A year after announcing the future of one of Iowa’s oldest higher education institutions was imminently dire, Iowa Wesleyan University has abandoned plans to save itself by partnering with a Catholic school based in Florida.

Though the Mount Pleasant university said in late 2018 it might not have enough money for even one more semester, it is on better financial footing now and has at least some breathing room to look again for another partner.

Administrators with Iowa Wesleyan and Saint Leo University in St. Leo, Fla., halted their pursuit of a partnership after a monthslong due diligence process revealed issues for both sides, according to Iowa Wesleyan President Christine Plunkett.

Saint Leo was wary of Wesleyan’s significant debt, and asked the U.S. Department of Agriculture’s Rural Development Office to forgive some of what the university owes it on a $21.4 million loan — a request the USDA denied, Plunkett said.

In addition, Wesleyan learned the collaboration with Saint Leo would change its accrediting body — and thus lose the opportunity for its students to receive financial aid through the Iowa Tuition Grant.

That loss would pull thousands from its current students, and bar prospects from tapping the aid — which the Legislature appropriates specifically for Iowans attending private colleges or universities in the state.

“It’s an extremely important part of our financial aid package for our students, because we do serve a fair number of Iowa students,” Plunkett said.

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Of Wesleyan’s total 645 students in the fall, 223 came from Iowa. Of those in-state students, 126 received Iowa Tuition Grant awards, totaling $364,229. For the 2018-19 academic year, 123 students received Iowa Tuition Grant awards, totaling $595,563, according to Iowa College Aid.

The maximum award this year for the grant — available only to income-qualifying undergraduate Iowans enrolled in a private college or university — is $6,000.

“We would have had to give up the Iowa tuition grant for our current students,” Plunkett said. “And then also any attempt we were doing recruiting, it would have been that same problem — that we can’t offer it.”

In a push to increase enrollment, Plunkett said her institution, which is affiliated with the United Methodist Church, has been gearing recruitment efforts toward Iowans, launching a new agribusiness program and adding men’s and women’s wrestling.

“And so to imagine proceeding with a partnership, and then having to announce that for all of the Iowa students you’re going to be losing $6,000 in aid, it did not feel at all like the best interest of our students,” she said.

Although Wesleyan did reach out to the Iowa Department of Education and financial aid office seeking advice and posing questions about whether legislative action could exempt the school from the grant rules, Plunkett said the process could take more time than her school has.

“It felt to us like that’s another process that’s going to take more time — I don’t think it would be fast,” she said. “I don’t think they’re going to make a decision like that and set a precedent, without thinking pretty carefully about it.”

The urgency in Plunkett’s tone stems from an ominous warning her predecessor delivered in fall 2018 that Wesleyan, established 178 years ago in 1842, risked closure if it didn’t come up with $2.1 million for the spring 2019 semester.

To stay open through December 2019, former President Steve Titus said, Wesleyan needed $4.6 million — a call several donors answered.

The local USDA Rural Development office in 2016 loaned Wesleyan $21.4 million — with a 40-year term — and the government agency has proved a strong partner in keeping the school afloat, Plunkett said.

“They have indicated, without a doubt, that they are very supportive of us, they are collaborative,” she said. “They want to continue to work with us closely and find the pathways forward.”

Two Rivers Bank & Trust in 2016 also loaned Wesleyan $5 million.

The USDA didn’t immediately provide details on how much the university has paid on its loans or how much Saint Leo wanted the debt reduced.

Plunkett said she, too, is bound by confidentiality clauses from sharing those details.

“This particular request was just one that (the USDA) couldn’t come up with a justification for the level of reduction that was being sought,” she said.

In response to questions from The Gazette, Saint Leo Senior Vice President Melanie Storms said in a statement the two sides were “unable to reach an agreement on the terms for the partnership that met the needs of both organizations.”

“From the start, Saint Leo University was incredibly interested in a partnership with Iowa Wesleyan because of the similarities we share in values, being both faith-based universities, and because of the university’s commitment to serving the rural communities of southeast Iowa, northeast Missouri, and west central Illinois,” Storms said in the statement. “We are disappointed that we will not have the opportunity to work with Iowa Wesleyan.”

In reassessing the next steps, Plunkett said, her school remains in close talks with the USDA “and that will continue.”

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Wesleyan’s board of trustees also has reconvened its “new directions team,” which last year led the call for potential partners and evaluated more than 20 proposals.

The group pretty quickly narrowed that batch to about 10, and then again to three before homing in on Saint Leo. The group will meet again in the coming week to take a “long hard look at what some of the proposals were that came in last year, what new ideas there might be out there.”

“It’s really the board’s work to start examining that and deciding on some directions,” Plunkett said.

Despite the Iowa Tuition Grant limitations, Plunkett said she doesn’t want to limit potential collaborations.

“Our imaginations are wide open,” she said.

Although Plunkett is an interim president, she told The Gazette she’s committed to sticking with Wesleyan “through a transition period to ensure that its future is stable and clear.”

And Wesleyan’s outlook, she said, is brighter today than it was when former President Titus issued his portentous appeal for help in 2018 — although, like most small private colleges across the country, uncertainty also looms.

“I’m certain we have what we need to operate through this year,” she said, adding Wesleyan also recently secured a line of credit “to smooth over the periods of the year when our cash cycle is low.”

She didn’t provide the exact amount, but said the university still has a “fair amount of it available to us.”

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“And I feel fairly confident that we have what we need to operate into next year,” she said. “But the work of the committee and the board will be to see, are there ways we can make that even more efficient, through partnership or collaboration?”

This last year’s partnership pursuit — while it didn’t pan out — wasn’t a waste, Plunkett said, recounting ways in which Wesleyan took the time to evaluate its mission and values and reaffirm its priorities.

“The exercise of going through this is very self-reflective,” she said. “It’s important to examine who you are as an institution and what are the non-negotiables. Are there things that you’re not willing to give up — that you insist on must stay the same? What are the things you have flexibility on? And then you look at the options and see which ones feel like a good fit.”

While Wesleyan decided Saint Leo wasn’t the right partner, Plunkett said the breakup wasn’t contentious.

“I sometimes equate it to a relationship where we dated and then we got engaged and spent some time evaluating what this marriage might look like, and in the end mutually agreed this probably is not going to be for the best.”

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