Monday, February 15, 2010

UNI's Potential Windfall Gain

Dear UNI Faculty,

By now, many of you have heard about UNI’s potential receipt of $5.2 million in additional state appropriations.  UNI’s potential share is part of about $35 million that the state may now need to restore to the Board of Regents’ general education funds.  On behalf on United Faculty, I would like to share with you the origins of this potential windfall gain as well as United Faculty’s response to it.


This windfall gain is the result of something called a Maintenance of Effort (MOE) requirement in the federal States Fiscal Stabilization Funds (SFSF) program (the part of the American Relief and Recovery Act’s federal stimulus program that directs funds to state governments).  This MOE requires states that receive SFSF program funds to maintain their state appropriations allocated to higher education at least at the same amount as in FY 2006.  As the Des Moines Register explained recently, these MOE rules in the 2009 stimulus bill “were designed to prevent states from slashing their budgets and filling the gap with federal stimulus money.”

On May 1, 2009, the Director of the Iowa Department of Education (IDOE), acting on behalf of Governor Culver, certified that Iowa would comply with the MOE for higher education in all three years (FYs 2009, 2010, and 2011) of the SFSF program.  The SFSF program allows states to request waivers from the MOE under certain conditions.  So, on December 15, 2009, the Director of the IDOE requested a waiver from the MOE for higher education for FY 2010 (the current FY).  This Request for a Waiver was needed because the Governor’s 10 percent, across-the-board cut reduced the state appropriations allocated to higher education to less than what the MOE required.  On January 7, 2010, the Director of the Iowa Department of Education submitted, again on behalf of the Governor, an application for Phase Two of the SFSF funds in which she included the earlier Request for a Waiver.  As of now, the US Department of Education has made no decision on this Request for a Waiver.

In order to be in compliance with the MOE, the Governor has requested a supplemental appropriation of some $35 million for higher education in order to prevent the potential loss of some $100 million in federal funds.  UNI’s $5.2 million share of this supplemental appropriation bill would bring UNI’s state appropriations back into compliance with the MOE.

If this supplemental appropriation bill is approved, the Board of Regents has already decided to refund the $100 tuition surcharge levied on students this semester.  I have suggested to President Allen that he restore the temporary salary cuts being suffered by all UNI employees, if the additional $5.2 million becomes available.

The United Faculty Central Committee has designated a team of UF leaders to engage President Allen and his designees in discussions of how this potential windfall gain can be used to restore the temporary salary cuts and to investigate Iowa’s compliance with the MOE provisions of the SFSF program.

In an effort to minimize the amount of e-mail generated by this issue, United Faculty has established a blog on our website where anyone in the university community can join in discussions of this matter.  (See http://unitedfaculty.blogspot.com/.)   United Faculty will make every effort to keep you informed regarding this matter and any further actions that United Faculty might take as the result of it.

Hans Isakson
UF President

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