|
|
|
Gov. Reynolds Statement on the Closure of Iowa Wesleyan University
DES MOINES – Gov. Reynolds released the following statement in response to the announced closure of Iowa Wesleyan University:
“Today, 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. The state is committed to supporting them during this time of transition. I have directed the Iowa Economic Development Authority and Iowa Workforce Development to reach out to community and business leaders, and work together to keep the local economy strong.
“It wasn’t until February 3, 2023, that my office received a request from the university for $12 million for ongoing operating costs. As I’ve said many times, we endeavor not to spend one-time federal dollars on ongoing expenses. To better understand their request and the financial health of the university, my office engaged an independent, third-party accounting firm to conduct due diligence. The firm reported that Iowa Wesleyan had a $26.1 million loan from the USDA, using their campus as collateral, that could be recalled in full as early as November 2023. Additionally, Iowa Wesleyan’s auditor cited ongoing concerns about the university’s fiscal health, stating “significant operating losses and reduced liquidity raise substantial doubt about its ability to continue as a going concern.” The firm also highlighted that that while enrollment at Iowa Wesleyan has grown over the past three years, their financial health has continued to deteriorate over the same period.
“Based on this and other factors, the independent accounting firm determined that providing one-time, federal funds would not solve the systemic financial issues plaguing the university. If the state would have provided the federal funding as requested and it was used to finance debt or other impermissible uses according to US Treasury guidelines, the state and taxpayers could have been liable for potential repayment to the federal government. Moreover, the state has separately received $122 million in requests from other universities and community colleges across the state.
“With this information, I made the difficult decision to not pursue the university’s funding request.”
“Today, 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. The state is committed to supporting them during this time of transition. I have directed the Iowa Economic Development Authority and Iowa Workforce Development to reach out to community and business leaders, and work together to keep the local economy strong.
“It wasn’t until February 3, 2023, that my office received a request from the university for $12 million for ongoing operating costs. As I’ve said many times, we endeavor not to spend one-time federal dollars on ongoing expenses. To better understand their request and the financial health of the university, my office engaged an independent, third-party accounting firm to conduct due diligence. The firm reported that Iowa Wesleyan had a $26.1 million loan from the USDA, using their campus as collateral, that could be recalled in full as early as November 2023. Additionally, Iowa Wesleyan’s auditor cited ongoing concerns about the university’s fiscal health, stating “significant operating losses and reduced liquidity raise substantial doubt about its ability to continue as a going concern.” The firm also highlighted that that while enrollment at Iowa Wesleyan has grown over the past three years, their financial health has continued to deteriorate over the same period.
“Based on this and other factors, the independent accounting firm determined that providing one-time, federal funds would not solve the systemic financial issues plaguing the university. If the state would have provided the federal funding as requested and it was used to finance debt or other impermissible uses according to US Treasury guidelines, the state and taxpayers could have been liable for potential repayment to the federal government. Moreover, the state has separately received $122 million in requests from other universities and community colleges across the state.
“With this information, I made the difficult decision to not pursue the university’s funding request.”
