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Reform utilities to lower tuition costs at University of Iowa

BY DI EDITORIAL BOARD | NOVEMBER 01, 2011 7:20 AM

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The University of Iowa's utilities budget is $4.74 million more this year than last, nearly a 7 percent increase. Officials from Iowa State University are reporting utility-cost increases of less than 1 percent.

Perhaps unsurprisingly, the former is pointing to utility costs as a primary driver of a controversial tuition-increase proposal.

The difference in utility costs between the two universities is evidence of poor cost-management by the UI and its utilities and energy department. Shifting the majority of the financial burden to the students is an irresponsible solution to a manageable problem.

Students at Iowa's state universities have experienced significant increases to their tuition this fiscal year (5 percent in-state, 6 percent out-of-state), but this does not seem to be enough to officials. The state Board of Regents has proposed additional tuition increases (3.75 percent in-state, 4.75 out-of-state), causing student groups to lobby statewide for more state appropriations.

Last week, The Daily Iowan asked UI President Sally Mason about the worrisome tuition increases. She cited costs that the UI has "very little control over"; energy was the only example she gave of such expenditures. A review of the university's utilities budget over the last two years supports her claim.

The UI budgeted $74.86 million in utilities expenditures for fiscal 2012 and $70.12 million for fiscal 2011, an increase of $4.74 million or 6.76 percent.

Have Iowa State officials noticed a significant increase in their utility rates over the past year?

"No," said Dave Miller, the associate vice president for facilities at ISU. "Last year, our average rate-increase was less than 1 percent."

Three years ago, ISU began holding each of its buildings accountable for its utility costs. The first year of the program saved ISU $28 million (around 37 percent of UI's current utilities budget), Miller said. Whatever funds are leftover from the budget difference goes directly to buildings or departments that facilitated the savings.

"[The savings are] significant, because the College of Engineering budget is $4 million," Miller said. "If they save 10 percent, they've got $400,000 to take care of their programs, hire staff, and purchase materials."

The budget isn't just allocated by building. ISU holds individual units in each building accountable for their energy use.

According to ISU's Recourse Management Model Policies, Procedures, and Processes document, "[f]or buildings that have numerous occupants, the utility consumption is prorated based on the net assignable square-footage assigned to each of the building's occupants."

In summary, in order to push their buildings' occupants to save energy, ISU has modeled its utilities budget to parallel that of a individual household or small business.

"People are paying a bill, and they are paying attention to what they pay for — the same as you're doing at your home," said Miller. "So as you turn around and take actions to save money, you're going to keep that money."

This philosophy is makes sense, and it should be prescribed for all university functions. If the UI were truly committed to spending its money as if it were its own, it would not rely on tuition increases, state appropriations, and federal grants.

The more above-inflation tuition increases there are, the less desirable the UI will be as an investment to potential students. Not only will initial costs rise, but people may begin to question the UI's commitment to affordable education if cost inefficiencies continue to surface.

Student groups such as the UI Student Government should continue to protest wrongful tuition increases. Its current actions are undoubtedly applaudable, but it should diversify its efforts by proposing specific plans to lower in-house costs that the UI claims to be a factor of the need for additional funding.

Modeling the UI's utilities management after that of ISU's has the potential to save the university millions. There are other ways to restructure the university's budget to minimize tuition, and it starts with management. Officials at the UI must create incentives to treat others' money as if it were their own.

It's common sense.


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