My thoughts are from the perspective of working at Ivy Tech for a few years in admissions and understanding the role that Ivy Tech is to play in the state (Not saying I agree with that role, but it is what it is).
Ivy Tech already has the remedial program, Ivy Tech has the faculty in place and it is cheaper to do this at Ivy Tech. Meaning that for ISU faculty to do it, it would cost a great deal more. Students are already upset that they are using their funds to pay for a class that doesn't give them any credit towards graduation, why make them pay the full amount for a remedial course at ISU. I think it is a good move personally. Allows ISU to focus on "real classes" that will help a student graduate. Not saying it is the best alternative, but it is a good one.