Iowa’s private colleges avoiding many budget woes of state schools

While next year could be even rougher, budgetwise, for Iowa's regent universities, officials with several private colleges say they are optimistic about 2010-11.

Private colleges don't rely on state appropriations like the regent universities do. Tuition revenues make up 85 percent to 90 percent of the budgets of most Iowa private colleges, and enrollment remains strong despite the economy.

Some officials predict modest gains for fall 2010, based on good application numbers so far.

“We had a very good year this fall, and right now we're looking better than what we did a year ago at this time for applications,” said Diane Tacke, vice president for finance and administration at Luther College in Decorah. “We are optimistic.”

While enrollment seems to be weathering the economy, officials do notice families struggling more with tuition bills.

“That means we need to help them more with financial aid,” Tacke said.

Also, the state reduced funding to the Iowa Tuition Grant program this year as part of a 10 percent budget cut. That program provides grants to low-income Iowa students who attend private college. Cutting the grants by up to $435 per student hurts when it impacts the neediest students and families, said Gary Steinke, president of the Iowa Association of Independent Colleges and Universities.

The Iowa Tuition Grant maximum award is $4,000, before the cuts, for nearly 15,000 qualifying students, Steinke said. That's less than half the average taxpayer subsidy for students attending a regent university, he said.

“I think the institutional presidents are very encouraged about budgets, but that's not the case with our students, and that's where the budget cut really matters,” he said.

Upper Iowa University in Fayette this year provided more financial aid to 900 students to cover the grant shortfall. Other colleges also stepped up internal aid in the wake of the grant cuts.

Keeping tuition increases low is another way college officials said they are trying to help families.

Mount Mercy in Cedar Rapids set its lowest increase in a decade for 2009-10. Luther approved a 3.8 percent total package increase for 2010-11, the lowest in at least 13 years. Coe College, Mount Mercy and Cornell College officials all expect to set 2010-11 tuition in the coming weeks. Higher education inflation is expected to rise about 3 percent nationally.

Of course, lower tuition increases and more internal financial aid mean less revenue in the budget. Most private colleges have avoided layoffs and handle the belt-tightening in other ways, officials said - evaluating open positions and cutting travel and supplies, for example.

Cornell College in Mount Vernon did lay off four employees this year, and faculty and staff took a 2 percent pay cut. Coe College in Cedar Rapids had a pay freeze this year, and salaries for 2010-11 are yet to be set.

While college endowments' stock market losses have hurt, many Iowa colleges have smaller endowments, meaning they rely less on the earnings. That can be a silver lining during a recession.

“Although I would love to have a larger endowment, in some cases we're better off than those schools who are so endowment-dependent,” said Karen Mercer, vice president for business affairs at Cornell. “The hurt isn't as dramatic.”