Pleas for pandemic relief aid from Iowa private campuses go unanswered

Two years after several of Iowa’s small private universities asked Gov. Kim Reynolds for $12 million each from the state’s share of pandemic relief funds “to help prepare rural Iowa for a brighter economic future” — and four months after Iowa’s deadline for obligating the money — campus officials say they never heard back about their requests.

“We never got a firm yes or no from the governor’s office regarding our request for $12 million to accelerate our digital transformation on our campus,” Graceland University spokesman Shane Adams told The Gazette, adding, “We would welcome the opportunity to revisit this conversation with Gov. Reynolds and her advisers because the request could still make a significant impact for us.”

A spokeswoman for Upper Iowa University, likewise, said, “We did not receive the requested funds, nor have we heard any update from the governor’s office.”

And William Penn University — the third private campus waiting to hear back on its $12 million ask — declined to comment on the topic.

The governor’s office also did not respond to repeated inquiries from The Gazette over the span of months and, more recently, weeks on whether and how it responded to the universities’ February 2023 ask for State and Local Fiscal Recovery Funds allocated to Iowa through the American Rescue Plan Act approved by Congress.

As of April 4, Iowa received $1.8 billion in “Coronavirus State and Local Fiscal Recovery Funds” — the pool from which the campuses hoped to pull the grants — and has spent $1.2 billion of that total to date. Most of that went to programs at Iowa Workforce Development, Iowa Economic Development and Finance authorities, the Iowa Department of Revenue and Iowa Department of Management.

A sliver went toward higher education, including $2.4 million to the Iowa Tuition Grant for instate students wanting to attend a private college or university and $4.1 million to the University of Northern Iowa’s new transfer partnership with community colleges.

‘Threat of closure’

Back in 2023, Graceland in Lamoni, Upper Iowa in Fayette and William Penn in Oskaloosa joined Mount Pleasant’s Iowa Wesleyan University in seeking a combined $48 million in COVID-19 relief funds — with Wesleyan leadership pressing the question of its $12 million ask as more dire, seeking an immediate response.

“We urgently need funding support as a bridge over the next three years to continue the successful work we have already begun,” former Iowa Wesleyan President Christine Plunkett told the governor’s office in a Feb. 17, 2023, letter. “Absent this funding, we face the threat of closure just at a time when we are making substantial progress.”

When the governor’s office turned it down, Iowa Wesleyan on March 28, 2023, announced it would close after 181 years — having predated the state’s incorporation itself.

“As I’ve said many times, we endeavor not to spend one-time federal dollars on ongoing expenses,” Reynolds said at the time, pointing to an independent third-party assessment her office commissioned to gauge Iowa Wesleyan’s financial health in response to its request.

That assessment highlighted the $26.1 million Wesleyan had borrowed from the U.S. Department of Agriculture — using its campus as collateral — via a loan that could be recalled as early as November 2023. Wesleyan’s auditor also flagged “significant operating losses and reduced liquidity” driving “substantial doubt about its ability to continue as a going concern.”

“Based on this and other factors, the independent accounting firm determined that providing one-time, federal funds would not solve the systemic financial issues plaguing the university,” Reynolds said, noting that other universities and community colleges statewide separately had requested $122 million.

‘At an inflection point’

Graceland — a 130-year-old private liberal arts university with campuses in Lamoni and Independence, Mo. — had hoped to use the $12 million “to accelerate our digital transformation on our campus.”

Even without the funding, the university has moved ahead with a multimillion dollar upgrade to its “enterprise resource planning system” meant to “revolutionize the way we serve our students and the community,” according to spokesman Adams.

“These types of projects require significant resources, both monetary and human,” he said.

With Graceland launching a new undergraduate nursing program next fall, Adams said the campus remains interested in governor-appropriated funding.

“We are in the process of preparing labs and simulation environments to educate a new generation of Iowa health care professionals,” he said. “If the governor were to approve even a portion of these funds, we would be able to accelerate and offset the significant cost associated with this investment, which will be beneficial to the rural health of the state.”

Graceland — like many small private colleges and universities — has seen enrollment wane in recent years, a trend aggravated and accelerated by COVID-19 in 2020 and 2021. Where the Lamoni campus reported 2,249 total students in fall 2017, that number dropped below 1,500 in 2021 and has continued to fall to 1,106 in fall 2024.

In response, the campus last year transformed its tuition and financial aid formula to better reflect the actual cost to attend. Dropping its sticker price from $32,500 to $19,950 in fall 2023 — while still offering scholarship and aid opportunities in a “scaled process” — Graceland improved its price transparency while leaving unchanged the bottom-line cost to attend.

Reporting a total tuition-and-fee rate of $20,950 this academic year, the university also is refocusing its recruiting efforts on the Interstate 35 corridor between Kansas City and Des Moines.

“We know that students who are within 200 miles of home are more likely to retain, so we want to ensure that we’re putting our best efforts with those students,” Adams said, highlighting several new programs aimed at attracting students — from a new four-year nursing bachelor’s to an MBA launching this fall or a three-track performing arts major.

“It’s no secret that higher education is at an inflection point in our history,” Adams said about the need for a strong private higher education sector in Iowa. “Private universities, especially those that support a liberal arts curriculum, support millions of graduates every year across the nation.”

Those graduates, according to Adams, develop some of employers’ most desired skills.

“Things like communication, collaboration, critical thinking and more,” he said, pointing to the broader economic ways private colleges and universities benefit the state, region and communities in which they sit.

Specifically, the Iowa College Foundation reports Iowa’s private campuses employ more than 10,000 and generate more than $1.8 billion in annual economic impact for its cities and towns.

“The impact of this investment, if it were approved, would be substantial and would directly improve Graceland’s ability to recruit, retain and graduate Iowa students,” Adams said.

Budget woes

In line with some of the challenges facing higher education, and private campuses specifically, Graceland’s total university assets dropped from $117.6 million May 2023 to $108.7 million in May 2024, according to an independent financial audit.

Its cash and cash equivalents dropped from $14.2 million at the start of the 2023 budget year to $3.4 million at the end of 2024 — although its net tuition and fees increased from $12.1 million to $12.5 million, according to the audit.

Upper Iowa’s net assets also dropped from $25.4 million in 2023 to $24.9 million in the 2024 budget year — which was down about 43 percent from its $43.7 million in net assets in the 2021 budget year.

William Penn, on the other hand, has reported year-over-year net asset increases — climbing from $35.3 million in 2023 to $38.8 million in 2024, nearly 60 percent above its pre-pandemic $24.4 million in net assets.

It is the only of the three to report an enrollment increase since 2018 — swelling 11 percent from 1,280 students to 1,425 in the most recent fall, according to state enrollment records. Upper Iowa, like Graceland, lost students over that span — dropping from 5,382 in 2018 to 3,902 in 2024.

Upper Iowa, also mirroring Graceland, in 2023 recalibrated its tuition and fees — dropping the sticker price from $33,639 to $19,000.

“This new rate makes UIU one of the lowest priced private, nonprofit institutions in Iowa,” the campus touted in its rollout.

USDA loans

All three universities — along with the shuttered Wesleyan University — in battling their budget woes years ago took loans from the USDA’s Rural Development office, which they’re still paying back.

Upper Iowa borrowed the most at $75 million in 2018 — a loan secured by a mortgage on the Fayette campus, which was worth $65.1 million as of June 2024, according to its recent audit.

“The USDA loan requires that the university maintain a debt service coverage ratio of at least 1.10,” auditors reported. “The university was out of compliance with this ratio for the year that ended June 30, 2024.”

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Due to its non-compliance, Upper Iowa — per the loan agreement — must provide the USDA’s state office quarterly financial reports, semester enrollment figures and a report documenting its plan to achieve the mandated debt service coverage ratio in the future.

A “workout” agreement signed July 15, 2024, requires minimum monthly payments of $175,000 — with principal payments of $407,152 this year, $1.3 million in 2026 and more than $2.1 million in subsequent years.

Graceland borrowed nearly $5 million in 2017 from the USDA “to buy out a lease for an on-campus apartment complex for our junior and senior students,” according to audit documents. Per its agreement, Graceland had to maintain a debt service coverage ratio of no less than 1.25, which the university did not meet in 2023 and 2024, according to audit records.

And William Penn back in 2009 took $23 million in direct and guaranteed loans from the USDA to finance its activity and technology centers.

All are continuing to pay down the loans using “workout” arrangements.

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com