With enrollment down and debt to pay, Upper Iowa University announces layoffs, campus closures

Amid an enrollment decline and failure to meet loan requirements, Upper Iowa University is cutting staff and planning to close some satellite campuses.

According to an Iowa Workforce Development notice posted May 10, school administrators laid off 22 employees at the private liberal arts college's main campus in Fayette. Spokesperson Andrew Wenthe said in an email that the university will cut another 15 jobs as it closes its campuses in Illinois and Wisconsin.

The cuts are tied to the school's April 27 announcement that it would disband seven sports teams at the end of May. Upper Iowa will stop competing in men's and women's bowling, men's cross country, men's indoor and outdoor track and field, women's tennis and shotgun sports.

More: What's next for Iowa Wesleyan University students as the college prepares for closure

The cuts come amid a drop in college enrollment across the country, particularly after the COVID-19 pandemic. Upper Iowa's layoffs also follow the March 28 announcement that Iowa Wesleyan University, a private college in Mount Pleasant with about 800 students, will close at the end of this year.

"Significant growth in higher education is unlikely in the immediate future," Wenthe said. "Like many industries, higher education is evolving at a rapid pace, as are the needs and outcomes for students. It is important for an institution of our size to be responsive to these changes in the best interest of our students and the long-term strength of our university."

In addition to the Fayette campus, which opened in 1857, Upper Iowa has Iowa locations in Cedar Rapids, Des Moines, Waterloo and the Quad Cities.

Higher education institutions across Iowa have lost students over the last decade, but the enrollment drop has been particularly acute since the beginning of the pandemic. Total enrollment at Iowa's public, private and community colleges was about 200,000 last fall, down 8% from 2019.

Upper Iowa has been among the hardest hit, with enrollment dropping to 3,000 in 2021, a 36% decline from 2016.

Upper Iowa University layoffs follow debt payment pause, increased scrutiny from USDA

The enrollment drop ― and the decline in tuition revenue ― has made looming debt payments difficult for the college. The Iowa Higher Education Loan Authority issued a $44.3 million bond on behalf of the school in 2010, allowing university officials to construct a liberal arts building, a student center and dorms at the Fayette campus.

Officials followed that two years later with a $22.5 million bond to build more dorms and renovate the Baker-Hebron Science Building. In 2016, the university refinanced its debts with yet another bond for $70.9 million.

Upper Iowa refinanced again two years later, in August 2018, this time taking out a $75 million loan from the U.S. Department of Agriculture. As part of the original loan agreement with the federal agency, Upper Iowa officials were supposed to pay $337,000 a month for 30 years.

USDA officials granted the college some relief, allowing the school to pause payments from May 2021 to October 2022. The loan's 2.75% interest rate would continue to accrue during the period, however.

In November 2022, the USDA gave Upper Iowa more leniency, allowing the school to reduce its monthly payments to $30,000 through this June. Those payments will increase to $60,000 from July through June 2024, with the federal agency determining a new payment rate after that.

Meanwhile, according to the university's audit, the school has been out of compliance with one of the requirements of the USDA loan since the beginning: that the school's net income exceeds the loan obligation by about 10%.

In the fiscal year ending in June 2019, the college suffered an operating loss of about $3.2 million. The school lost about $2.9 million the year after that. After an operating profit of about $600,000 in 2021, Upper Iowa lost $5.1 million in 2022.

Payments on the principal of the USDA debt are scheduled to increase each year, according to the audit. After paying about $1.3 million in principal this year, Upper Iowa's obligation will rise to about $1.9 million by 2027.

Because the school's income has not exceeded its loan obligations, the university has had to provide the federal agency with quarterly financial reports, enrollment figures and reports on how the school can improve its financial situation.

Wenthe, Upper Iowa's spokesperson, said the recent layoffs are tied to the enrollment declines, not the debt obligations. He added that the school will probably not generate enough income this year to meet the requirements of the USDA loan. "But," he said, "the reimagining of our university footprint and offerings will immediately help to strengthen our finances and put us in good position to meet this ratio moving forward."

In a previous email to the Register, Wenthe said school officials want to "focus our operations" at the school's Iowa and Louisiana locations, as well as at four military bases. Upper Iowa also has offered an online program since 1999.

Upper Iowa University also seeking more federal COVID-19 relief funds

On Feb. 3, Upper Iowa officials and counterparts at Graceland University, Iowa Wesleyan and William Penn University submitted a joint request to Gov. Kim Reynolds, each asking for $12 million in federal COVID-19 relief funds allocated to the state.

In a white paper, a representative of the schools told Reynolds that the universities are "the economic drivers of our communities." The author added that the colleges, each located in a nonmetro or micropolitan community, help rural areas bring in young residents and keep local businesses afloat.

“For our institutions to continue implementing our creative economic initiatives and robust recruiting and programming in rural corners of Iowa," the author wrote, "we will require funding to support us through several more years of post-Covid enrollment impacts.”

In a portion about Upper Iowa, the unidentified author wrote that the school will decrease tuition to $19,000 from $33,000 in fiscal year 2024. The author added that the school has a paraeducation partnership with three school districts and noted that Reynolds herself took classes in public administration from Upper Iowa. The paper states that Upper Iowa partners with eight military bases, double the figure that Wenthe gave the Register this week.

The funding would stand on top of other COVID-19 relief dollars that federal officials have given Upper Iowa since 2020. Through a series of congressional bills, the school received about $12.8 million, according to its audits. Federal agencies earmarked about $5 million of those funds for student financial relief.

On March 28, Reynolds announced that she had rejected Iowa Wesleyan's request for $12 million, saying in a statement at the time that the money would "not solve the systematic issues plaguing the university." Expenses exceeded revenues by about $1.2 million at Iowa Wesleyan in 2022.

A spokesperson for Reynolds did not immediately respond to a message asking if the governor has decided whether to give money to Upper Iowa. Wenthe said school officials believe Reynolds is still evaluating their request.

Wenthe added that Upper Iowa wants to use the money for infrastructure, more programs and "student success initiatives."

"Our strategic decision to reduce our university footprint was not related to our request to the Governor," he said, "but rather our request is an effort to work with the Governor’s office to empower and strengthen rural 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: Upper Iowa University announces layoffs, satellite campus closures