Even with federal aid, Iowa higher ed takes big hit from pandemic

Iowa State alone calculates at least $80 million loss

People move their belongings out of Currier Residence Hall during a scheduled move-out March 19 from the University of I
People move their belongings out of Currier Residence Hall during a scheduled move-out March 19 from the University of Iowa in Iowa City. Students had to vacate their dorms in the coronavirus response, and now universities are refunding fees students paid to live and dine on campus. (Rebecca F. Miller/The Gazette)

Iowa’s colleges and universities will collect tens of millions in federal stimulus money, but losses are expected to far outpace that and measures about which campuses qualify threaten to leave some out in the cold unless changed.

Higher education institutions around the state have emptied out and hurriedly converted to online education — meaning, among other things, that universities are refunding millions to students who no longer can live or dine on campus or participate in study abroad programs.

Conservative estimates from Iowa State University tally the campus’ coronavirus-related losses and additional expenses at more than $80 million — prompting leaders to announce looming budget cuts and pay freezes.

Assuming status quo in state appropriations and fall tuition rates, ISU President Wendy Wintersteen last week directed all campus units to cut 5 percent from their budgets for fiscal 2021, which begins July 1. And she told them to plan for another 5 percent budget cut in fiscal 2022, too.

5 percent of ISU’s $742 million general fund operating budget is about $37 million, according to campus officials.

No raises, scheduled to be awarded July 1, will be given to faculty members, professional and scientific staff, postdoctoral researchers and contract associations, Wintersteen said,

Merit staff — including clerical, technical and security positions, like police officers — are unionized and will receive a 2.1 percent salary increase by contract.


“It is important that we take a prudent and frugal approach to our budget,” Wintersteen said in an April 20 campus communication.

As of April 3, ISU projected losses and extra expenses would top $80 million, including nearly $17 million in refunds to students for things like housing, dining, study abroad programming and course fees.

“It also includes lost revenue due to cancellations, closures and modified operations,” she wrote. “This figure will change as we continue to gather more information.”

ISU announced Thursday it will move all summer courses — the first session beginning May 18 and the second beginning June 15 — to virtual instruction only. It previously did that only for the first session.

Other regent schools

The University of Iowa and the University of Northern Iowa — which also have moved much of their summer courses online — have not made public estimated losses and additional expenses.

UI leaders last Wednesday sent a memo to deans, senior human resources and business officers instructing them to assess the COVID-19 impact at the individual college and unit level.

“Each college will be working to understand the potential changes in enrollment and will need to model different scenarios based upon those projections,” the memo said. “It is important that these decisions be made at a local level as the impact from the pandemic will be different for each college and each central service unit.”

Federal help

Colleges and universities nationwide — including Iowa’s public and private campuses — are receiving COVID-19-related federal aid through the Coronavirus Aid, Relief and Economic Security, or CARES, Act.

The law includes about $12 billion for higher education, with 75 percent of the allocation based on a school’s percentage of full-time Pell Grant students — those with significant financial need — and 25 percent based on full-time, non-Pell students.

Students enrolled exclusively online before the pandemic aren’t included. And every school must use half its funding to provide direct emergency aid to students, including through grants for “food, housing, course materials, technology, health care and child care.”

ISU, with the highest percentage of Pell students, is slated to get the biggest CARES Act provision in Iowa — nearly $21.7 million, according to Iowa’s Legislative Services Agency. About $10.8 million will go to students, leaving $10.8 million for the campus.

“We are working on a plan to appropriately distribute this money to students in need,” according to Wintersteen’s letter. ISU’s senior leadership team will decide how to spend the campus share.

The UI is getting $16.2 million, with $8.1 million going to students. UNI is getting $7.6 million, with $3.8 million for students.

The UI memo last week noted the campus will follow several guiding principles in managing its COVID-19 financial impact, including putting people — its students, faculty and staff — first. The university said it also will strive to preserve its core values.

Private college aid

The private college in Iowa expecting the biggest allotment from the CARES Act is the University of Dubuque, at $2.6 million, followed by Drake University at $2.2 million.

Des Moines Area Community College is the top recipient among Iowa’s public community colleges with $7.3 million, followed by Kirkwood Community College, expecting $6.3 million.

Some on a national level have questioned the federal allotment strategy, noting it heavily favors schools with more full-time students, putting those with more part-timers — like community colleges — at a disadvantage.

Among Iowa’s 15 community colleges, part-time enrollment remained larger than full-time — accounting for a record 64 percent, according to the state’s fall 2019 community college enrollment report.

Clare McCann, deputy director for federal policy at New America, last week told Inside Higher Ed that because part-time students typically are more likely to need financial aid and support of some kind, the government should have used two separate formulas.


One, she said, would support operational losses at the institutions, and another would have gone directly to students.

“If you’re thinking of aid for students, the need is probably larger for part-time students who may have lost jobs,” she told Inside Higher Ed.

seeking changes

Iowa Republican Sens. Chuck Grassley and Joni Ernst are taking issue with the inability of some of Iowa’s private colleges and universities to access the Paycheck Protection Program.

“Many schools in our state were eager to apply to the Paycheck Protection Program to use these funds to keep their employees on payroll, ultimately helping to serve students as effectively as possible,” according to an April 20 letter Grassley and Ernst sent to U.S. Treasury Secretary Steve Mnuchin and U.S. Small Business Administration Administrator Jovita Carranza.

“However, a number of Iowa schools were unable to receive a PPP loan because part-time student workers are counted toward the overall number of employees at the school — leading many schools to exceed the 500-employee threshold.”

Most of Iowa’s not-for-profit private colleges and universities would fall under the 500-employee threshold if just full-time employees are counted, according to the National Center for Education Statistics.

When including part-time employees, though, many push past 500 workers, according to the statistics.

“Preventing schools from receiving a PPP loan because they had opportunities for student workers is not fair for colleges, students or the communities,” Grassley and Ernst wrote. “These schools play a vital role not only in educating our state’s future workforce, but in supporting our state’s economy, particularly in rural areas.”

Grassley and Ernst asked the leaders to clarify that “student workers are not counted toward the PPP’s requirement for entities to have fewer than 500 employees in order to be eligible.”

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