Posted by Gretchen Tegeler
President Flannery brought the meeting to order and introduced Susan Judkins for the invocation.  Susan noted it was Albert Einstein’s birthday, and compared some of Einstein’s thoughts about creativity and scientific discovery with today’s speaker, Mike Richards.
 
Skeet Wootten introduced the many guests of Rotarians. There were no visiting Rotarians.
 
Steve Jacobs introduced Dr. Michael Richards, his one-time personal physician. Mike is currently the chair of the Iowa Board of Regents.  He was a practicing physician in Des Moines for 21 years, and chief medical officer for then Iowa Health Systems.  Most recently he was managing partner for Quatro Composites, and was Chair of MEDTEC, a medical services and equipment company.
 
Mike provided some highlights about the state’s three universities, which are governed by the nine-member Board of Regents.  Enrollment is around 75,000 with 10,000 students per year graduating into the state’s economy.  The universities are also huge research engines.  With relatively little state direct investment in research, the universities bring in over $1 billion in research funds each year.
 
At 81.9 percent, Iowa’s system has the top graduation rate in the country. 
Mike spoke about the changed funding landscape for state universities across the nation, including Iowa.  State support has dropped, federal funding has been level, and tuition has had to increase to close the gap.  In just the last 20 years, Iowa’s mix has reversed:
2000: 64% state support/31% tuition
2019: 64% tuition/31% state support
 
The universities receive the same amount of absolute dollars today as they did prior to the 2009 recession, still a sizeable amount of $435 million.  Mike emphasized he is not making a judgment, just reporting facts.
 
To adjust to the new funding environment, the universities have placed emphasis on helping students graduate within four years (which helps keep down their debt) and coaching them on “living like a student.”  They have also stressed efficiencies in operations.
 
The universities have been successful in improving the 4-year graduation rate which now stands at 66 percent, compared with 64 percent nationally.  Student debt is decreasing.
 
Looking ahead, Mike said that parents across the state told the Regents they are mostly concerned with avoiding huge spikes in tuition.  The Regents have devised a plan whereby UNI’s tuition will be frozen in order to adjust to its peers, but UI and ISU will see growth of about three percent per year for five years.  However it will be adjusted depending on what level of state support is secured, with a top increase of 5.2 percent possible if there is no increase in state support.
 
Mike went on to describe a major new public/private partnership that will generate funds to invest in strategic initiatives. Examples would be new efforts to reduce time to graduation, investment in distance learning and other things that would not otherwise be possible in the environment of running just to stay even.
The University of Iowa will receive a substantial up-front payment for the utility system (power, water, tunnels), which will be used by the university for an endowment.
 
  The company will run the system for 50 years through a professional services agreement.  Tax laws make it a win/win situation because the up-front payment to the university is tax free, and the private company can depreciate the asset.  The utility’s 120 employees would be offered continued employment, but if they choose to leave the utility, the university would place them in another job with the same pay and benefits.  The contract would include the existing commitment to go coal-free by 2025.  Rates would continue to be controlled by the Iowa Utilities Board, which have always been used as a guide by the university.
 
The Regents will be looking for more opportunities for asset sale in areas that do not fall within the core mission of the university or are unusual in ownership by a university.  He believes state government could also benefit from a review of its assets, especially during this time when there are lots of dollars out there looking for yield.
 
Following a few questions and answers, President Flannery thanked Dr. Richards.
 
Don announced that he will donate $20 on behalf of anyone wearing a costume on Oct. 31st!
 
The meeting was adjourned.