He also amended the bill to take effect immediately after it's signed by the governor, rather than on July 1.
Dixie State officials have spent the last five years adding degree programs, hiring 60 new faculty members and meeting other benchmarks to become a university.
"The Board of Regents is satisfied that Dixie has met these benchmarks," said David Buhler, Utah Commissioner for Higher Education. The school will "provide that community college as well as regional university role under one roof."
The school now has 41 bachelor's degree programs, though it has not yet developed master's degree programs.
"They will eventually have some limited master's degrees," Buhler said, naming education as a possible example, though there are no immediate plans to establish graduate programs.
"There's been lots of hard work, sweat and tears and many, many people down in the southern part of the state will benefit from this," said Committee Chair Rep. Francis Gibson, R-Mapleton. The 14 committee members present voted for the bill; two were absent.
The name became controversial in recent months amid calls for a change to shed its associations with the Confederacy and slavery. The school used the Confederate flag at sports events and its mascot was a Confederate solider until the 1990s.
An opinion study found a majority of people in and around the school supported keeping the word Dixie in its name. It's a nickname for the region that can be traced back to an 1800s mission by The Church of Jesus Christ of Latter-day Saints to send pioneers, including some former slave owners and drivers, south to grow cotton in the area.
The Utah Board of Regents approved Dixie's move to university status last week despite the pointed criticism of two members who said the school was missing an opportunity to change the name.