Fiscal Note
Fiscal Services Division
HF 2558 – Higher Education Omnibus (LSB5335HV.1)
Staff Contact: Michael Peters (515.281.6934) michael.peters@legis.iowa.gov
Fiscal Note Version – As amended and passed by the House
Description
House File 2558 makes changes to the diversity, equity, and inclusion (DEI) policies, tuition,
and administrator hiring at State universities; makes changes to the membership of the State
Board of Regents; and instructs the State universities and community colleges to establish
student-employer work and tuition programs. Figure 3, at the end of this Fiscal Note,
summarizes the fiscal impacts of the Bill.
Division I — Short Title
Description
Division I establishes the title of this Bill as the “Higher Education Reform Act of 2024.”
Fiscal Impact
Division I is not estimated to have a fiscal impact.
Division II — Community Colleges
Description
Division II requires that the community colleges establish a program that would allow a student
to work part-time for a registered employer while pursuing an associate’s degree and
establishes program requirements. This program is to be established on or before December
31, 2024.
In addition, the community colleges are also to adopt policies and procedures that require the
community college to follow State law regardless of rules or directives of any accrediting agency
and that grant the president of a college the ability to initiate tenure review.
Fiscal Impact
The fiscal impact of Division II cannot be determined. According to the community colleges, the
process, involvement, and scope of creating a work-study program is unknown.
Division III — State Board of Regents
Description
Division III makes changes to the members of the Board. The Bill adds two ex officio, nonvoting
members of the General Assembly to the current Board, expanding the Board to 11 total
members. The President of the Board is nominated by the Board every even-numbered year
and subject to confirmation by the Senate. Voting member terms are adjusted from six to four
years, and the number of required yearly Board meetings decreased from six to four per year.
The Bill makes conforming changes.
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Fiscal Impact
Division III is not estimated to have a fiscal impact.
Division IV — Institutions of Higher Education Governed by the State Board of Regents
Description
Division IV makes changes to the process for the election of a president at an institution of
higher learning under the Board requiring the use of a presidential selection committee to
provide candidate recommendations and select a new president. The identities of candidates
for president considered by the presidential selection committee are to be confidential and not
subject to public disclosure, unless agreed to by all members of the presidential selection
committee.
The Bill adopts the following provisions related to tuition:
• Requires an institution of higher education under the Board to adopt rules providing that the
institution may not increase the total amount of resident tuition and mandatory fees
associated with a baccalaureate program by more than 3.0% over the proceeding academic
year without approval by the Legislative Council.
• Prohibits an increase in the amount of tuition and mandatory fees charged by an institution
of higher education under the Board’s control during the first four full academic years of
participation in the undergraduate program by a student who began the program during the
2024-2025 academic year. The Bill prorates the tuition freeze length if the student had
attained undergraduate credits prior to admission.
The Bill makes the following program changes:
• Requires that each institution under the control of the Board establish a program, prior to the
beginning of the 2025-2026 academic year, that would allow a student to work part-time for
a registered employer while pursuing a baccalaureate degree. This program would require
the employer to pay for all of the student’s tuition and mandatory fees for the semesters the
student is enrolled in the program, in addition to an hourly wage not less than the federal or
State minimum wage, in exchange for the student working at least one calendar year for an
employer.
• Requires the Regents to accept the Classic Learning Test, developed by Classic Learning
Initiatives, when considering admissions.
• Directs the institutions of higher education to develop a curriculum and materials related to
an American history and civics course and to adopt policies requiring all undergraduate
students admitted on or after the 2024-2025 academic year to complete a three-credit-hour
course developed to this subject.
• Requires the institutions of higher education are also required to adopt policies and
procedures that would grant the president of a college the ability to initiate tenure review, as
well as policies that focus the college’s strategic plan on degree programs that lead to
employment in high-demand fields.
• Requires the Board to prohibit any institution of higher education under its control from
allowing any Confucius Institute or any other education institute funded by the People’s
Republic of China from operating on any property owned by the institution.
• Requires institutions to adopt policies and procedures prohibiting any faculty senate
committee from having governance authority over the institution.
• Requires that each institution governed by the Board, prior to the November 2024 Board
meeting, develop a proposed baccalaureate degree program that requires no more than 90
semester hours of classroom work.
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• Requires each institution of higher education under the Board, prior to the November 2024
Board meeting, to develop a proposal related to the establishment of a center, institute, or
initiative that is dedicated to expanding opportunities for education and research concerning
freedom of speech and civic education.
The Bill adopts the following requirements related to DEI:
• Requires the elimination of any DEI function that is not necessary for compliance with
federal or State laws or accreditation. The institutions of higher education are to make the
support services that were provided by such offices broadly available to all students and
faculty.
• Requires that institutions of higher education review the services provided by offices that
support diversity or multicultural affairs to ensure that services are available to all students
and that conforming updates are made to promotional and informational materials. The Bill
prohibits an employee, student, applicant, or campus visitor from being required to submit a
DEI statement or be evaluated based on participation in a DEI initiative. The Bill also
requires each institution to adopt a policy that prohibits the consideration of race and other
protected class characteristics during the admissions process and to provide guidance for
employees on the separation of personal political advocacy from the employee’s regular
duties and the business of the institution.
The Bill adopts the following reporting requirements:
• Each institution is required to submit a report on or before December 31, 2024, that includes
a review of all DEI-related positions and job responsibilities.
• Prior to the November 2024 Board meeting, each institution is required to conduct a
comprehensive study related to reducing institutional costs, maintaining close to current
levels of tuition and mandatory fees, and maintaining noninstructional costs below 10.0% of
the institution’s annual budget.
• Prior to the November 2024 Board meeting, each institution is required to develop a
proposal related to the establishment of a center or institute that is dedicated to expanding
opportunities for education and research concerning freedom of speech and civic education.
Background
The Board reviews proposed tuition rate increases each June for the upcoming fall semester.
The 2019-2020 and 2020-2021 academic years (AY) did not include any tuition or mandatory
fee increases due to the ongoing COVID-19 pandemic. Figure 1 shows the combined tuition
and mandatory fees charged from AY 2020-2021 to AY 2023-2024.
Figure 1 — Undergraduate Tuition and Mandatory Fee Rates AY 2020-2024
2020-2021 2021-2022 2022-2023 2023-2024
University of Iowa $ 9,605.5 $ 9,942.0 $ 10,353.0 $ 10,964.0
Iowa State University 9,315.9 9,633.9 10,132.9 10,496.9
University of Northern Iowa 8,938.0 9,053.0 9,411.0 9,728.0
Average Tuition & Fees Cost $ 9,286.5 $ 9,543.0 $ 9,965.6 $ 10,396.3
Average % Change - 2.76% 4.43% 4.32%
Senate File 560 (2023 Education Appropriations Act), Division V, required the Board to conduct
a study of the DEI efforts at each university and implemented a hiring freeze until June 30,
2024. The report was reviewed by the full Board during the November 15-16, 2023, meeting.
The full report and recommendations can be found here, and a Fiscal Update Article
completed by the Legislative Services Agency can be found here. The Board voted to adopt all
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10 recommendations provided in the report and is in the process of implementing those
recommendations through task forces created at each university. The report outlined all
positions currently engaged in DEI-related activities along with their salary, benefits, and
percent effort in DEI activities.
Assumptions
• Tuition revenue and State appropriations support the operating costs for the Regents
institutions of higher education.
• The following assumptions were made in the calculation of the impact of the undergraduate
tuition freeze as seen in Figure 2:
• The calculations show the estimated revenue generated from a single freshman class in
fall 2020 and add a new freshman class each year until fall 2023, when there would be
four years of progressing students.
• The calculations assume that all students pay the full tuition rate, which does not
account for any tuition or other price discounts that may be available to students.
• The calculations do not account for transfer students or high school students who may
be admitted with earned college credit hours.
• Dropout numbers and four-year degree completion numbers are not included in this
calculation. Students who continue into a fifth year of an undergraduate program would
have their tuition rates reset to the current year.
• Future tuition increases are assumed to match the average rate increase of 3.6% per
year in Figure 1.
• Based on Figure 2, the average tuition and mandatory fees across all three universities
could increase from $9,000 to $11,000.
• The Board estimates that each university would need to establish at least 75 company
agreements required for the work-study program.
• Iowa State University estimates that organizing the work-study agreements would require
1.0 full-time equivalent (FTE) coordinator position estimated at $100,000 per year, and an
additional $100,000 in legal support communications and miscellaneous expenses per year.
This $200,000 estimate will be applied to all three Regents universities.
• Creating new courses requires research and development. Faculty creating new courses
are generally compensated for one month (one ninth) of their annual salary. The average
salary for a tenure track faculty member is estimated to be $90,000, so the cost for one
faculty member to create a new course would be $10,000.
• There are no known Confucius Institutes or educational institutes funded by the People’s
Republic of China currently located on any property owned by an institution of higher
education under the control of the Board.
Fiscal Impacts Related to Tuition
The fiscal impact of limiting tuition and mandatory fee increases to 3.0% cannot be determined.
Division IV also requires a new four-year tuition freeze for all new undergraduate resident
students. Due to many variables, a fiscal impact going forward cannot be estimated. The
Board’s Fall 2022 Graduation and Retention Report shows a second-year student retention rate
of 86.0%, a four-year graduation rate of 56.0%, and a six-year graduation rate of 71.0%. This
report can be found here.
Figure 2 provides an example showing total revenues received by the three Regents
universities compared to the impact of this provision during the same time period.
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 Figure 2 — Impact of Undergraduate Tuition Freeze on Revenue AY 2020-2023
Fiscal Impacts Related to New Program Requirements
• The creation and implementation of a work-study program as directed by the Bill would
require 3.0 new FTE positions and a total estimated cost of $600,000 per year across all
three universities.
• The creation of an American history or civics curriculum and materials is estimated to be
$10,000 per university, or $30,000 total.
• The cost to create a 90-credit-hour baccalaureate program is unknown but significant.
Additionally, the new program would be required to receive accreditation prior to being
implemented.
Fiscal Impacts Related to DEI
The following fiscal impacts are related to DEI:
• The fiscal impact of the elimination of DEI positions is unknown. The Bill also expands the
services provided by these DEI departments to all students, which may require additional
FTE positions or resources.
• The cost of the requirement of a new annual DEI positions and job responsibilities report is
assumed to be absorbed by current staff and funding.
Fiscal Impacts Related to Reporting Requirements
The comprehensive study on the reduction of costs may require the Board to work with an
external company to conduct the study due to time constraints to complete prior to
November 2024. Based on similar studies, the Board estimates this study would require two or
more years to complete. The Board estimates a cost of between $250,000 and $500,000
across all three universities. If the report is completed by an outside consultant, the cost could
be as high as $3.0 million due to the report’s November 2024 deadline.
Division IV Total Fiscal Impact
• The total fiscal impact of implementing Division IV is 3.0 new FTE positions and a cost to the
Board estimated between $850,000 and $3.6 million depending on how the comprehensive
study on the reduction of costs is implemented.
• The impact of the elimination of DEI-related positions and the expansion of serviced
students and faculty is unknown.
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• The impact of the four-year tuition freeze for all new resident undergraduate students is
unknown, but the freeze is expected to have a negative fiscal impact on the universities’
revenues.
• The creation of an American history or civics curriculum and materials is estimated to be
$10,000 per university, or $30,000 total.
Division V — Closure of Private Institutions of Higher Education
Description
Division V requires that accredited private institutions of higher education provide notice to the
Department of Education immediately after the governing board of the institution votes to close
the institution. The governing board is also required to provide a report within five days to the
Department of Education with additional information on the closure.
Fiscal Impact
Division V is not estimated to have a fiscal impact.
Summary of HF 2558 Fiscal Impact
Figure 3 includes a summary of the fiscal impacts for each division of the Bill:
Figure 3 — Estimated Summary of Fiscal Impacts for HF 2558
Division Fiscal Impact
I No fiscal impact.
II The fiscal impact cannot be determined.
III No fiscal impact.
IV • The total fiscal impact is 3.0 new FTE positions and a cost to the Board
estimated between $850,000 and $3.6 million depending on how the
comprehensive study on the reduction of costs is implemented.
• The cost of creating a new American history and civics course is estimated to
be $30,000.
• The impact of the elimination of DEI-related positions and the expansion of
serviced students and faculty is unknown.
• The impact of the four-year tuition freeze for all new resident undergraduate
students is unknown, but the freeze is expected to have a negative fiscal
impact on the universities’ revenues.
V No fiscal impact.
Sources
State Board of Regents
Association of Community College Trustees
Legislative Services Agency calculations
/s/ Jennifer Acton
March 7, 2024
Doc ID 1447564
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 260C.14, 262.1, 262.7, 262.5, 262.6, 262.9
Reprinted: 260C.14, 262.1, 262.7, 262.5, 262.6, 262.9