Statement by Senator Joe Bolkcom on proposed privatized management of University utility system
The University of Iowa and Iowa Board of Regents are moving at breakneck speed toward approving a proposed University of Iowa’s plan to privatize management of the institution’s electricity and water systems in exchange for a $1 billion-dollar (my guesstimate because it’s still a secret) payment.
Like a hedge fund, the University of Iowa will invest this borrowed money in the markets, in hopes of realizing large capital gains to both payback the borrowed money to the investors and realize a financial gain to fund the University. Like a home mortgage, every dollar that the University receives in an upfront payment will have to be paid back with interest over the next 50-years.
Exotic and possibly risky financing with international investors’ money is the latest plan by Governor Reynolds, the Board of Regents and university leaders to support educating our Iowa college students. The plan relies on the performance of the markets to succeed. If for some reason the University can’t pay back the money, Iowa taxpayers will.
This elaborate, 50-year creative borrowing scheme is the result of the failure over the last decade by the Iowa Legislature and Governor Reynolds to adequately fund our public universities.
Except for handful of legislative leaders and the Governor’s office, Iowans have been left in the dark about the financial details of this deal. The assets of the University of Iowa belong to Iowa taxpayers not any board or unelected administrator. We have not privatized the University of Iowa yet! Iowans deserve a far more transparent process and a timely sharing of the financial details of such a complicated long-term deal.
Iowans will have no opportunity to express their views on the final details of borrowing plan. At the Board of Regents meeting next week, they will reveal the successful bidder and the amount of the deal moments before they vote to approve the contract. Their agenda does not allow for any public input.
Taxpayers deserve some straight answers to basic questions before the Board of Regents rubber-stamps the deal. Some of the questions include:
- Who is the company and what is their expertise and experience operating both a power plant and drinking water system?
- Where is the money coming from?
- How much money will need to be paid back?
- Who is financially responsible if the plan fails?
- Why does the University of Iowa continue to pay all the costs of staff, fuel and capital improvements to operate the utility systems?
- Why have Iowan’s been left in the dark?
This is no way to run a public university. This is not a long-term solution to fund higher education. Iowa taxpayers and University of Iowa faculty, staff and students deserve better.