On Tuesday, UI Senior Vice President for Finance Doug True told Faculty Senate members the university is considering using leftover stimulus funds to close the university’s $24.7 million budget gap. Two Opinions writers weigh in on the proposal.
The UI and the magic bean stalk
Imagine if Jack crushed his magic beans to make tofu rather than plant them. There’d be no beanstalk. No giant with treasure. No goose to lay golden eggs and no beautiful princess. Well I’ve got news: You don’t have to imagine. You can observe the UI potentially doing the same thing with its stimulus funds. The proposal to divert nearly $13 million is shortsighted. The plan is understandable, considering the dire fiscal crisis the university is enduring, but it would only delay the inevitable and would cost the school dearly in the long-run.
The UI already received aid to meet budget shortfalls. The federal government, as part of the Federal Recovery and Reinvestment Act of 2009, gave money to the state, which then allocated approximately $35 million to the university. The UI received $20 million to meet budget shortfalls, $14 million for various stimulus projects, and an additional $1 million to use as it saw fit. The university has gone through the $20 million for the budget and might now use $13 million intended for stimulus projects to meet additional budget shortfalls.
The federal government intended that money to be the university’s magic beans. Instead, the UI is making tofu to satisfy its hunger pangs. This only delays the inevitable, because the school will again go hungry next year. Only then, there will be no stimulus money to meet budget shortfalls. There won’t be any benefits from the stimulus funds. No beans. No beanstalk. Not even tofu.
The money earmarked for stimulus projects could aid Iowa in emerging from the recession, allowing the state to become a leader in such industries as wind turbines and alternative fuels. The UI should look to the future before squandering it.
— by Justin Sugg
Holes need to be filled — use the stimulus money
Budget malaise doesn’t even begin to describe the situation the UI finds itself in — midyear, looking to cut a nauseating $24.7 million from the budget.
Erudite economists such as Paul Krugman and Joseph Stiglitz have argued the country needs a second stimulus bill, a portion of which would probably be used to help out struggling states and universities. But with the deficit growing and political will lacking, that seems unlikely.
Luckily, the UI has around $15 million in remaining stimulus funds, $13 million of which UI Senior Vice President for Finance Doug True said could be used to lessen the severity of budget cuts. The money was originally intended to fund worthy programs such as Energy Hawk, but it’s difficult to justify funding such programs when officials are weighing tuition surcharges, layoffs, and furloughs.
You have to stabilize before you can stimulate.
Fiscal conservatives will likely take glee in the cuts, excited at the possibility of a smaller government-employed workforce. Those calling for some sort of “lesson” to be derived from this unfortunate situation are wrong, however.
I don’t see profligate, impetuous spending on the UI’s part as the root cause of the budget gulf. What I see is a terrible economy that has decreased revenue and forced tough decisions and triaging. Sure, the UI will likely face additional cuts next year. But to pre-emptively slash positions or raise tuition because of future conditions would be misguided.
Whether university officials opt to use the stimulus money, they will undoubtedly have to employ austere cuts to break even. The question is whether they will be draconian, or merely painful.
— by Shawn Gude
