Through the end of September, the University of Iowa had withdrawn nearly $41 million from an endowment fund it created in 2020 with $985.9 million the campus received as part of a public-private partnership for the operation of its sprawling utilities system.
A big chunk of that $40.9 million endowment distribution to date — $35.2 million — has been disseminated across campus via one- to three-year grants supporting projects, programs and initiatives aligned with UI strategic priorities, according to a September financial report.
The remaining $5.8 million has helped UI fulfill its obligation to its new private partner to cover utility and operating costs.
Advertisement
Including those withdraws and market fluctuations, the total value of the fund as of September was $998.7 million — up $12.8 million from where it started, but down $27.3 million from its value in June 2021, when the fund early on was reporting a $147.7 million net worth increase after just one year.
In September, according to the most recent financial report, the fund’s net worth increase from inception had dropped to $53.8 million.
“The market value of the (UI Strategic Initiatives Fund) can fluctuate,” UI spokesman Chris Brewer said. “It is currently lower due to additional distributions to the university and world-wide issues (inflation, pandemic, wars, etc.) impacting the financial markets and performance of the fund.”
The endowment fund stemmed from a landmark 50-year $1.165 billion deal for the private operation of the sprawling UI utilities system. In exchange for that upfront lump payment, the winning private bidder landed exclusive rights to operate the university’s utility system for the next five decades — requiring UI to pay it a $35 million annual fixed fee; tens of millions more annually to cover operation and maintenance costs; and any additional expenses for things like capital improvements and fuel.
The winning bid came from a group of foreign- and U.S.-based businesses and individuals — including Meridiam Infrastructure North American Corporation; ENGIE North America Inc.; and Hannon Armstrong Sustainable Infrastructure Capital Inc. — which collectively call themselves the UI Energy Collaborative.
Already, the deal has come under public scrutiny after UI refused to disclose the private investors who made possible the $1.165 billion upfront payment — even for a state audit.
Newsletter Signup
Delivered to your inbox every day
Only after the Iowa Supreme Court weighed in did UI provide the state auditor with a list of investors — including Iowa-based companies, Transamerica; Principal Global Investors; and Athene, formerly of Des Moines.
The auditor’s yearslong investigation questioned whether lawmakers should have more oversight of public-private partnerships at its universities — given the UI deal amounts to the “largest financial obligation ever held by Iowa taxpayers.”
“While the Legislature long ago delegated the authority to issue debt to the (Board of Regents), it is uncertain they anticipated debt or long-term obligations of this magnitude,” Sand wrote in his audit, released in December. “It seems inappropriate for a government department or agency to take on the largest financial obligation ever held by Iowa taxpayers at the governor’s general suggestion. Such practices lead to a lack of accountability and transparency.”
State Auditor Rob Sand also advised UI to include more information on its website and in its financial reports related to the endowment fund.
“We will carefully consider the recommendations made by (the auditor) in the report,” according to the UI and Board of Regents response to his findings. “The P3 is a great opportunity for the university, and we look forward to its continued success.”
A month later, and just three years into the partnership, more questions and cracks in the deal emerged when the UI Energy Collaborative sued UI for “breaching its obligations.”
In the federal lawsuit filed in January, the private utilities operator accused UI of refusing to pay money it owes; rescinding approval for certain utility system repairs; refusing to file casualty insurance claims; and demanding payment for “unplanned” utility outages “even though the university’s representatives participated in the very meetings and discussions planning for those events.”
UI officials have not yet filed a formal response with the court.
In a separate September report on the public-private partnership — or P3 for short — the university described in more detail how it has distributed the about $35 million in grants to 20 interdisciplinary projects.
“Project activities must be outside of scope, or unable to be supported, through the current budget model,” according to a list of criteria used in selecting grant recipients.
Other criteria include the prospect of longevity beyond the funding period and high-level impact across multiple strategic priorities — aligning with one or more UI goals, objectives, or strategies.
For the 2022 and 2023 budget years, UI received 78 grant applications from across campus.
One of the first-year projects to land P3 endowment funds was a “high impact hiring initiative,” proposed by the UI Council of Deans, receiving $4.25 million to help colleges and departments recruit and retain faculty.
Through that initiative, collegiate units could apply for one-time, non-recurring funds “to recruit or retain faculty,” according to the report, noting nearly $4.2 million to date had been committed to 25 different recruitments or retentions.
The success of that first “high impact hiring” initiative led to the approval of a second iteration in the current budget year under the same name. That second high-impact-hiring project received another $7.5 million over two years — meaning nearly $12 million, or one-third, of the $35.2 million in endowment grant funds have gone toward the hiring initiatives alone.
That combined total is the most granted to any project — with the second highest award of $4 million going toward a “seeding excellence” project aimed at funding research across campus concentrated on areas of community engagement; diversity, equity, and inclusion; early — career faculty; and interdisciplinary research.
The university in the 2022 budget year also funded through its P3 grant process an “off-cycle” allocation of $579,500 over three years for an “Academic Analytics subscription.” Academic Analytics provides comparative data for peer universities allowing institutions to analyze trends across research and academia.
“It is widely considered to be the industry standard for higher education analytics and has myriad applications including, but not limited to, benchmarking, strategic planning, identification of honorific awards for faculty, identification of institutional strengths and weaknesses, faculty collaborations, and faculty recruitment and retention,” according to a UI summary of its 2022 projects. “Many peer institutions use this product for the aforementioned applications.”
The university currently is accepting applications for its fiscal 2024 P3 grants — due March 10. Preliminary proposals were due Oct. 31, and only those approved to proceed were invited to submit full grant applications.
Selected projects will be unveiled in June.
www.thegazette.com
A big chunk of that $40.9 million endowment distribution to date — $35.2 million — has been disseminated across campus via one- to three-year grants supporting projects, programs and initiatives aligned with UI strategic priorities, according to a September financial report.
The remaining $5.8 million has helped UI fulfill its obligation to its new private partner to cover utility and operating costs.
Advertisement
Including those withdraws and market fluctuations, the total value of the fund as of September was $998.7 million — up $12.8 million from where it started, but down $27.3 million from its value in June 2021, when the fund early on was reporting a $147.7 million net worth increase after just one year.
In September, according to the most recent financial report, the fund’s net worth increase from inception had dropped to $53.8 million.
“The market value of the (UI Strategic Initiatives Fund) can fluctuate,” UI spokesman Chris Brewer said. “It is currently lower due to additional distributions to the university and world-wide issues (inflation, pandemic, wars, etc.) impacting the financial markets and performance of the fund.”
'Largest financial obligation’
The endowment fund stemmed from a landmark 50-year $1.165 billion deal for the private operation of the sprawling UI utilities system. In exchange for that upfront lump payment, the winning private bidder landed exclusive rights to operate the university’s utility system for the next five decades — requiring UI to pay it a $35 million annual fixed fee; tens of millions more annually to cover operation and maintenance costs; and any additional expenses for things like capital improvements and fuel.
The winning bid came from a group of foreign- and U.S.-based businesses and individuals — including Meridiam Infrastructure North American Corporation; ENGIE North America Inc.; and Hannon Armstrong Sustainable Infrastructure Capital Inc. — which collectively call themselves the UI Energy Collaborative.
Already, the deal has come under public scrutiny after UI refused to disclose the private investors who made possible the $1.165 billion upfront payment — even for a state audit.
Daily News
Newsletter Signup
Only after the Iowa Supreme Court weighed in did UI provide the state auditor with a list of investors — including Iowa-based companies, Transamerica; Principal Global Investors; and Athene, formerly of Des Moines.
The auditor’s yearslong investigation questioned whether lawmakers should have more oversight of public-private partnerships at its universities — given the UI deal amounts to the “largest financial obligation ever held by Iowa taxpayers.”
“While the Legislature long ago delegated the authority to issue debt to the (Board of Regents), it is uncertain they anticipated debt or long-term obligations of this magnitude,” Sand wrote in his audit, released in December. “It seems inappropriate for a government department or agency to take on the largest financial obligation ever held by Iowa taxpayers at the governor’s general suggestion. Such practices lead to a lack of accountability and transparency.”
State Auditor Rob Sand also advised UI to include more information on its website and in its financial reports related to the endowment fund.
“We will carefully consider the recommendations made by (the auditor) in the report,” according to the UI and Board of Regents response to his findings. “The P3 is a great opportunity for the university, and we look forward to its continued success.”
A month later, and just three years into the partnership, more questions and cracks in the deal emerged when the UI Energy Collaborative sued UI for “breaching its obligations.”
In the federal lawsuit filed in January, the private utilities operator accused UI of refusing to pay money it owes; rescinding approval for certain utility system repairs; refusing to file casualty insurance claims; and demanding payment for “unplanned” utility outages “even though the university’s representatives participated in the very meetings and discussions planning for those events.”
UI officials have not yet filed a formal response with the court.
'High impact hiring’
In a separate September report on the public-private partnership — or P3 for short — the university described in more detail how it has distributed the about $35 million in grants to 20 interdisciplinary projects.
“Project activities must be outside of scope, or unable to be supported, through the current budget model,” according to a list of criteria used in selecting grant recipients.
Other criteria include the prospect of longevity beyond the funding period and high-level impact across multiple strategic priorities — aligning with one or more UI goals, objectives, or strategies.
For the 2022 and 2023 budget years, UI received 78 grant applications from across campus.
One of the first-year projects to land P3 endowment funds was a “high impact hiring initiative,” proposed by the UI Council of Deans, receiving $4.25 million to help colleges and departments recruit and retain faculty.
Through that initiative, collegiate units could apply for one-time, non-recurring funds “to recruit or retain faculty,” according to the report, noting nearly $4.2 million to date had been committed to 25 different recruitments or retentions.
The success of that first “high impact hiring” initiative led to the approval of a second iteration in the current budget year under the same name. That second high-impact-hiring project received another $7.5 million over two years — meaning nearly $12 million, or one-third, of the $35.2 million in endowment grant funds have gone toward the hiring initiatives alone.
That combined total is the most granted to any project — with the second highest award of $4 million going toward a “seeding excellence” project aimed at funding research across campus concentrated on areas of community engagement; diversity, equity, and inclusion; early — career faculty; and interdisciplinary research.
The university in the 2022 budget year also funded through its P3 grant process an “off-cycle” allocation of $579,500 over three years for an “Academic Analytics subscription.” Academic Analytics provides comparative data for peer universities allowing institutions to analyze trends across research and academia.
“It is widely considered to be the industry standard for higher education analytics and has myriad applications including, but not limited to, benchmarking, strategic planning, identification of honorific awards for faculty, identification of institutional strengths and weaknesses, faculty collaborations, and faculty recruitment and retention,” according to a UI summary of its 2022 projects. “Many peer institutions use this product for the aforementioned applications.”
The university currently is accepting applications for its fiscal 2024 P3 grants — due March 10. Preliminary proposals were due Oct. 31, and only those approved to proceed were invited to submit full grant applications.
Selected projects will be unveiled in June.
University of Iowa has withdrawn $41M from P3 endowment fund
Through the end of September, the University of Iowa had withdrawn nearly $41 million from an endowment fund it created in 2020 with $985.9 million the campus received as part of a public-private partnership for the operation of its sprawling utilities system.
www.thegazette.com
