Iowa private university leaders see bills as harmful to their institutions

DES MOINES, Iowa (IOWA CAPITAL DISPATCH) - Iowa private university leaders say they are worried about their peers and the setting of a dangerous precedent in the state as Iowa lawmakers move to establish new degree programs at community colleges and tax endowment funds filled by donors.

Legislation to establish bachelor’s degree programs at Iowa’s community colleges and tax university endowment funds have already seen amendments as they made their way through subcommittees and the full Iowa House Higher Education Committee.

However, Iowa Association of Independent Colleges and Universities President Gary Steinke said even with guardrails in place, there’s no middle ground. It’s less about the details of the legislation at this point, he said, than it is about “unfair competition with private business,” and reactions to the bills have been “extremely negative.”

“They understand what legislators don’t seem to understand, and that is … private business cannot survive competing against a tax-supported public institution, or business, or anything else,” Steinke said.

Concerns linger on community college bachelor’s degrees

As amended by the higher education committee Jan. 28, House Study Bill 533 would create a pilot program in which community colleges could offer no more than three bachelor’s degrees, with limitations on what programs are eligible for development. The program would be limited to community colleges with a main campus located at least 50 miles away from the main campus of a public university or a private university already offering a similar degree program.

Steinke said the association and Iowa’s private universities are opposed to the amended legislation “as adamantly as we were opposed to” the bill in its original form. Using Buena Vista University in Storm Lake as an example, he said Iowa Central Community College’s main campus is more than 50 miles away but it has a branch campus in Storm Lake as well.

“It would put (Buena Vista University) in direct competition with a public, tax-supported institution,” Steinke said. “And that just doesn’t work.”

Both Iowa lawmakers and community college leaders have spoken about the benefits of passing and enacting this legislation, with committee chair Rep. Taylor Collins, R-Mediapolis, calling the bill the “most significant reform to the community college system as we know it since it was incepted about 60 years ago.”

Community Colleges for Iowa Executive Director said during a presentation to the committee that adding bachelor’s degrees would be an expansion of community colleges’ core mission to provide affordable, accessible education. With other states seeing success from similar initiatives, Shields and others said these degree programs could be a way to address “education deserts” in Iowa and improve access to higher education for people who are place-bound, adult learners and those who can’t afford a four-year institution’s costs.

While Drake University in Des Moines and St. Ambrose University in Davenport each has community colleges within the prohibiting area of the bill — Des Moines Area Community College and Eastern Iowa Community Colleges, respectively — the biggest question its leaders are asking is “why?”

Drake University President Marty Martin, like Steinke, questioned the reality of “education deserts,” a term used by Community Colleges for Iowa in its report studying potential bachelor’s degree programs at community colleges to define where there is limited local access to higher education. He asked to see data to confirm these deserts and to hear from the students who aren’t being served.

“We have a lot of capacity to solve any problem that is identified and established when it comes to educating Iowans for their future and the future of the state, and we stand ready,” Martin said. “Certainly my colleagues across the private colleges and universities stand ready to meet whatever need is identified and established, but we haven’t seen that even done yet.”

Drake University, as well as its peers in Iowa private education, have a long history of meeting students where they are, Martin said, through in-person, hybrid and online learning. The university has “very robust articulation agreements with the community colleges in Iowa” as well, he said.

St. Ambrose University President Amy Novak said of the around 2,500 students attending the private university, 1,100 of them have earned some form of community college credit. Both St. Ambrose and Mount Mercy University in Cedar Rapids, which is currently combining with the Davenport institution, have “strong and enduring” partnerships with community colleges in their areas.

With degree completion programs incorporating Eastern Iowa Community Colleges classes with St. Ambrose courses and other initiatives, Novak said she’s concerned about changing a system that is working.

While the amendment to the bill is helpful in setting geographic limitations, Novak said in an email it “sets a precedent that blurs long-standing mission distinctions within Iowa’s higher education ecosystem.”

Novak maintained that collaboration, not further competition, is the best way to creatively address any problems facing Iowa’s higher education system. Business leaders should maybe have a bigger space at the table when developing solutions to problems of education access and workforce needs, she said, and they could work with community colleges as well as public and private institutions to solve issues and meet demand.

“All boats rise when we all rise, and ultimately, that is how I hope we can be focused as a Legislature, as private and public institutions,” Novak said in an interview.

If this legislation does pass, Martin said it would mean taking the competition that already exists between higher education institutions and adding more competition from state-funded community colleges.

“What it could mean in some communities is that these institutions of higher education that have been there for a long, long time, and who are incredibly important citizens of those communities in terms of economic development, cultural activities, sports activities, cease to exist,” he said.

Even limited, endowment tax would set ‘chilling’ precedent

Changes were also made last week to legislation imposing a tax on university endowments, raising the threshold amount from $250 million to $500 million and shifting the tax from 15% to the highest corporate tax rate at the time. Collins said during the committee meeting amending the bill that endowment funds should be used “for the benefit of Iowa students” rather than sitting idly in university accounts.

Where the original legislation would have impacted St. Ambrose University, Drake University, Grinnell College and the University of Dubuque, Steinke said the bill in its current form would only reach Grinnell’s endowment. According to Grinnell College’s website, its endowment’s ending value on June 30, 2025 was nearly $2.85 billion.

Two of Iowa’s public universities would also be taxed under the bill, with the University of Iowa’s endowment sitting at $3.7 billion and the Iowa State University endowment totaling $1.63 billion in July 2025.

Much of the money that goes into university endowments are gifted by donors with a specific purpose for those funds or the interest they generate, often with legally binding contracts, and Steinke said “it’s just incredulous to think about” how taxing that money would even work.

“Generous people donate money to these institutions, but they don’t just write a check and hand it over and say, do whatever you want with it,” Steinke said. “That almost never happens.”

A vast majority of Grinnell’s endowment goes to student financial aid as well, Steinke said, which he pointed out has been a focus of lawmakers who want higher education to be cheaper for Iowans.

Endowed funds at St. Ambrose go “almost exclusively” toward scholarships, Novak said.

While Novak said in an email she appreciates the changes to the bill, she is still concerned about its implications. Donors could receive the message that their charitable gifts will be taxed instead of fully going toward student support or other missions, leading to a potential “chilling effect on philanthropic support across the sector.”

Any tax on endowments will draw resources away from students and a university’s ability to meet its core mission, Martin said. He said he sees both the endowment tax and community college bachelor’s degrees bills as “very bad ideas,” and wondered how people could see turning a bad idea into a less-bad idea as the right path to take.

“I don’t see a path to compromise,” Martin said. “I think a better outcome is for there to be serious reconsideration about moving either of these forward.”