent. The regents voted to end that practice, called tuition set-aside, several months ago after criticism of the program last spring from 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 his fiscal 2014 budget proposal, well short of the regents’ request. The regents say they would lower tuition at a rate commensurate with the level of state support.
“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, R-Sioux City, asked Tuesday during the education appropriations subcommittee meeting, where regent and university leaders made their fiscal 2014 budget pitches.
Presidents of the University of Iowa, Iowa State University and the University of Northern Iowa said most of the money in university endowments is earmarked at a donor’s specification for things such as new buildings or programs. The money cannot just be taken and used for something else, such as scholarships.
The universities are working to raise more private money that is targeted for scholarships, they added. 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.”
After the meeting, Rep. Cecil Dolecheck, R-Mount Ayr, the subcommittee co-chairman, 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 at a lower rate of tuition dollars — say, 15 percent — used for that purpose.
Dolecheck also said he had assumed much of the large university endowments 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 regents’ request.
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“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.
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.