Public-private partnerships could answer University of Iowa’s funding prayers
The University of Iowa (UI) has ambitious plans for the future, but with their primary funding source undergoing cuts and students increasingly shouldering the cost of their education, the university is looking towards less traditional funds to turn those plans into reality.
Public-private partnerships (PPPs), in which a university partners with a private business to deliver a project, have been encouraged by Iowa’s Governor Kim Reynolds as a possible solution to the funding shortfall. The private entity in the pair usually takes on operating responsibility and accrues payments over a longterm contract after completion
Taking Reynolds advice, UI, along with Wells Fargo — one of three companies consulting UI during the public-private-partnership process – released a request for qualification (RFQ) for a partner to run their utility system. Final submission date is June 14.
“If we don’t do this deal, we’ve got to rethink our strategic plan and our objectives,” President Bruce Harreld said at a public-information session at the Medical Education and Research Facility on Wednesday.
Struggling with funding, UI sees the proposed 50-year agreement as a way to ease the financial burden and open up a new revenue stream.
Iowa’s leading higher education institutions have seen their budgets slashed in the last two years and, while tuition fees have risen, it has not been enough to cover the losses.
“Philanthropy will offset some of that, but hasn’t even come close to offsetting [all of] that,” Harreld said.
“Our estimate is we need about US$35 million in new resources every year to get to our strategic plan, and we’re about US$15 million a year short.”
While Iowa lawmakers did not make midyear funding cuts to the top universities this year, the institutions saw their budgets trimmed by more than US$30 million in the previous two budget years – prompting Reynolds’ suggestion of looking elsewhere.
UI is hoping for an upfront payment from the private firm they eventually end up partnering with, this will then serve as an endowment for the university’s strategic plan and go towards funding teaching, professional services, student scholarships, and research.
In return, the firm will receive an annual utility-fee payment from UI for the duration of the contract, which will factor in a fixed fee and determined inflation.
Iowa is not alone in its funding woes, and PPPs are increasingly being heralded as the solution to universities across the country. As finances slow and ambitions continue to blossom, expect to see a lot more of these collaborative contracts across campuses soon.