Wednesday, May 07, 2014

Iowa's Economic Foundation? Graduate Education & Research

May 5, 2014, 3:30 p.m. [with related subsequent additions as the story evolved]

What is it with the Regents and the University of Iowa?
If you think education's expensive
Just wait 'til you start paying for ignorance

-- bumper sticker
Executive Summary: It costs much more to educate graduate students, especially those entering the professions, than to educate undergraduates. (For example, in allocating money to the University of California, the State's formula provides appropriations for dental students that are five times those for undergraduates). In the past, although the Regents have not formally recognized these disparities as such when allocating appropriations among the State's three universities, the formula it has applied had the effect of going part way in that direction (see paragraph 5 of text, below).

A Regents' committee is now recommending that (a) the disparity be removed entirely (providing the same amount, per student, for professional and graduate students as for undergraduates), and (b) that the allocation be provided only for students who are Iowa residents.

The effect of this proposal is to substantially underfund, and thereby weaken, the State's flagship, nationally recognized research university, the University of Iowa. Thus, if this new formula is adopted by the Regents, not only will it necessitate reducing the quantity and quality of education received by Iowans (and others) at the University (including undergraduates), it will also reduce the economic contribution of the University to the economy of Iowa -- currently estimated to be in the range of $6 billion a year.

There are five major sub-heads below, in bold. Scroll down to those that most interest you if you wish:

What the Regents' Committee is Proposing

What's Wrong With This Proposal? Its Adverse Impact on Quantity and Quality of Education

Weakening the University of Iowa Necessarily Reduces Its $6 Billion Annual Contribution to Iowa's Economy

What is the Economic Impact of the University of Iowa -- Now Threatened by the Proposed New Budget Formula?


And see Note, below.

A column drawn from this blog essay appeared in the Iowa City Press-Citizen May 16, and is available below: Nicholas Johnson, "What Is It With the Iowa State Board of Regents?!" Iowa City Press-Citizen, May 16, 2014, p. A7 (along with links to related material on that day's page of the paper).

And on another allegation: Are UI's entering students sufficiently "welcomed" and "comfortable"? Regents' president Rastetter charges they're not.

Finally, for some serious comment about the economic and other value of fully funding higher education -- set in an editorial cartoon format -- don't miss "Silhouette Man Wonders WTF Is Wrong With Americans."

Now that we're producing more dirty oil in the U.S., and moving it with tanker cars poorly designed for the journey, every once in a while they leave the tracks, causing massive fires and rivers polluted with “blobs of black glue” (in this case from highly toxic and explosive Bakken Crude from North Dakota). Paresh Dave, "Oil tanker train derails in Lynchburg, Va., triggering fire and spill," Los Angeles Times, April 30, 2014 ("Wednesday’s fire is the latest in a series involving trains carrying crude oil as the nation’s drilling boom fuels a surge in oil transportation"). [Photo source unknown.]

What the Regents' Committee is Proposing

That's kind of what happened last Monday [May 5] when the Board of Regents budget model committee jumped the tracks. The difference is that an oil spill and polluted river can be cleaned up -- sort of. The kind of economic damage to be done by the committee's budget model will still be hurting Iowans decades from now.

What the committee thought, or at least said it was doing is "performance-based funding" -- higher education's "flavor of the month" these days. I will leave to others an evaluation of this philosophy in general and what some may view to be the committee's application of it to 40% of the State's appropriations for Iowa's three Regents' universities in particular.

What I want to address is the 60% of what it did that is not, by any standard, "performance-based funding."

In the past, legislative appropriations for the three universities were divided 42% for the University of Iowa, 42% for Iowa State University, and 16% for University of Northern Iowa. The new formula will allocate 40% of the money according to "performance" regarding such things as graduation rates, degree progress, and job placement. [Former Dean Fethke asserts that "Taking cost differences into account, if the annual regent allocation to the UI, ISU and UNI were based on their reported relative costs per full-time student, the budget split would be 45-29-26, respectively." Gary Fethke, “One Size Doesn’t Fit All for Regent Schools,” Des Moines Register, May 9, 2014, p. A15.]

However, the Register reports, "The budget model the group proposed would consider above all the enrollment of Iowa residents in full-time degree programs in each of the three universities." That is, "60 percent [of the entire legislative appropriation would be allocated among the three universities on the basis of their percentage of the total number of Iowans enrolled in all three schools combined, including] resident full-time students in undergraduate, graduate and doctoral/professional degrees." Sharyn Jackson, “University funding plan focuses on Iowa students,” Des Moines Register, May 6, 2014, p. A7.

What's Wrong With This Proposal?
Its Adverse Impact on Quantity and Quality of Education
It's self-defeating; economically an assault rifle in the foot. Face it, Iowans make up roughly 1% of our nation's population. Our universities benefit from the higher tuition paid by international and out-of-state students. To the extent the Regents' universities are provided incentives to admit more Iowans, total tuition revenues will decline, ultimately leading to upward pressure on in-state tuition rates.

Iowa's economic growth requires immigration. "'For us as a state, not to have a strategy to continue to try to attract top global talent, we are not putting ourselves in a strong position for the future,' said Jay Byers, chief executive officer of the economic-development agency Greater Des Moines Partnership. 'We are a nation, we're a state, we're a region of immigrants, but (had it not been) for immigration over the last decade, the state of Iowa would have lost population. "Stemming the Shortage of Highly-Skilled workers in The Corridor, Nation; Immigration Already Has Hit Its Cap for H-1B Visas for the Year," The Gazette, August 25, 2013; updated March 28, 2014.

Diversity helps prepare Iowa's young for today's global economy. Exposure to a wide variety of individuals is a significant part of a young Iowan's education at our universities. Students from other countries and regions of our country, various socioeconomic levels, different races, ethnicities and languages, among other things, enrich education. Funding limited to Iowa residents provides incentives to our universities to cut back on the admission of out-of-state and international students.

This narrow world view of what's relevant for Iowans is illustrated in a "Non Sequitur" cartoon published the week following this blog essay.

[Cartoon credit: Wiley Miller, "Non Sequitur," May 12, 2014,]
The Board of Regents' equivalent to the parochial view of New Yorkers would be a worldview represented by a wall of clocks displaying the time in Sioux City, Des Moines, and the Quad Cities.

Aren't the Regents interested, at least in large measure, in promoting Iowa's economy by increasing the number of well educated Iowa residents who can help create jobs, or at least fill those going wanting for lack of highly skilled applicants? If so, would they rather the University educate native-born Iowans who then leave the state for more lucrative jobs elsewhere, or out-of-state students who want to come here so badly that they are willing to pay the out-of-state tuition and then stay here after graduation? Iowa's President Sally Mason says 40% of our out-of-state students do stay here. Think about it. O. Kay Henderson, "Mason says 40 percent of out-of-state students stay in Iowa after graduating," Radio Iowa, May 12, 2014.

It fails to take into account differences in the universities' entrance requirements. The University of Iowa requires that entering students have either taken itemized basic courses before coming to Iowa, or that they take remedial instruction in those areas at Iowa before graduating. It is my understanding that Iowa State does not have these requirements, and that the University of Northern Iowa has lower entrance requirements generally. Thus, unless the University of Iowa is willing to lower its expectations and entrance requirements it will be at a substantial disadvantage in recruiting entering undergraduates from Iowa in competition with Iowa State and UNI.

Graduate education and research is more expensive than undergraduate. There's a limit to how much a potential surgeon or dentist can learn by sitting in a 300-student lecture hall. Indeed, regardless of the subject matter, graduate and professional student education necessarily involves a lot of one-on-one and small group time with professors and researchers -- as well as often very expensive facilities and equipment. As noted above, Dean Fethke notes that for dental students this can run five times the cost of educating undergraduates.

Research and other grants go to top schools. Major government and foundation grants are not spread equally among all the nation's colleges. They go to the top research universities. The University of Iowa is one of them. To continue as such it needs the kind of funding that can attract, and then hold, top faculty in all departments. A funding formula that is (a) limited to Iowans, and (b) treats undergraduates and graduate/professional students as equivalent, is either designed to destroy the school's reputation and role, or the product of ill-considered policy. The money the University of Iowa brings into the state is very closely related to the quality of the faculty and their research. So cutting support there is definitely a foot shooting exercise.
Weakening the University of Iowa Necessarily Reduces Its $6 Billion Annual Contribution to Iowa's Economy

The University of Iowa is an economic engine for this state. It is exactly what our economy needs. We don't have a shortage of jobs for our most creative highly skilled workers. We have a shortage of workers adequately educated for the jobs that are available for those with such abilities in this highly competitive information age.
"As rising unemployment and layoffs beset workers around the country, Iowa faces a different problem: a surplus of jobs. Or to put it another way: a shortage of workers. A survey of companies by Iowa Workforce Development, a state agency, found as many as 48,000 job vacancies, in industries including financial services — Des Moines trails only Hartford as the nation’s insurance capital — health care and skilled manufacturing. One estimate projects the job surplus to reach 198,000 by 2014, with vacancies increasingly in professional positions. Greater Des Moines alone faces a shortfall of 60,000 workers in the next decade.

"The state provides a small, advance view of what some economists predict will be a broader shortage of skilled workers in the next 20 or 30 years, as tens of millions of baby boomers retire from the workplace, and the economy produces more new jobs than workers. Potential consequences include slower economic growth and competitiveness, as well as higher wages for skilled workers and greater inequality."
John Leland, "As Iowa Job Surplus Grows, Workers Call the Shots," New York Times, May 31, 2008.

"How did we go from the Great Depression to 30 years of Great Prosperity?" former Secretary of Labor Robert Reich asks. Robert Reich, "How Our Prosperity Became Stagnation," Des Moines Register, May 29, 2011, p. OP1 (no longer available online). "Government . . . widened access to higher education. The GI Bill paid college costs for those who returned from war. The expansion of public universities made higher education affordable to the American middle class. . . . Government could have enforced the basic bargain. But it did the opposite."

Public universities -- like the evolution of public K-12 schools centuries before -- were created to provide free or radically reduced-cost higher education to the people of their states, out of an awareness of the relationship between education, economic growth and quality of life.

How did California became the seventh largest economy in the world? It was in large measure because of its three systems of free education for Californians: the universities of California, the California state universities, and its community colleges -- similar to the way, as Robert Reich notes, the entire nation enjoyed the economic boost provided by the GI Bill that brought World War II veterans to the University of Iowa campus for a free education when I was growing up in Iowa City.

What is the Economic Impact of the University of Iowa -- Now Threatened by the Proposed New Budget Formula?

The positive economic impact of the University of Iowa on every Iowan is huge. See the the Tripp Umbach study, "University of Iowa Economic Impact Study; Fiscal Year 2008-2009," September 30, 2010.

"More than 30,000 students enroll at the University of Iowa each year. Some 58 percent come from Iowa, 25 percent from adjoining states, and 9 percent from the remaining states. International students from 104 countries make up 8 percent of the University’s enrollment. The UI educates many of the state's professionals: 79 percent of Iowa's dentists, 50 percent of Iowa’s physicians, 48 percent of Iowa's pharmacists and teachers and administrators are present in 80 percent of Iowa’s K-12 school districts." Id. at 3. Not incidentally, given the proposed budget model, "more than $143.7 million in fresh dollars entered the state of Iowa in the form of tuition from out-of-state students [with] a total impact on the state of Iowa of $380 million." Id. at 5.

Beyond the human capital, the direct and indirect contributions to Iowa's economy are enormous -- "$1.00 of every $30.00 in the Iowa economy is supported by the University of Iowa." Id. at 4.

According to Tripp Umbach, the University of Iowa Annual Impact on the Iowa Economy (explained more fully in its report) includes:
o $6.0 billion in total economic impact generated by UI operations in the state of Iowa

o $1.4 billion in total University-related spending (capital and goods and services)

o 51,818 jobs created in the state of Iowa as aresult of the UI

o $429.5 million in external sponsored research, supporting more than 6,275 jobs ["Iowa ranks 20th among public universities in federal research and development funding." Id. at 8. "These [6,275 research-related] jobs include not only direct employment by the University of Iowa research professionals (2,510 direct FTEs) but also indirect jobs created for supply and equipment vendors, contractors, and laborers for the construction and renovation of laboratory facilities, administrators and managers who support the research infrastructure, and jobs created in the community by the disposable income of the scientific workforce. Id. at 10. "Public research universities such as the University of Iowa stimulate economic development and extend the benefits of learning and discoveries to the citizens of the community, region, state, nation, and world. University-based research has proved to have a substantial and measurable affect on business formation and economic development. Research performed by Adam Jaffe at Harvard found that “. . . a state that improves its university research system will increase local innovation both by attracting industrial R&D and augmenting its productivity.” Id. at 11, citing Jaffe, Adam B., “Real Effects of Academic Research,” American Economic Review, March 1991, pp. 957-970.]

o $208.1 million in direct and indirect expenditures associated with people visiting UI

o $486.9 million to state and local government taxes, including sales, property, and business
Id. at 2.

In addition, the Tripp Umbach study estimates the economic value of voluntary contributions that benefit the state:
o 2009, UIHC provided more than $232.5 million in care to Iowa state residents for which it did not receive full compensation (charity care or bad debt).

o UI staff, faculty, and student employees donated $24.8 million in 2009 to local charitable organizations.

o UI staff and faculty provide hours of volunteer services. The economic value of such services is estimated at more than $17.0 million.

o UI students (undergraduate and graduate) also provide benefits in the form of contributions to local charities. It is estimated that the students donate nearly $6.5 million to local charities and that their volunteer activities are valued at nearly $20.5 million. These dollars are in addition to the [$6 billion] economic impact outlined above.
Id. at 13.


The Board of Regents, and its committee, probably have the legal right to ignore the University of Iowa's educational, research, and economic contribution to the state. They can work their will in dismantling it, by failing to take into account in budgeting the significantly higher costs associated with graduate and professional education and research. I haven't pursued the legal implications. But the thinly veiled consequences of this budget formula will cost every Iowan many multiples of any savings.

It is the Iowa Legislature, the Board of Regents, and its budget model committee -- not the universities -- that have made the decisions to abandon what Reich calls "the basic bargain." It is they who, by radically reducing the percentage of public support of higher education, have necessitated the escalating cost of Iowans' tuition.

Tripp Umbach reports that "In FY 08-09, the University of Iowa received $379.4 million in appropriations from the state of Iowa. For every $1 invested in the University of Iowa by the state, $15.81 is generated in the state’s economy. The total UI operation budget for FY 08-09 was $2.68 billion." Id. at 5. Thus, this public university, formerly named the State University of Iowa, received only 14% of its financial support from the State -- making it more like a private, than a public university, with tuition to match.

In short, like Walt Kelly's character in the comic strip "Pogo" once observed, "We have found the enemy and he is us" -- us and those we have chosen to elect as our governor and legislators (and the Regents they appoint), who have refused to provide adequate public support for what has been historically recognized as an enviable and productive American public good, and the graduate education and research foundation upon which a prosperous Iowa economy can be built.

Note: Let me make unambiguously clear at the outset that (a) whatever may be the outcome of the University of Iowa's funding will not affect me personally -- financially, professionally, politically, or socially -- any more than its impact on every other citizen of the state, and (b) I have not communicated or consulted with, or been informed or advised by anyone in the University's central administration, nor have they -- or anyone at the law school -- seen this before it was posted. The information contained here comes from the Des Moines Register's coverage of the story [Sharyn Jackson, “University funding plan focuses on Iowa students,” Des Moines Register, p. A7, May 6, 2014], and the opinions expressed are solely my own.

This essay focuses only on higher education. It is in no way intended to minimize the importance of early childhood, K-12, community college, and four-year programs -- all of which I have strongly supported in the past, especially community colleges. This essay's message is simple: If Iowa is to continue to receive the enormous benefits that a nationally-recognized major research university can provide (including the added benefits to the Iowa undergraduates who are there), it must be funded in a way that recognizes the disparity in costs between undergraduate and graduate/professional education.

Four days after the posting of this blog entry on May 5, the former Dean of the Tippie College of Business and Interim President of the University of Iowa, Gary Fethke, published his take on these issues. Gary Fethke, “One Size Doesn’t Fit All for Regent Schools,” Des Moines Register, May 9, 2014, p. A15. Totally consistent with this blog essay in tone and ultimate position, it contains more factual detail about costs per student, tuition, and appropriations, and fewer of the other arguments put forth here.

The May 12 Daily Iowan ran a "Guest Opinion" column signed by 13 very distinguished members of the University of Iowa faculty, each of whom had served one or more terms as president of UI's Faculty Senate. "New funding model hurts UI," The Daily Iowan, May 12, 2014 ("The recent recommendation by the Performance-Based Revenue Model Task Force of the state Board of Regents to allocate legislative funding largely on the basis of undergraduate Iowa residents enrolled would prove devastating to the University of Iowa. If fully implemented, the recommended revenue model would slash our annual legislative-general-fund appropriation by nearly $60 million, with those funds being reallocated to the other two schools.").
-- Nicholas Johnson

What Is It With the Iowa State Board of Regents?!
Nicholas Johnson
Iowa City Press-Citizen
May 16 2014, p. A7

What is it with the Regents and the University of Iowa?

An earlier Board ran off one of the most competent university presidents in the nation, who was quite willing to stay. (He had to settle on the presidency of one of the nation’s most prestigious universities at three times the salary, and is now president of the Smithsonian Institution.)

The Register editorialized March 8 that, “The Iowa Board of Regents took [UI President] Sally Mason to the woodshed last week” for lack of communication -- when it was they who cancelled the meetings she had requested.

Later that month, believing this efficient and innovative University needs to be more so, it hands over $2.5 million to a consultant. “UI Says, ‘Deloitted to Meet You,’” ("Consultants borrow your watch to tell you the time; then they walk off with your watch.")

In their latest episode of “Can You Top This?” they have a committee proposing a new “budget formula” to transfer money away from the University of Iowa to Iowa State and the University of Northern Iowa. Although they refuse to release the proposal, the Register reports [May 6] the formula funds graduate and professional students equally with undergraduates, and only funds students from Iowa.

Memories of Peter Yarrow’s March 9 Englert Theater rendition of “when will they ever learn” flows “gentle on my mind.”

As soon as I heard the May 5th news of this latest IED the Regents left along the road to Iowa City, I laid out some of its problems in “Iowa's Economic Foundation? Graduate Education & Research,”

The short answer, of course, is that graduate and professional education costs much more per student than undergraduate education. For example, California’s “budget formula” appropriates five times as much for each dental student as for undergraduates.

Later, former Dean Gary Fethke added supporting detail of these cost disparities (“Regent System Shouldn’t Be One-Size-Fits-All,” May 10), followed by 13 former Faculty Senate presidents’ letter.

The proposal will necessitate reducing the quantity and quality of education received by Iowans (and others) at the University (including undergraduates). But its negative impact will not be limited to the UI’s students, staff and faculty. It will harm all Iowans by, among other things, reducing the University’s economic contribution to Iowa’s economy -– currently roughly $6 billion a year.

What else is wrong with this proposal?

The adage is right: “You get what you measure.” The proposal bases UI’s share of appropriations on Iowans, without regard to their disparate costs of education. That’s an incentive to compete for undergraduate Iowans by lowering admission standards, minimize professional and graduate students, and turn away international and out-of-state students who actually pay higher tuition. Why reject that 40% of non-residents who choose to come to, and then stay in, Iowa?

Besides, exposure to a wide variety of individuals is a significant part of a young Iowan's education at our universities. Students from other countries and regions of our country, various socioeconomic levels, different races, ethnicities and languages, among other things, enrich education.

In addition to the UI’s $6 billion contribution, what Iowa’s economy needs is not only more jobs, but more UI grads who can create jobs, and fill those going wanting for lack of highly-skilled applicants.

Major grants go to top research universities. The UI is one of them. To continue as such it needs to attract, and hold, top faculty. The near-half-billion UI receives in research grants is not inevitable. A funding formula that ignores this income is a foot shooting exercise.

Regents, however you feel about the University of Iowa, consider Iowa’s economy. Graduate and professional education is its foundation.
The existence and content of this column is solely the responsibility and opinion of Nicholas Johnson of Iowa City. It has not previously been seen by any University of Iowa-affiliated person.

Related material on that day's [May 16, p. A7] opinion page includes the letter from 13 UI faculty members who were former presidents of the UI's Faculty Senate, "'One Size Fits All' Funding Undermines UI's Mission" ("Each school has its own unique identity and mission. Why not continue to respect and celebrate those differences"), linked above to another source, and the paper's Editorial Board "Our View" editorial, "Do the Regents Not Want UI to be Research I?" ([Board of Regents President Bruce] Rastatter basically considers UI to be a third-rate university -- at least, in his words, to be the third choice among Iowas residents. . . . Hopefully [the two columns on that page] will be more effective than we were in explaining to the regent president how UI's mission necessarily differs from those of Iowa State University and the University of Northern Iowa").

Regents' President Rastetter Charges UI Not "Welcoming"

Iowa Board of Regents President Bruce Rastetter has been quoted as believing that "Iowa typically has come in third as a choice for college of Iowans. We consistently hear from parents that they don't feel as welcomed . . . here as they do at ISU and UNI. Parents want to know that their kids are going to feel comfortable and that they are wanted." Sara Agnew, "Rastatetter: Kids Say UI Not As Welcoming; More Iowa Students Picking ISU or UNI," Iowa City Press-Citizen, May 15, 2014, p. A1.

It prompted me to put the following "comment" on the paper's online version of the story:

A relief to read our observations about the different costs of educating graduate/professional students and undergrads is seeping into Regents' thinking. [Agnew reported, "Rastetter acknowledged that the metrics of the proposed funding model should be adjusted to accommodate the large number of graduate and profession degree students at UI." Id., p. 6.] But problems remain. See, "Iowa's Economic Foundation."

1. As for UI applicants "feeling welcome," someone needs to research and print, or put a comment up here, regarding the detailed differences in entrance requirements between the three schools. My impression is that Iowa requires students to take some relatively more difficult courses, if not in high school then before graduating from UI, that ISU does not, and that UNI requires even less. If that's not correct I apologize in advance. If correct, I can see why some students might prefer UNI or ISU over UI. The less that is expected of a student the more comfortable they may feel.
[I subsequently researched this and concluded, "The admission course requirements (for liberal arts students) at the three universities for Science, Math and Social Studies are relatively equivalent, essentially three years of each, and four of English. UNI's requirements are marginally more flexible on English (speech, communication, and journalism can count) and Science (for which "general science" counts).

Foreign language is the major difference. UI requires four years of a single language for graduation in Liberal Arts and Sciences, Business, and Nursing. Iowa State only requires two years of a single foreign language. And UNI applicants need only complete two years of high school foreign language with at least a C- in their second year.

Sources: University of Iowa. As a research university with a number of professional colleges, UI's admission standards vary between colleges. But here are the UI's "Minimum High School Course Requirements" for the Colleges of Liberal Arts & Sciences, Business, Engineering, and Nursing.

Iowa State University. "Admission Requirements."

"UNI Freshman Admission Requirements".]
During this Press-Citizen online exchange, in response to my suggestion that the UI might have higher entrance requirements than Iowa State and UNI, a reader wrote, "Nicholas, that is not correct. ISU, Iowa and UNI all require a minimum of 245 on the Regents Admission Index (RAI) for admission."

However, this morning [May 16] I received a comment from an official in a position to know that "the 245 RAI requirement is not a 'real' admission requirement. All three institutions can admit students below that threshold and, not surprisingly, ISU and UNI accept a lot more students below that threshold. If you go to the regents report at and scroll down to page 83, you'll see that Iowa's class this year of in-state students had 3.3% of students below the 245 RAI requirement. ISU had 7.8%. UNI had 15.4%. Iowa could accept more students below the 245, but we've chosen not to. The RAI is relatively new and it's 'interesting' that ISU and UNI have chosen not to adhere to it from the start (the previous 3 year of data are on pages 80-82)."

2. If anecdotal assertions regarding student happiness are to be our standard, my personal response when I see two parents and what appears to be their child looking lost on campus is to approach them, introduce myself, and take time to give them a bit of a tour. More than once has that child shown up at my office the following fall, recalling that experience. I can't believe I'm the only one doing that.

3. We have two good universities for undergraduate Iowans -- ISU and UNI. UI can also perform that function -- and as well. But that's not its primary strength and contribution to providing Iowa's towns with their doctors, dentists, lawyers and other professionals. That's not its primary contribution to Iowa's economy as one of our nation's major research universities. Of course, the UI can lower its undergraduate entrance requirements, pursue, enroll and educate more undergraduates. But is that really what the Regents should want?

# # #

1 comment:

Helpless said...

The basic problem is that the debate about the education budget is being recast as the division of the pie, rather than the sizing of the pie to meet the needs of all regents institutions. If each university's needs are being met, then the proportion of the pieces of the pie do not matter. Instead of advocating for adequate funding of all the state's universities, the regents have pitted each school against the others.