Finlandia’s institutional accreditor, the Higher Learning Commission, was aware of the financial troubles facing the university and placed the school in an oversight program. Two years ago, the university was notified it was no longer at risk of noncompliance. Lead Reporter David Jesse says that he does not know what led to Finlandia being removed from the program, though he notes the school would have needed to provide some sort of evidence showing intent to pay off debts.
“The year before they closed, they passed a balanced budget. The problem with that budget was it was based on enrollment rates. The problem with that is that it was a bit of rosy thinking. Finlandia’s been hemorrhaging students for years. And to project a 20 percent increase in enrollment, which doesn’t sound like very much. But when you’re talking about a small private institution, that’s a huge amount of students. And so they must have presented a budget that showed that. So that’s probably what the department looked at, and well they’re projecting they’ll be able to stay open. We’ll go ahead and take them off. But then as we know, when they actually got in there, when the new president came in to try to start these programs, then they realized, no there’s no money it’s all gone”. – David Jesse
Spread across 24 acres, 12 buildings and a football field, are the properties of Finlandia University. Much of the campus has been used as collateral at one time or another, resulting in an approximate $10.6 million of debt by time the university closed.
“What makes them a unique situation is they can’t sell off those buildings. You know, the first line goes to whatever bank or group of individuals, or an individual themselves, just like a mortgage. Like your house, or my house. If I sell my house the first thing I have to do is pay them [the bank] off. And so now they run into trouble at Finlandia , as they try to cash out. That’s why they sent a letter to staff, saying we know we still owe you the final six paychecks, we don’t have the money, and we don’t know if we’re going to get it. Cause everything we get, has to go to those other places before we’re able to sell them [the buildings] off.” – David Jesse
Tomorrow we plan to look more into how college closures can impact rural communities. In working on part one of our series, we reached out to State Receiver Patrick O’Keefe for comment. If you are interested in reading David Jesse’s The College that Mortgaged Everything, you can find the article link here.