Declaring 'financial exigency,' Upper Iowa makes more cuts, laying off professors, deans

Declaring "financial exigency" as it faces declining enrollment and a need to increase its cash on hand, Upper Iowa University is cutting academic programs, laying off employees including faculty and deans, and merging its colleges, the Des Moines Register has learned.

The moves follow a separate round of layoffs and other cuts earlier this month by the Fayette-based school, whose satellite programs include an office in West Des Moines.

A presentation from administrators to school staff said Upper Iowa needed to take "swift and decisive action to secure long-term viability."

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Upper Iowa spokesperson Andrew Wenthe told the Register in an email that the cuts Wednesday eliminated 13 faculty positions, two deans and three support staff.

The school also dropped its programs in sociology, information systems, information technology, intensive English and sports administration, affecting "just over" 100 students, Wenthe said.

Last week, Upper Iowa disclosed it had laid off 37 employees after eliminating seven sports programs and closing its satellite campuses in Wisconsin and Illinois.

The cuts follow the university board's May 8 declaration of financial exigency, a process that allows layoffs of tenured professors. With tuition revenue shrinking and the school owing about $69 million to the U.S. Department of Agriculture as of last June, a consulting group told Upper Iowa administrators they needed to cut $6.8 million in spending and raise $5.5 million by the end of next month.

"This reimagining is designed to better align with student demand, be responsive to trends in higher education, and maximize growth opportunities," Wenthe said in his email about the cuts.

Upper Iowa University cuts, restructures academic programs

In addition to layoffs, Wenthe said Upper Iowa has changed the organization of its academic programs.

The university has operated for about a decade with three schools: the School of Business and Professional Studies, the Andres School of Education, and the School of Arts and Sciences. This week, the university told staff that the schools will combine into one overarching system.

In the new structure, Wenthe said, Upper Iowa will have seven academic programs, each with a department chair, all of whom report to a single dean. The layoff of two of the school's three deans this week was a result of the shift.

In addition to West Des Moines, Upper Iowa also has Iowa campuses in Cedar Rapids, the Quad Cities and Waterloo, as well as in Kansas, Louisiana, Oklahoma and Texas. In addition, it aggressively markets it online and distance learning programs,

"This represents the final step in a difficult but necessary process to reimagine UIU to secure a stronger financial future while continuing our commitment to a quality education that is accessible and affordable for students," Wenthe said of the cuts.

Upper Iowa University needs to raise $8.5 million by next summer, consultant says

Administrators are cutting staff on the advice of the consulting firm, CFO Colleague, which reviewed Upper Iowa's books earlier this year, a requirement of its debt to the federal government.

The USDA through its Rural Development Community Facilities Direct Loan program, which helps prop up key community institutions, loaned Upper Iowa $75 million in August 2018. That helped the college refinance a series of bonds that funded new buildings on the Fayette campus earlier in the decade.

But at the same time, Upper Iowa lost about one-third of its students, with fall enrollment dropping from 4,700 in 2017 to about 3,000 in 2021.

While the USDA loan required Upper Iowa to pay $337,000 a month for 30 years, department officials let the college pause payments from May 2021 through October 2022. College and department officials also negotiated a schedule that has allowed the school to pay only $30,000 a month from November through next month. The school then has to pay $60,000 a month through June 2024.

The hiring of consultant CFO Colleague was part of the agreement.

More: Upper Iowa University's May 9 presentation

In a May 9 slide presentation to school staff, Upper Iowa administrators said that "without immediate action, UIU will face significant cash flow challenges in the immediate future."

In addition to funding the actual campus programs, according to the presentation, Upper Iowa needs stronger cash flow to help improve the financial health ratios reported to outside agencies.

For example, the U.S. Department of Education weighs three ratios to create a composite score that is supposed to indicate whether a college is at risk of failing. On a scale of -1 to three, any score below 1.5 indicates that a school is struggling.

Education officials monitor those schools more closely and require their administrators to turn over more financial information.

Upper Iowa's data indicated the school was healthy, at 2.5, as of the 2020-21 year, its most recent score. But outside experts question whether the ratio is reliable. A Government Accountability Office report found that half of the colleges that closed from 2010-2016 had healthy composite scores.

According to the May 9 presentation, Upper Iowa needs to raise $5.5 million by June 30 and another $3 million over the next year. Administrators said in the presentation that Upper Iowa has raised about $3.8 million and also needed to cut $6.8 million to "remain strong."

Also in debt to the USDA and experiencing an enrollment decline, Iowa Wesleyan University in Mount Pleasant announced in March that it would close at the end of the school year. But "UIU is not in danger of closing and will meet the DOE composite score," Wenthe said.

"The reductions we made through this reimagined UIU effort certainly strengthens both our short-term and long-term financial position," he said. "Like many institutions, fundraising and gifts are important to UIU and we’ve received a high level of support this year."

Upper Iowa President Bill Duffy resigns, will focus on raising money

The same day of the school's presentation to staff, Upper Iowa officials announced that President Bill Duffy had stepped down to take on a president emeritus role. In the new position, Duffy focuses on raising money.

The board appointed Kathy Franken, the school's vice president of finance and enrollment management, to the interim president position.

Board members have attempted to patch some of Upper Iowa's financial holes with $938,000 in donations in the year that ended June 30, 2022 ― up from $141,000 a year earlier. Board members also pledged another $200,000 to Upper Iowa as of last June, according to the school's audit.

The school additionally requested $12 million in COVID-19 relief funding from Gov. Kim Reynolds in February, joining Iowa Wesleyan; Graceland University, Lamoni; and William Penn University, Oskaloosa. The announcement of Iowa Wesleyan's closure followed Reynolds' denial of its request.

Kollin Crompton, a spokesperson for the governor, said Thursday that Reynolds has not decided whether to give COVID-19 funds to Upper Iowa.

Tyler Jett is an investigative reporter for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett. He also accepts encrypted messages at tjett@proton.me.

This article originally appeared on Des Moines Register: 'Financial exigency': Upper Iowa University lays off professors, deans