House File 2568 - Introduced HOUSE FILE 2568 BY THOMSON A BILL FOR An Act establishing a temporary independent fiscal 1 restructuring authority to provide oversight of institutions 2 of higher education governed by the state board of regents, 3 providing penalties, and making appropriations. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6150HH (2) 91 je/ns

H.F. 2568 Section 1. LEGISLATIVE FINDINGS AND INTENT. The general 1 assembly finds and declares all of the following: 2 1. Public purpose and long-term state interest. The 3 institutions governed by the state board of regents exist to 4 advance the long-term educational, economic, cultural, and 5 civic vitality of the people of Iowa, including the preparation 6 of Iowa’s future leaders across every profession, industry, and 7 community. The fiscal stability, operational integrity, and 8 faithful alignment of those institutions with their founding 9 purposes is therefore a matter of vital statewide concern and a 10 proper subject of legislative action under the police power of 11 this state. The general assembly has both the constitutional 12 authority and the solemn duty to ensure that public resources 13 entrusted to these institutions are deployed efficiently, 14 transparently, and in furtherance of the purposes for which the 15 people of Iowa created them. 16 2. Regents as creatures of statute —— no tolerance for 17 insubordination. The state board of regents is a creature of 18 statute, established by legislative enactment and exercising 19 only such authority as has been delegated to it by the 20 general assembly. The board is subordinate to statutes 21 duly enacted, and must implement legislative mandates fully, 22 faithfully, and promptly. Any willful refusal, delay, 23 obstruction, circumvention, or noncompliance with statutory 24 directives, whether by the board itself or by university 25 administrators, employees, or agents, constitutes ultra vires 26 conduct incompatible with the delegated status of the board’s 27 enterprise and will not be tolerated by the general assembly. 28 Recent events have demonstrated that elements within the 29 regents institutions have engaged in deliberate efforts to 30 evade or undermine legislative mandates, including documented 31 instances in which university personnel have openly discussed 32 strategies to circumvent duly enacted laws while maintaining 33 superficial compliance. Such conduct betrays the public trust 34 and necessitates enhanced legislative oversight mechanisms. 35 -1- LSB 6150HH (2) 91 je/ns 1/ 38

H.F. 2568 3. Tuition and revenue growth outpacing 1 inflation. Tuition, mandatory fees, and related charges at 2 regents institutions have increased at rates substantially 3 exceeding general inflation over extended periods, imposing 4 mounting and often crushing burdens on Iowa families 5 and taxpayers. The cost of attendance at Iowa’s public 6 universities has increased by more than two hundred percent 7 over the past two decades, far outstripping the growth in 8 median family income and the general consumer price index. 9 Where in 1981 state appropriations accounted for seventy-seven 10 percent of the universities’ general education budgets and 11 tuition accounted for twenty-one percent, those proportions 12 have effectively reversed. Today, tuition accounts for 13 approximately sixty-four percent of general education funding 14 while state appropriations account for approximately thirty-one 15 percent. This structural inversion signals cost drivers 16 that have not been sufficiently constrained by ordinary 17 budget processes and demonstrates the failure of the current 18 governance framework to protect Iowa families from relentless 19 cost escalation. 20 4. Federal credit expansion has weakened market 21 discipline. The general assembly finds that the widespread 22 availability of federal student loans and related financing 23 mechanisms has substantially weakened ordinary consumer price 24 discipline in higher education, contributing to tuition and 25 cost escalation and reducing institutional incentives to 26 constrain cost growth. This dynamic is especially acute where 27 the borrowers are young adults and first-time financial actors 28 who often lack the mature price sensitivity that normally 29 constrains consumer markets. The availability of easily 30 accessible credit has insulated regents institutions from the 31 market discipline that would ordinarily punish inefficiency, 32 bloat, and mission drift. Research from the federal reserve 33 bank of Richmond and the federal reserve bank of New York 34 confirms the relationship between expanded federal student aid 35 -2- LSB 6150HH (2) 91 je/ns 2/ 38

H.F. 2568 and rising tuition. This validates what has become known as 1 the Bennett hypothesis, which states that federal financial aid 2 policies, while well-intentioned, have enabled institutions to 3 raise tuition with confidence that loan subsidies would absorb 4 the increases. The general assembly concludes that absent 5 external discipline imposed by legislative action, regents 6 institutions have insufficient internal incentive to constrain 7 costs. 8 5. Absence of true audit discipline and intrusive 9 performance scrutiny. Regents institutions have not been 10 compelled to submit, on a routine and system-wide basis, to 11 the type of intrusive, independent, performance-oriented, 12 forensic audit discipline commonly imposed in private-sector 13 restructuring or receivership contexts. While compliance 14 and financial audits have been conducted, these have 15 proven insufficient to identify structural inefficiencies, 16 administrative bloat, or misalignment with legislative intent. 17 Internal audit functions have experienced chronic workforce 18 challenges, with audit plans regularly falling short of 19 completion due to staffing vacancies and resource constraints. 20 Recent audit findings have revealed unacceptable weaknesses 21 in operational controls, including weaknesses at units that 22 had been the subject of prior investigations and should have 23 implemented comprehensive reforms. The general assembly finds 24 that the existing audit framework lacks the forensic intensity 25 and independence necessary to impose genuine fiscal discipline 26 on institutions that control billions of dollars of public 27 resources. 28 6. Cost growth contrary to legislative intent —— human 29 burden. The general assembly finds that major cost increases 30 in tuition, fees, and institution-provided services have 31 proceeded in ways fundamentally inconsistent with legislative 32 intent in creating and funding regents institutions, which is 33 to provide accessible, high-value public education for Iowans 34 at a reasonable cost. The financial burden imposed on Iowa 35 -3- LSB 6150HH (2) 91 je/ns 3/ 38

H.F. 2568 families has become unreasonable and, in effect, inhumane. 1 Students report needing to work multiple jobs to afford 2 attendance. Graduate students describe tuition increases as 3 dollars diverted from rent, utilities, child care, and basic 4 necessities. The general assembly created these institutions 5 to serve Iowans, not to extract from them ever-increasing 6 resources while delivering services of uncertain value. The 7 disconnect between institutional cost growth and the financial 8 capacity of ordinary Iowa families represents a betrayal of 9 the foundational compact between the people and their public 10 universities. 11 7. Programmatic drift from measurable Iowa benefit. The 12 general assembly finds that, over time, substantial portions 13 of instruction, research, and administrative activity at 14 regents institutions have drifted away from measurable benefit 15 to Iowa’s public interests, workforce needs, civic health, 16 and economic priorities. Programs have proliferated without 17 rigorous assessment of their contribution to the state’s needs. 18 Administrative positions have multiplied while faculty numbers 19 have declined relative to enrollment. Academic offerings have 20 expanded into areas of questionable relevance to Iowa’s economy 21 and workforce requirements. The general assembly concludes 22 that comprehensive rejustification of all expenditures is 23 necessary to restore alignment with the public purpose for 24 which these institutions were created and for which they 25 continue to receive public appropriations. 26 8. Fiscal opacity encourages institutional monoculture 27 and diminishes excellence. The general assembly finds 28 that prolonged insulation from rigorous fiscal scrutiny can 29 contribute to institutional monoculture, reduced intellectual 30 competitiveness, and diminished robustness and value. A 31 durable and excellent public university system requires 32 diversity of thought, viewpoint pluralism, and competitive 33 excellence rather than unchallenged uniformity enforced through 34 administrative orthodoxy. The general assembly is concerned 35 -4- LSB 6150HH (2) 91 je/ns 4/ 38

H.F. 2568 that fiscal opacity and lack of accountability have enabled 1 ideological conformity to take root in ways that undermine the 2 intellectual vitality, competitive position, and long-term 3 institutional health of Iowa’s universities. Fiscal discipline 4 is a legitimate and necessary tool to restore institutional 5 health, encourage intellectual diversity, and ensure that 6 Iowa’s universities remain competitive with peer institutions 7 rather than declining into comfortable mediocrity. 8 9. Recent capital projects demonstrate scrutiny 9 failures. The general assembly finds that recent major 10 proposals affecting regents-related facilities and long-term 11 financial obligations have been advanced without adequate, 12 independently validated justification. Proposals involving 13 expenditures exceeding two billion dollars were at risk of 14 proceeding without sufficient scrutiny until individual board 15 members raised objections questioning the adequacy of the 16 underlying analysis and the reliability of key assumptions. 17 That such objections had to come from a single board member, 18 rather than emerging naturally from robust institutional 19 processes, reveals the failure of existing oversight 20 mechanisms. Prior major construction projects have experienced 21 significant cost overruns, design disputes, and budget 22 escalations that might have been avoided with more rigorous 23 initial scrutiny. The general assembly concludes that current 24 capital planning and approval processes provide insufficient 25 protection for the state’s fiscal interests. 26 10. Regents budget process lacks adequate transparency and 27 detail. The general assembly finds that the budget formation 28 and approval process employed by the state board of regents 29 has proven inadequate to ensure meaningful oversight by board 30 members themselves, let alone by the general assembly or the 31 public. Members of the board have expressed concern that they 32 receive proposed budgets with insufficient time for review, 33 without access to actual expenditure data from prior years, 34 without adequate information about contingency planning, and 35 -5- LSB 6150HH (2) 91 je/ns 5/ 38

H.F. 2568 without opportunity for substantive committee discussion before 1 approval votes. When board members charged with fiduciary 2 responsibility for billions of dollars of public resources vote 3 against budget approval as a protest against the inadequacy 4 of the process itself, the general assembly concludes that 5 the process has fundamentally failed and requires legislative 6 intervention to establish minimum standards for transparency, 7 detail, and deliberation. 8 11. Need for extraordinary oversight tools. The general 9 assembly finds that ordinary oversight methods have proven 10 inadequate to impose timely, system-wide fiscal discipline 11 on regents institutions. Incremental reforms, voluntary 12 compliance initiatives, and traditional appropriations 13 processes have failed to arrest cost growth, restore 14 alignment with legislative intent, or ensure accountability. 15 Extraordinary temporary restructuring authority is therefore 16 necessary to restore lawful, transparent, accountable, and 17 efficient operations and to protect legislative appropriations 18 and the interests of Iowa taxpayers. The general assembly 19 intends by this Act to establish mechanisms capable of 20 compelling the systemic reform that normal processes have 21 failed to achieve. 22 12. Zero-based budgeting is independently beneficial 23 regardless of disputed facts. The general assembly finds 24 that even if any specific contested factual premise regarding 25 particular programs, costs, or administrative decisions 26 were later disputed or shown to be incomplete, periodic 27 system-wide, zero-based budgeting and external restructuring 28 review are independently beneficial governance tools for 29 large institutions that have not previously been subjected 30 to such intrusive scrutiny. Zero-based budgeting requires 31 each expenditure to be justified anew rather than carried 32 forward automatically, thereby forcing institutions to 33 articulate the continuing necessity and value of each program 34 and function. Such processes have proven valuable in both 35 -6- LSB 6150HH (2) 91 je/ns 6/ 38

H.F. 2568 public and private sector contexts, enabling organizations to 1 identify inefficiencies, eliminate redundancies, and reallocate 2 resources to higher-value functions. The general assembly 3 concludes that zero-based budgeting is a sound governance 4 practice that should be applied to regents institutions 5 regardless of any particular factual controversies, and that 6 such application is reasonably expected to reveal substantial 7 savings and efficiency opportunities. 8 13. Anticipated savings magnitude and reinvestment 9 potential. The general assembly finds, based on restructuring 10 experience in other large organizations and budget-reset 11 methodologies, that substantial savings, potentially in the 12 range of fifteen percent or more of current expenditures, 13 are often identified when zero-based budgeting and intrusive 14 restructuring tools are imposed on systems previously insulated 15 from such scrutiny. In 2003, the state of Texas faced a 16 projected ten billion dollar budget shortfall. By requiring 17 state agencies to justify every expenditure from a zero 18 base, the legislature identified opportunities to consolidate 19 agencies and reduce costs, achieving approximately one billion 20 dollars in annual savings without tax increases. Private 21 sector applications of zero-based budgeting have identified 22 comparable efficiencies. The general assembly concludes that 23 achieving such efficiencies within the regents system will 24 enable these institutions to redirect substantial resources 25 toward their highest-value educational and research functions, 26 which are the truly excellent programs and faculty that likely 27 have been suffering from inadequate funding due to bloat, 28 administrative overhead, and mission drift in other areas of 29 the enterprise. 30 14. Federal funds preservation —— no immunity from state 31 oversight. The general assembly finds that preservation of 32 federal funds and compliance with mandatory federal grant 33 conditions are important public interests that this Act is 34 designed to protect. However, receipt of federal funds does 35 -7- LSB 6150HH (2) 91 je/ns 7/ 38

H.F. 2568 not immunize regents institutions from state fiscal oversight, 1 audit, and restructuring. The state of Iowa retains full 2 authority to condition, structure, and oversee institutional 3 fiscal operations while directing compliance with mandatory 4 federal requirements. Nothing in this Act shall be construed 5 to require any action that would violate binding federal law 6 or result in forfeiture of federal funds to which regents 7 institutions would otherwise be entitled. However, neither 8 shall federal funding relationships serve as a shield against 9 legitimate state oversight or as an excuse for failing to 10 implement lawful state directives in areas where federal 11 requirements do not apply. 12 15. Construction of Act. This Act shall be construed 13 broadly to effectuate its purposes, including the restoration 14 of fiscal integrity, transparency, accountability, and 15 alignment with the public purpose of regents institutions. Any 16 ambiguity in the provisions of this Act shall be resolved in 17 favor of the authority granted herein to obtain data, impose 18 restructuring requirements, mandate zero-based budgeting, 19 and protect state fiscal stability. The general assembly 20 declares that the findings set forth in this section reflect 21 its considered legislative judgment based on extensive review 22 of institutional operations, public testimony, media reports, 23 academic research, and the experience of other jurisdictions, 24 and that these findings shall inform the interpretation and 25 application of all provisions of this Act. 26 Sec. 2. NEW SECTION . 262C.1 Short title. 27 This chapter shall be known and may be cited as the 28 “Independent Fiscal Restructuring Authority Act” . 29 Sec. 3. NEW SECTION . 262C.2 Purpose, findings, and 30 declarations. 31 1. Public purpose, police power, and constitutional 32 authority. The general assembly finds and declares all of the 33 following: 34 a. Regents institutions exist to educate Iowa’s future 35 -8- LSB 6150HH (2) 91 je/ns 8/ 38

H.F. 2568 leaders and sustain state economic and civic health. 1 b. Fiscal integrity, affordability, and durability of these 2 institutions are matters of compelling statewide concern. 3 c. This chapter constitutes a valid exercise of the state’s 4 police power to preserve fiscal stability, protect taxpayers, 5 and ensure efficient operation of public institutions. 6 d. The fiscal condition of regents institutions requires 7 extraordinary legislative intervention. 8 e. This chapter exercises the general assembly’s 9 appropriations power under Article III, section 24, of the 10 Constitution of the State of Iowa. 11 f. Contract modifications authorized herein are necessary 12 and reasonable means to serve a significant public purpose, 13 representing the least impairing means available to achieve 14 fiscal stability while respecting contract rights to the 15 maximum extent feasible. 16 2. Ministerial execution framework. The general assembly 17 finds and declares all of the following: 18 a. This chapter establishes fixed statutory policy regarding 19 fiscal objectives, performance metrics, metric weights, 20 reduction targets, and procedural requirements. 21 b. The independent fiscal restructuring authority exercises 22 ministerial authority to apply criteria and execute policies 23 established by statute. 24 c. The independent fiscal restructuring authority does 25 not formulate new fiscal, academic, or institutional policy; 26 the authority implements policy choices made by the general 27 assembly. 28 d. The metrics, weights, targets, timelines, and procedures 29 in this chapter constitute an intelligible principle sufficient 30 to guide action by the independent fiscal restructuring 31 authority and permit judicial review. 32 e. Powers exercised by the independent fiscal restructuring 33 authority are bounded by statutory criteria and subject 34 to legislative override, ensuring accountability to the 35 -9- LSB 6150HH (2) 91 je/ns 9/ 38

H.F. 2568 legislative branch. 1 3. Legislative supremacy. The general assembly finds and 2 declares all of the following: 3 a. The state board of regents is a statutory body with no 4 inherent constitutional authority. 5 b. All the board’s authority is delegated by the general 6 assembly and subject to legislative revision or revocation. 7 c. Conduct inconsistent with legislative directives 8 constitutes ultra vires action. 9 4. State subsidy neutrality. The general assembly finds and 10 declares all of the following: 11 a. The state does not penalize receipt of federal funds. 12 b. The state declines to provide duplicative state subsidies 13 for administrative functions that are shielded from state 14 oversight by federal requirements. 15 c. Regents institutions remain free to accept federal 16 funds on federal terms. The state may adjust only its own 17 independent financial contributions. 18 d. Such action by the state represents a neutral exercise of 19 appropriation authority, not retaliation or coercion. 20 5. Meaningful judicial review. The general assembly finds 21 and declares all of the following: 22 a. The procedural provisions of this chapter regulate the 23 process of judicial review to ensure efficiency, finality, and 24 protection of state fiscal interests. 25 b. Such provisions preserve meaningful access to courts 26 consistent with due process. 27 c. Nothing in this chapter eliminates judicial review. This 28 chapter channels and expedites such review. 29 d. Bond and standing requirements serve legitimate state 30 interests and are proportionally calibrated in this chapter. 31 6. Additional findings. The detailed findings regarding 32 absence of fiscal discipline, tuition growth, federal loan 33 market distortion, institutional drift, capital planning 34 deficiencies, internal audit capacity, and zero-based budgeting 35 -10- LSB 6150HH (2) 91 je/ns 10/ 38

H.F. 2568 benefits set forth in section 1 of this Act are incorporated 1 by reference. 2 7. Construction. This chapter shall be construed 3 broadly to effectuate its purposes. Ambiguity shall be 4 resolved in favor of the functions of the independent fiscal 5 restructuring authority provided in this chapter consistent 6 with constitutional limitations. 7 Sec. 4. NEW SECTION . 262.3 Definitions. 8 As used in this chapter, unless the context otherwise 9 requires: 10 1. “Authority” means the independent fiscal restructuring 11 authority. 12 2. “Board” means the state board of regents. 13 3. “Contract” does not include a collective bargaining 14 agreement entered into pursuant to chapter 20. 15 4. “Department” means the department of management. 16 5. “Institution” means an institution specified in section 17 262.7, subsections 1 through 3. 18 6. “Major directive” means a directive of the authority 19 that requires the board, an institution, or an individual not 20 employed by the authority to carry out or not carry out an 21 action. 22 Sec. 5. NEW SECTION . 262C.4 Independent fiscal 23 restructuring authority —— functions and limitations —— reports. 24 1. The independent fiscal restructuring authority is 25 created as a temporary instrumentality of the general assembly 26 exercising ministerial authority to apply statutory criteria 27 to the board and institutions. 28 2. The authority shall commence operations on July 1, 2027, 29 and shall cease operations on July 1, 2032. The authority is 30 dissolved on the date it ceases operations and shall exercise 31 no further authority unless otherwise provided by law. 32 3. A directive of the authority, issued as provided in this 33 chapter, is controlling, notwithstanding any provision of law, 34 including but not limited to chapter 17A, 21, 22, 70A, or 262, 35 -11- LSB 6150HH (2) 91 je/ns 11/ 38

H.F. 2568 or of a board or institution policy, or of a contract entered 1 into by the board or an institution to the contrary. 2 4. The board shall serve as the implementing body for 3 directives of the authority. The board shall not countermand, 4 delay, or interfere with the implementation or enforcement of 5 such directives. 6 5. The authority shall submit quarterly reports on its 7 activities to the general assembly. 8 6. The general assembly, by joint resolution subject to 9 approval by the governor, may override any directive of the 10 authority by a vote of at least two-thirds of the members of 11 both chambers of the general assembly. 12 7. Each major directive of the authority shall expressly 13 state all of the following in writing, and a major directive 14 that fails to state all of the following is voidable upon a 15 timely challenge in district court: 16 a. The specific statutory objective being served, which 17 shall be one or more of affordability, fiscal integrity, 18 workforce alignment, operational efficiency, or taxpayer 19 protection. 20 b. The exact metric or metrics from section 262C.7 that 21 triggered the action, including weights applied and final 22 score. 23 c. The specific statutory authority under which the 24 authority acts. 25 Sec. 6. NEW SECTION . 262C.5 Composition. 26 1. The authority shall consist of the following three 27 members: 28 a. One member be appointed by the speaker of the house of 29 representatives. 30 b. One member appointed by the majority leader of the 31 senate. 32 c. One member jointly selected by the other two members, who 33 shall serve as chairperson. If the other two members cannot 34 agree on the selection of the third member within thirty days 35 -12- LSB 6150HH (2) 91 je/ns 12/ 38

H.F. 2568 of the later of their appointments, the speaker of the house 1 of representatives and the majority leader of the senate shall 2 jointly select the third member. 3 2. A member shall have demonstrated experience in one 4 or more of public finance, higher education administration, 5 organizational restructuring, public sector management, or law. 6 A member need not be a member of the general assembly. 7 3. A member shall not have been employed by an institution 8 or the board within the five years preceding appointment or 9 have a spouse, parent, or child currently employed by an 10 institution or the board. 11 4. The members specified in subsection 1, paragraphs “a” and 12 “b” , serve at the pleasure of the appointing authority. The 13 chairperson may be removed by agreement of the speaker of the 14 house and the majority leader of the senate or by agreement 15 of the other two members with the concurrence of either the 16 speaker of the house or the majority leader of the senate. 17 5. A vacancy of the members specified in subsection 1, 18 paragraphs “a” and “b” , shall be filled in the same manner as 19 the original appointment. A vacancy of the member specified in 20 subsection 1, paragraph “c” , shall be filled by agreement of the 21 remaining two members, or if they cannot agree within fifteen 22 days, by agreement of the speaker of the house and the majority 23 leader of the senate. 24 6. Two members constitute a quorum. Action by the authority 25 requires the affirmative vote of at least two members. 26 7. Members shall be compensated at a salary determined by 27 the legislative council to be commensurate with the expertise 28 and acumen required for the position, taking into account the 29 compensation of comparable positions in state government and 30 the private sector. Members shall be reimbursed for actual and 31 necessary expenses incurred in the performance of their duties. 32 8. Members and staff of the authority are not state 33 employees for purposes of chapter 8A, subchapter IV, or public 34 employees for purposes of chapter 20, but are considered public 35 -13- LSB 6150HH (2) 91 je/ns 13/ 38

H.F. 2568 officers for purposes of chapter 68B. 1 9. The authority may employ staff, retain consultants, and 2 contract for services necessary to carry out its duties. Staff 3 of the authority serve at the pleasure of the authority. 4 Sec. 7. NEW SECTION . 262C.6 Zero-based budgeting. 5 For the fiscal year beginning July 1, 2027, and the four 6 subsequent fiscal years, an institution shall establish 7 its budget from a zero baseline annually. The institution 8 shall not presume in favor of continuation of any program, 9 position, or expenditure. The requirement applies to all 10 expenditures regardless of funding source, including general 11 fund appropriations, tuition, federal funds, gifts, and 12 auxiliary enterprises. 13 Sec. 8. NEW SECTION . 262C.7 Reduction of positions —— 14 limitation on reclassification. 15 1. Each institution shall achieve a fifteen percent 16 reduction in administrative full-time equivalent positions, 17 relative to the number of such positions on July 1, 2027, no 18 later than January 1, 2029. Each institution shall achieve 19 a twenty-five percent reduction in managerial and executive 20 full-time equivalent positions, relative to the number of such 21 positions on July 1, 2027, no later than July 1, 2030. 22 2. Following achievement of reductions required by 23 subsection 1, any increase in the number of such positions in 24 an academic year shall be capped annually at the lesser of the 25 annual increase in the consumer price index announced by the 26 federal bureau of labor statistics in the previous academic 27 year or enrollment growth in the previous academic year. This 28 subsection applies for five years after the authority ceases 29 operations. 30 3. An institution shall not reclassify a position as 31 administrative, managerial, or executive, or remove such 32 a classification, without prior written approval from the 33 authority. This subsection applies until the authority ceases 34 operations. 35 -14- LSB 6150HH (2) 91 je/ns 14/ 38

H.F. 2568 4. For purposes of this section, each position at an 1 institution shall be classified according to the integrated 2 postsecondary education data system human resources survey 3 functional categories. Administrative positions are those 4 classified under institutional support and the nondirect 5 portions of academic support and student services. The 6 baseline shall be the institution’s most recent integrated 7 postsecondary education data system submission prior to July 8 1, 2027. 9 5. Attempts to evade the requirements of this section 10 through reclassification of a position constitutes obstruction 11 under section 262C.15. 12 Sec. 9. NEW SECTION . 262C.8 Evaluation of academic programs 13 —— metrics and weights. 14 1. The authority shall evaluate each academic program by 15 audit at each institution with a score using the following 16 metrics and weights: 17 a. Economic and workforce metrics, constituting a minimum of 18 fifty percent of the total score, including the following: 19 (1) Iowa workforce placement rate, calculated as the 20 percentage of graduates employed in Iowa within two years of 21 graduation, with a weight of twenty percent. 22 (2) Workforce alignment score, calculated by correlation 23 with the list of high-wage and high-demand jobs and 24 corresponding academic majors created pursuant to section 25 84A.1B, subsection 5, with a weight of fifteen percent. 26 (3) Cost per degree, calculated as the total program 27 cost divided by the number of degrees conferred, compared to 28 similar programs at peer institutions, with a weight of fifteen 29 percent. 30 b. Academic performance metrics, constituting twenty-five 31 to thirty-five percent of the total score, including the 32 following: 33 (1) Graduation and completion rate, calculated as a 34 comparison to institutional and national benchmarks, with a 35 -15- LSB 6150HH (2) 91 je/ns 15/ 38

H.F. 2568 weight of fifteen percent. 1 (2) Enrollment trends, calculated based on the trajectory 2 of enrollment over the previous five years, or the period of 3 existence of the program if less than five years, with a weight 4 of ten to twenty percent as determined by the authority. 5 c. External validation metrics, constituting fifteen 6 to twenty-five percent of the total score, including the 7 following: 8 (1) External funding ratio, calculated by the net dollar 9 amount of grants, contracts, and gifts per program dollar, 10 with a weight of ten to fifteen percent as determined by the 11 authority. 12 (2) Accreditation status, determined based on whether 13 accreditation is required for professional licensure, 14 accreditation is voluntary, or accreditation is not involved, 15 with a weight of five percent to ten percent as determined by 16 the authority. 17 2. The general assembly declares that Iowa taxpayers fund 18 higher education primarily for workforce development and 19 economic benefit to the state. The fifty percent weight of 20 metrics provided in subsection 1, paragraph “a” , reflects this 21 policy determination. 22 3. The authority shall publish its scoring methodology 23 on the general assembly’s internet site within sixty days of 24 commencing operations, including specification of exact weights 25 within ranges established in subsection 2. Using the scoring 26 methodology, the authority shall assign each academic program a 27 composite score from zero to one hundred. 28 4. Standards for scoring of academic programs shall be as 29 follows: 30 a. Programs scoring below fifty shall be presumptively 31 subject to elimination. 32 b. Programs scoring from fifty to sixty-five shall be 33 subject to restructuring review. 34 c. Programs scoring above sixty-five shall be presumptively 35 -16- LSB 6150HH (2) 91 je/ns 16/ 38

H.F. 2568 retained absent extraordinary circumstances. 1 Sec. 10. NEW SECTION . 262C.9 Standards for audit of 2 academic programs. 3 1. The authority shall not audit individual academic 4 programs in isolation. The authority shall conduct audits 5 by academic college or equivalent administrative unit. The 6 authority shall audit all programs within a college or unit 7 simultaneously before issuing any elimination orders for that 8 college or unit. The authority shall not issue elimination 9 orders for any academic program until the complete audit of the 10 corresponding college or unit is complete and the authority has 11 documented a comparative analysis of all academic programs in 12 the college or unit, to ensure elimination orders result from 13 comparative analysis across peer programs within each college 14 or unit. 15 2. A decision by the authority to eliminate, reduce, or 16 restructure an academic program that scores below fifty in the 17 scoring methodology is presumptively based on legitimate fiscal 18 and educational grounds. This presumption may be rebutted only 19 by clear and convincing evidence that the score was pretextual 20 and that the actual motivation was based on the viewpoint or 21 ideological content of the program. Any statistical disparity 22 in outcomes across academic disciplines shall not rebut the 23 presumption absent direct evidence of discriminatory intent. A 24 challenging party shall have the burden of proving pretextual 25 scoring. If the authority complies with the requirements of 26 section 262C.8 and subsection 1 of this section, a decision 27 by the authority shall be presumed to have been made in good 28 faith. 29 3. a. The authority shall publish quarterly summaries on 30 the general assembly’s internet site showing the distribution 31 of program elimination, reduction, and restructuring across the 32 following categories: 33 (1) Science, technology, engineering, and mathematics. 34 (2) Humanities and social sciences. 35 -17- LSB 6150HH (2) 91 je/ns 17/ 38

H.F. 2568 (3) Professional programs including business, law, and 1 education. 2 (4) Health sciences. 3 (5) Arts and communications. 4 b. A summary shall include the number of programs reviewed; 5 the number eliminated, reduced, or restructured; and the 6 aggregate savings by category. If the authority materially 7 deviates from the requirements of section 262C.8 or subsection 8 1 of this section in any respect, the authority shall include 9 justification of the deviation in the summary. 10 4. The authority shall apply only the metrics and weights 11 provided in section 262C.8 when conducting audits of academic 12 programs. The authority shall not consider the ideological or 13 political content of a program. 14 5. All audit materials of the authority, including but not 15 limited to scoring materials for each academic program, are 16 public records under chapter 22. 17 Sec. 11. NEW SECTION . 262C.10 Programs and positions —— 18 authority orders and procedures. 19 1. After providing notice and an opportunity to respond 20 pursuant to subsection 2, the authority may order an 21 institution to do any of the following: 22 a. Eliminate, consolidate, or restructure an academic 23 program. 24 b. Eliminate a specific employment position or a specified 25 number of positions. 26 c. Merge administrative functions. 27 d. Establish or modify an operational standard. 28 e. Establish or modify a procurement standard, including 29 but not limited to consolidating purchasing across institutions 30 or, where efficiency requires, waiving competitive bidding 31 requirements. 32 2. Before issuing an order pursuant to subsection 1, 33 the authority must provide written notice to the affected 34 institution any affected individual specifying the proposed 35 -18- LSB 6150HH (2) 91 je/ns 18/ 38

H.F. 2568 order, the information required by section 262C.4, subsection 1 7, and the deadline for response. An affected institution or 2 individual shall have thirty days to respond. 3 3. a. Before ordering the elimination, consolidation, or 4 restructuring of any academic program, the authority shall 5 certify in writing that compliance with the order does not 6 result in any of the following outcomes: 7 (1) Breach any interstate compact to which Iowa is a party, 8 including the midwest higher education compact. 9 (2) Violate the terms of any multi-state research 10 consortium agreement. 11 (3) Trigger liability under any multi-jurisdictional 12 contract or memorandum of understanding. 13 b. If compliance with the order would result in any of the 14 outcomes provided in paragraph “a” , the authority shall obtain 15 release from the relevant obligation, negotiate an amendment 16 thereto, or defer elimination until the obligation expires. 17 This paragraph shall not be construed to prohibit compliance 18 with the other, but rather to require that the relevant 19 obligation be appropriately managed before compliance occurs. 20 4. If compliance with an order under this section would 21 jeopardize receipt of federal funds, the authority shall pursue 22 equivalent savings from sources not impacted by the federal 23 requirement or direct an offset pursuant to section 262C.14. 24 Sec. 12. NEW SECTION . 262C.11 Contracts —— authority orders 25 and procedures. 26 1. a. The general assembly finds and declares the 27 following: 28 (1) A significant public problem exists regarding the 29 contracting practices of the board and institutions that 30 requires a legislative response. 31 (2) Modification, suspension, or termination of such 32 contracts is necessary to address this problem. 33 (3) Such actions are reasonable and appropriate due to 34 inclusion of mandatory compensation. 35 -19- LSB 6150HH (2) 91 je/ns 19/ 38

H.F. 2568 (4) This chapter represents the least impairing means to 1 achieve fiscal stability. 2 (5) The state may exercise its police power to protect the 3 public fisc. 4 b. With respect to tenure, the general assembly further 5 finds and declares the following: 6 (1) Tenure constitutes contractual protection against 7 termination without cause but does not guarantee the continued 8 existence of any position or program. 9 (2) Bona fide program discontinuation based on fiscal or 10 educational grounds is a permissible basis for elimination of 11 a position. 12 (3) This chapter codifies principles recognized in 13 guidelines of the American association of university professors 14 and judicial precedent regarding financial exigency and program 15 discontinuation. 16 2. The authority may order the modification, suspension, 17 or termination of any contract entered into by the board or an 18 institution where necessary to achieve the statutory objectives 19 of this chapter. 20 3. Before ordering the modification, suspension, or 21 termination of a contract, the authority shall do all of the 22 following: 23 a. Issue a notice of intent specifying the contract at 24 issue, the proposed modification, suspension, or termination, 25 the fiscal savings required, and the information required by 26 section 262C.4, subsection 7. 27 b. Provide a counterparty fifteen calendar days to propose 28 an alternative means of achieving equivalent fiscal savings. 29 c. Respond in writing within ten days to any counterparty 30 proposal by accepting, rejecting with specific reasons, or 31 offering a counterproposal. 32 d. Document the complete negotiation exchange in the 33 authority’s administrative record. 34 4. The authority may proceed to the order only after the 35 -20- LSB 6150HH (2) 91 je/ns 20/ 38

H.F. 2568 fifteen-day period expires without a counterparty proposal 1 or good-faith negotiation fails to produce an acceptable 2 alternative. Subsection 3, paragraphs “b” , “c” , and “d” , do 3 not apply if a counterparty cannot be located after reasonable 4 effort, delay would cause imminent harm to students or 5 patients, or the counterparty has materially breached the 6 contract. 7 Sec. 13. NEW SECTION . 262C.12 Contracts —— compensation. 8 1. Upon issuing an order pursuant to section 262C.11, 9 the authority shall authorize reasonable compensation for 10 counterparties whose contracts are modified, suspended, or 11 terminated. Compensation shall be mandatory. 12 2. Standards for compensation shall be as follows: 13 a. For service contracts, compensation shall be the 14 documented costs incurred plus a reasonable margin, or the 15 remaining contract value, whichever is less. 16 b. (1) For employment contracts, compensation shall be a 17 maximum of six months’ salary. 18 (2) If the employment contract covers a tenured position, 19 compensation shall also include a good-faith effort to reassign 20 the employee for twelve months. 21 c. For construction contracts, compensation shall be the 22 documented costs plus demobilization expenses. 23 3. Compensation authorized under this section constitutes a 24 vested statutory entitlement. The state’s obligation to pay 25 is not discretionary and constitutes a binding obligation. A 26 claim for compensation may be brought in district court. 27 4. If payment of compensation authorized by this section is 28 delayed beyond ninety days from issuance of an order pursuant 29 to section 262C.11, interest shall accrue at the prime rate 30 plus two percent per year. Interest shall accrue without the 31 need for a separate claim. 32 5. A counterparty must file a claim for compensation no 33 later than ninety days from issuance of an order pursuant to 34 section 262C.11. The authority shall issue a written decision 35 -21- LSB 6150HH (2) 91 je/ns 21/ 38