Dive Brief:

• The Iowa Board of Regents has adopted a funding formula for the state’s three public universities that rewards the schools that enroll in-state students and meet performance goals, while punishing those that don’t.
• The plan, characterized by the Associated Press as the biggest change to Iowa’s higher education funding in decades, would dictate how most of the $500 million in state funding is divvied up between the three schools.
• The plan is effective next year. If adopted today, the formula would have taken $47 million in funding away from the University of Iowa over a three-year period and given the funding, in roughly equal parts, to the University of Northern Iowa and Iowa State University.

Dive Insight:

On the plus side, the new model will incentivize the schools to recruit Iowa students and meet the performance standards. On the downside, it could hurt out-of-state recruitment and the higher tuition revenues that come with it, as well as discouraging spending on graduate and research programs, which are more expensive. Also, it’s hard to see how pitting the schools against each other in a zero-sum game competition for finite state funding isn’t going to damage good will and cooperative efforts between the institutions — though it could be argued that the old funding system did that already. The regents voted 8-1 in favor of the new plan, with proponents saying that the old funding model rewarded universities for recruiting out-of-state students and punished those that enrolled more Iowa residents.