Iowa Wesleyan, three other colleges, sought $48 million from state

Iowa Wesleyan University — the state’s second-oldest college now careening toward closure next month — wasn’t the only higher education institution in February to ask Gov. Kim Reynolds for a cut of Iowa’s billions in federal COVID-relief funds to help overcome “significant obstacles.”

Four universities collaborated on a total request of $48 million — or $12 million apiece — from Iowa’s most recent $1.48 billion American Rescue Plan Act allocation, according to a “white paper” submitted to the governor’s office Feb. 3.

“Rural institutions of higher education are economic drivers for the regions they serve,” according to the paper. “Our four universities play a vital role in the strength of our rural areas. We are the primary employers in our communities and provide a wide range of educational, economic, workforce, social, and cultural opportunities.”

But, they warned, “As we face the ongoing impacts lingering from the COVID pandemic and the changing higher education demographics, we urgently need additional funding to continue to be an economic engine and service provider for our rural communities.”

The campuses making the ask were:

Wesleyan — which in 2018 aired fiscal woes and flagged risk of closure, launching a nationwide search for collegiate partners to help forge a financially-stable future — last week said it will close in May after the governor denied its request for $12 million in aid.

“The decision is based on a combination of financial challenges — increased operating costs due to inflationary pressures, changing enrollment trends, a significant drop in philanthropic giving, and the rejection of a proposal for federal COVID funding by Governor Reynolds,” according to the Wesleyan announcement.

Wesleyan President Christine Plunkett, following up on the collaborative white paper, sent the governor’s office a separate letter Feb. 17 stressing immediacy in the $12 million request.

“We urgently need funding support as a bridge over the next three years to continue the successful work we have already begun,” she wrote. “Absent this funding, we face the threat of closure just at a time when we are making substantial progress.”

The push for a Wesleyan-specific decision compelled the governor to seek an independent risk assessment, which found the campus “in financial decline.” Saying ARPA funds weren’t meant for ongoing expenses and the Wesleyan investment wasn’t wise, Reynolds denied that campus the $12 million it sought — although she hasn’t yet made a call on ARPA funds for the other universities, according to Kollin Crompton, a spokesman for the governor’s office.

Upon learning of the Wesleyan decision to close, Reynolds directed the Iowa Economic Development Authority and Iowa Workforce Development to work with the local community and business leaders to maintain economic strength.

“My thoughts are with the students, faculty, and staff who are stunned by this announcement, and the people of Mount Pleasant who have long revered the university as a pillar of their community,” Reynolds said in a statement.

Rural challenges

Leaders from the private universities seeking state help warned Reynolds about the economic risks facing rural private institutions — and the communities they call home — following COVID enrollment stresses; inflation-driven expenses; and demographic shifts.

Specifically, Iowa high schools are churning out more low-income, minority, and first-generation students either unfamiliar with college options, unable to finance them, or unsure they want to. Iowa saw a five-percentage-point decline in college-going rates from 2015 to 2019, according to statewide longitudinal data systems.

While the percent of Iowa public high school graduates intending to attend a four-year private college dropped from 13.3 percent in 2012 to 10.9 percent in 2021, the percent of those planning to jump straight into a job after high school jumped from 9 percent to 15 percent over that period.

Iowa Wesleyan isn’t the only small, rural private college to close its doors amid higher education headwinds. Presentation College in South Dakota announced its pending closure in January and Michigan’s Finlandia University announced plans to close earlier in March.

In Iowa over the past decade, only two other colleges have closed — both in 2016. The private nonprofit AIB College of Business ended its 95-year tenure in June 2016; the for-profit ITT Educational Services out of Clive closed in September of that year.

Presidents of the private colleges appealing to Gov. Reynolds for millions cited in their white paper the threat campus closures could pose for the communities in which they reside and the economic goals she aims to achieve.

“Our four rural universities … request $48 million from the Iowa COVID relief fund to help prepare rural Iowa for a brighter economic future,” according to the paper, listing “three significant ways” they contribute to Iowa’s rural economic growth.

They serve as an economic engine, educate students to be “productive members of the economic and civic life of their communities,” and attract businesses to their communities.

“To continue, we need to grow,” they wrote in the paper. “But the ongoing economic consequences of the pandemic have created significant obstacles to this growth.“

Unique needs

The four colleges seeking help argued their unique positions require specific state support.

Of Iowa’s 26 private colleges and universities, 13 are in urban areas with 50,000 people or more. Of the remaining 13 in communities of 20,000 or less, nine boast an endowment cushion of $50 million or more, including four with endowments topping $100 million, according to the paper.

“Our universities are small, rural, and private, located in an average community population of 6,000, and a campus undergraduate enrollment of 1,000 or fewer students,” according to the paper.

The four combine for an average endowment of $21 million, although three have endowments under $20 million — including Wesleyan, reporting net endowment assets of $16.8 million, and William Penn, reporting $7.4 million in endowment net assets.

“Compared to larger urban institutions with significant enrollments and endowments, our relatively smaller enrollments and modest endowments do not provide us with the resources, tuition revenue, endowment earnings, and large philanthropic gifts typically offered to larger urban institutions.”

The campuses touted initiatives they’ve taken to better serve their rural communities and the students, who largely stay in Iowa post-graduation — including tuition discounts, scholarships, partnerships, online offerings, and expanded diversity services.

“Yet, the niche of students we serve continues to be particularly vulnerable to the lingering impacts of COVID,” they said in the white paper. “We are experiencing a dramatic increase in student mental health concerns, a spike in the number of families unable to meet their tuition payments, while at the same time retention rates for first-year students and the number of high school graduates who plan to go to college are declining.”

Should the state let the smaller private universities flounder — and their students, faculty, and staff — it will suffer meaningful economic losses, the campuses argued. In the 2022 budget year, the four combined contributed $32.3 million to the Iowa business economy and employed 1,265 people.

‘Joint but separate’

Iowa Wesleyan accounted for 166 of those employees, generating $18 million in revenue and contributing $5.2 million to the Iowa business economy. Graceland contributed $13.1 million and employed 306, and its Chief Marketing Officer Shane Adams stressed to The Gazette his institution is “not in danger of closing.”

“The universities who reached out share many similarities — we are rural, our student populations are diverse, we were impacted by the COVID-19 pandemic, and we are committed to educating a strong workforce for the state of Iowa,” he said, but added Graceland is among those collaborating with Wesleyan to take students and athletes.

In making its specific appeal for state support, William Penn President John Ottosson said his campus focused on infrastructure needs, including addressing deferred maintenance issues.

“I would characterize the joint request as joint but separate,” he told The Gazette. “Each of us requested funds for different purposes. Our request was for infrastructure improvements on our campus. We did not request nor do I know exactly what the other institutions requested.”

Upper Iowa University made its appeal for $12 million, noting it’s the largest employer in Fayette County and — in fact — educated Reynolds herself.

“Governor Reynolds, UIU also takes great pride that you attended UIU as a working adult from 2012 to 2015, and we consider you one of UIU’s very successful alums,” according to its request.

Included in the presidents’ appeal for funding and broader state support were letters from business leaders and community members praising the import of each respective campus — like one from Cierra Fountain, executive director of the Decatur County Development Corporation.

“In his 2010 book, ‘Caught in the Middle,’ Iowan Richard Longworth described a dim outlook for small rural communities in the upper central Midwest, due to out-migration, agricultural corporatization, and aging demographics,” she wrote. “He predicted that the majority of small towns of the region would slowly wither over the decades with three exceptions: those with a college, those on an interstate highway, and those with a lake.”

Stressing the role small colleges like Graceland play in keeping rural Iowa alive, Fountain wrote funding would be “of immeasurable advantage to the economic and educational status of the area.”

Vanessa Miller covers higher education for The Gazette.

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