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Release: May 22, 2002

Coleman: budget proposal for FY03 is 'lose-lose' proposition for UI

IOWA CITY, Iowa - A legislative proposal that underfunds salary increases in the general education fund at The University of Iowa by about $12 million presents a "lose-lose" situation that pits competitive salaries needed to retain top faculty members against funding for educational programs, President Mary Sue Coleman said today. In either case, the quality of the university's educational offerings is compromised.

Coleman and other university officials also expressed profound reservations about a legislative proposal to further slash funding for key economic development programs.

"Following a budget year in which we lost more than $38 million in state support for the entire university, we are facing additional reductions and underfunding of $21 million in state support for the general education fund for the coming fiscal year," Coleman noted. "The governor has already signed legislation that cuts next year's University of Iowa operating budget by $9 million. The legislative proposal would add $12 million of salary underfunding on top of that.

"This presents us with a lose-lose situation. If we don't provide competitive salary increases, we risk losing more of our best faculty members to other universities or private business," she added. "Because our faculty are the heart and soul of the quality of our education, this is a serious problem both in the short term and in the long term. It also has consequences for patient care because faculty in our College of Medicine are also the physicians who treat patients in UI Hospitals and Clinics. Iowans deserve to be treated by the best doctors.

"On the other hand, if we do give competitive pay increases, we will have to carve those funds out of our already depleted operating budget," Coleman continued. "This will imperil not only initiatives to improve education, but it will also mean that we will have fewer course offerings and higher student-to-faculty ratios. Both of these scenarios put the quality of our education at risk."

UI officials noted that the current legislative proposal would reduce the funding for salary increases to all state employees from $41 million to $8 million. The UI estimates, based on historical allocations, that the general education fund would receive about $1.8 million of the $8 million. However, the general education fund needs about $12 million to fund the salary increases legislatively mandated. Up to this point the university has eliminated 247 positions, closed programs, suspended admissions to programs as well as made numerous other cuts. Additional cuts, yet to be determined, will be required to implement the $21 million dollar shortfall proposed by legislative leadership.

Under the budget proposal announced by the majority party legislative leadership on Tuesday, funding for the Oakdale Research Park, the Technology Innovation Center and the Center for Advanced Drug Development would be cut by 56 percent from the FY02 appropriation.

"One of the things that Iowa citizens and the business community expect from the university is to work hand-in-hand with the private and public sectors on economic development for the entire state. Particularly in difficult economic times, budget cuts of this magnitude are short sighted," said David Skorton, vice president for research and external relations. "We are concerned about the message the cuts send to entrepreneurs and to business people around the country interested in doing business in Iowa.

"These economic development programs have a long track record of taking university research and translating that into new jobs for Iowans. We will not be able to sustain those efforts with this budget cut," Skorton added. "We have business and ethical obligations to our affiliates which we will choose to honor. Similarly, we have obligations to the entire state to do what we can to improve the economic climate. We will face some difficult choices next spring if the budgets are not restored.

"Growing the pharmaceutical industry in Iowa has been a long-standing goal of Iowa's economic development strategy," Skorton said. "The Center for Advanced Drug Development has been a cornerstone of that effort. With cuts of this magnitude we may be forced to abandon our commitment to enhance the pharmaceutical industry in Iowa."