The governing board for the state’s public universities approved an agreement Tuesday for two French companies to take over operation of the University of Iowa’s utility system for 50 years in an effort to generate funding for UI’s performance goals.
ENGIE North America and Meridiam, which have a similar agreement with Ohio State University, will pay the University of Iowa $1.165 billion up front. The University of Iowa plans to invest about $999 million of that in a new endowment that is projected to yield more than $3 billion in 50 years.
“I am excited,” Regent Nancy Boettger said. “I think this is one of the most exciting things for higher ed that I’ve seen.”
UI will pay ENGIE a designated amount each year, starting at $35 million, to run the campus utilities. The university will also pay for operations and maintenance, including employee salaries and capital needs. UI estimates its payment to ENGIE in fiscal year 2022 would be about $60 million.
If the endowment performs as expected, a majority of the funding generated would help cover rising utility costs.
The rest is expected to help fund UI’s “strategic goals” by providing $15 million each year to improve student retention and graduation rates, make UI more competitive for faculty and research grants, and stimulate the state’s economy. UI has been slipping in national college rankings.
An ENGIE representative said they are still committed to making university utilities coal-free by 2025, if not sooner.
Republican Gov. Kim Reynolds stopped by Tuesday’s meeting to thank the Iowa Board of Regents. In the summer of 2018, she challenged them to look for new funding sources as state support declines and tuition increases.
“This public-private partnership is exactly the kind of innovative thinking that we need not only in Iowa’s public universities, but across state government,” Reynolds said.
Reynolds also praised the board and UI for being transparent in the process.
But some Iowans have criticized state university officials for a lack of transparency. The names of the companies, or the amount they would pay UI, were not publicly released until Tuesday’s meeting, shortly before the regents voted on the agreement.
The AP reported state officials still would not release the names of additional Iowa-based investors Tuesday.
Sen. Claire Celsi, D-West Des Moines, interrupted the meeting and told the regents it is “shameful” that they did not allow for public comment at Tuesday’s meeting.
“This is a State of Iowa asset, not your monopoly board,” Celsi said. “So not letting the public outside the University of Iowa itself have any input is unconscionable.”
Asked about those criticisms, UI President Bruce Harreld said there were six town hall meetings about the proposal, as well as dozens of meetings with university stakeholder groups.
“So that’s one wave of this that I get a little bit frustrated with that, quite frankly, we somehow think that this has been too fast? It’s been a year and a half,” Harreld said. “Secondly, that it hasn’t been transparent. Stop it. It’s been very transparent and will continue to be.”
Sen. Joe Bolkcom, D-Iowa City, has criticized the plan as an “exotic and risky funding scheme” that shows the state’s failure to fund its public universities.
The regents say this is a low-risk investment plan.
Board of Regents President Michael Richards said he is positive the deal will work out well for UI.
“I think we will be looking at other opportunities to do similar type of ventures at our other universities,” Richards said. “But that’s not been decided.”