Report shows Boulder’s Naropa University faces financial trouble

Naropa University’s decision to sell the campus that’s been its home for 40 years, a momentous decision announced to its community in an email Thursday, was forced by what records show to be financial challenges the university’s faced in the last few years.

According to a March 20 audit report, Naropa is working to overcome financial hardship in part by selling some of its properties. The university administration addressed the reason why it’s selling the main campus, 2130 Arapahoe Ave, in an email on Thursday to the campus community.

“The Arapahoe Campus is an asset we were fortunate to have purchased 40 years ago and can now leverage to ensure the long-term financial health and sustainability of Naropa,” the email read.

The audit report said Naropa is struggling due to inflation cost increases, exhaustion of one-time pandemic federal funding and stagnating tuition revenues due to students’ declining ability and willingness to pay for a private education. The report noted Naropa is not unique in this, and that these challenges affect small colleges and universities nationwide.

“These conditions raise substantial doubt over the University’s ability to continue as a going concern over the next twelve months from the issuance of the financial statements,” the report read. “However, management (of Naropa) has concluded that the following factors have alleviated such doubt.”

One of those factors is the sale of various Naropa-owned properties the report listed as an example of how the university seeks to “free up needed capital intended to create a stable operational and financial foundation for the future.”

Naropa President Charles Lief said some of the proceeds from property sales have been used to restore the university’s financial health.

“Despite the challenges faced by many small liberal arts schools, Naropa is not only standing strong, but also thriving with year-over-year enrollment, retention and fundraising growth,” Lief wrote in an email. “As we mark our 50th anniversary, we have much to celebrate and be proud of.”

Naropa student Emma Anderson said the property sales are “not a good sign.” She’s sad and shocked the university is selling the main campus.

“It makes me not want to give my money to them and go back,” she said, adding, “Something’s going on, something that they’re not being honest with the students and community about and that makes me not want to support them.”

Properties

In the last three to four years, Naropa University has sold or is making plans to sell six of its properties. Naropa currently owns eight properties in Boulder, according to Boulder County property records.

The property that’s home to Alaya Preschool in Boulder and owned by Naropa will be sold in 2025. The preschool launched a fundraising campaign to save the school and purchase the property from Naropa. Alaya has until June 30 to raise the $2.2 million required for a direct sale.

Lief said supporting the preschool made since when Naropa had an early childhood education program, but that program was discontinued roughly five years ago.

Another property Naropa owns and plans to sell is a single-family house in Boulder that is rented by the president. After it sells, Naropa will lease the house back for up to 18 months. Naropa is engaged in a search for a new president after Lief announced his retirement, and if the Naropa Board of Trustees and the new president determine that the house is a preferred residence, the sale allows Naropa to repurchase the house.

“This arrangement gives Naropa a chance to maximize the value of the house through a sale and the option to repurchase at Naropa’s discretion,” Lief wrote in the email.

In the spring, Naropa sold a property across the street from its main campus at 2111 Arapahoe Ave., for roughly $2 million. The building housed offices and a student mental health counseling center that has since been relocated.

Roughly three years ago, Naropa sold its Paramita campus, 3285 30th St, consolidating from three campuses to two. The graduate school for psychology, Naropa’s biggest degree program, was housed at Paramita and moved to Naropa’s Nalanda campus, 6287 Arapahoe Ave. After the sale of the main campus is complete, Nalanda will be Naropa’s sole physical campus.

Sakile Melchishua graduated from Naropa in 2022. She was a student when Naropa sold the Paramita campus.

“I do feel that it was a little bit of a loss for the student body but I also do understand why they had to sell it,” she said.

Melchishua was in the education department and has fond memories of spending time at Alaya Preschool. After the pandemic, she said, Naropa became less of a space of exploration and she heard talk of Naropa being closed down because of financial issues.

“Ever since we went back in person (after the pandemic) it didn’t feel the same,” she said. “I feel like the magic was gone.”

Additionally, Naropa’s Snow Lion dorm was sold in the summer of 2021. Naropa leased back the building and entered into a lease until 2035 so that housing would be in Naropa’s control for 11 more years.

“Naropa had stood tall in its values and morals — conducting no layoffs during COVID and holding tuition flat for three years in order to protect students as best we could,” Lief wrote. “The nationwide market reality is that Naropa has been subject to the same inflationary conditions that require us to operate and be competitive — increased wages, insurance, utilities, and health and dental.”

Some of the funds from property sales have been used to pay off Naropa’s debt. In 2012, Lief said, Naropa had a bond debt of about $12 million.

“As property has been sold, a significant amount of the sales proceeds was used to pay down the debt, which is now about $3.8 million — a reduction of more than $8 million,” Lief wrote. “At the same time, we have grown from a budget of about $19 million in 2012 to $28 million today — an increase of 60% during a time of considerable difficulty in private higher education, which is a testament to our faculty and staff.”

Online degree programs

The audit report also identified online degree programs as a new area of growth and increased revenue for Naropa. Lief said online programming is an enrollment growth strategy.

“Online programs allow our Naropa community to expand beyond Boulder’s borders,” Lief wrote. “We have taken the lessons learned in the pandemic and adjusted them to meet our students’ needs and preferences. While there are some cost savings from online learning — no physical classrooms — there are new technology infrastructure and support costs to teach online.”

More than 40% of Naropa’s student body is enrolled in an online or low residency program. Before the pandemic, Naropa was almost a 100% residential university.

“To my knowledge, Naropa made a lot of profit on their online courses and students and faculty are not happy,” Naropa student Harsheath Chauhan said. “It seems like they’re selling off properties so that they can shift it completely online because it’s more profitable for them.”

Lief said the online student population continues to grow and will likely exceed 50% by 2025.

“Naropa will continue to offer in-person, low-residency and fully online academic programs in Boulder,” he wrote.

Chauhan said the Naropa experience is a lot about being in person, and it’s been the most rewarding part of his time there. He said the sale of the main campus is “outrageous.”

As a student, he said it’s impossible to get answers from the university.

“There’s a large disconnect between us and the administration,” he said, adding, “We really just are so in the dark, we don’t know what’s going on.”

Melchishua said the in-person experience is a “critical part” of a Naropa education.

“It’s about the communal aspect. It’s not just learning in a classroom, it’s having that opportunity to practice what we preach and build our own experiences from it,” she said. “I think that interpersonal connection is a key factor in bringing a more mindful approach to education and the world in general.”

Lief said Naropa evaluates online programs each semester to ensure that students have a good experience.

“Over 90% of our online students would recommend their program to a friend, according to our 2024 survey,” Lief wrote. “The reality is that our expanded online academic modalities have opened up Naropa to a broader audience, which has increased enrollment by 30% in the last three years and retention has increased by 9%.”

Anderson said friends who have been at Naropa longer than her have “really seen a decline in the way the school functions.”

She’s had a lot of trouble with advisors because they’re short-staffed, she said, and she’s not getting the help she needs. She’s also noticed a lot of staff are leaving.

“It’s really frustrating and I think they’re taking advantage of the students,” Anderson said. She added, she doesn’t know where her tuition money is going.

Chauhan, an international student, said Naropa lacks certain services expected at colleges, including a campus gym and the option to have a meal plan. He expects to pay close to $24,000 in tuition for the upcoming semester and said there are not a lot of scholarship opportunities.

“To me, it’s felt like as an international student that we’re being squeezed for as much money as possible,” he said, adding, “I really don’t see how (Naropa is) in a poor financial situation. The amount of money they’re charging the average student … it really doesn’t make sense to me.”

Tuition for full-time students, online and in-person, starts at $18,060 per semester, according to the university’s website.

Naropa students who received federal aid had median earnings of $28,720 10 years after starting school, and 62% make less than a high school graduate, according to the U.S. Department of Education. The university is ranked in the bottom 25% of western regional universities by U.S. News and World Report.

Staff turnover

The audit report found a “significant deficiency” in Naropa’s preparation of financial statements. According to the report, books and records for the 2023 fiscal year were not reconciled and closed on time due to turnover in key accounting management personnel and a lack of review and approval of various account balances.

“The University did not have the proper controls, processes, or personnel resources in place to analyze, adjust, or independently review account balances throughout the year ended June 30, 2023,” the report read. “Reliance on the external audit firm to perform these procedures is considered a significant deficiency under U.S. generally accepted auditing standards.”

According to the report, Naropa experienced “significant turnover” in its finance office between fiscal years 2021 and 2023. The financial statements were not completed on time the prior fiscal year, and Naropa was placed on sanctions. The report said Naropa has since re-staffed the finance office with qualified individuals who have made significant progress in this area.

“Management (of Naropa) continues to evaluate the cost-benefit analysis of preparing their own financial statements and will continue to work on reconciling their financial records in a timely, complete, and accurate manner,” the report read. Management is now in a place “consistent across fiscal years, which will assist in a more timely, complete, and accurate financial closing process,” it added.

Aside from property sales, Lief said Naropa is always exploring innovative and entrepreneurial ways to grow and be sustainable for the future.

For example, he said, Naropa launched its Center for Psychedelic Studies that went from a startup with no revenue two years ago to a planned revenue of $2.2 million in the current fiscal year.

He said Naropa is in the final stages of being approved by its accreditor to accept high-credit, degree-completion transfer students. Naropa is not renewing an expensive lease for administrative offices across from the Nalanda campus, and the university converted to a modern health insurance platform to offer better benefits and save money.

Naropa became an approved “teach out” school for Goddard College, the Vermont liberal arts school closing this summer, so that students may complete their degrees at Naropa.

Another example is the university’s investment in faculty and curriculum to become accredited by the Council for Accreditation of Counseling and Related Educational Programs, Lief said. This would ease the path to licensure for graduates of the master’s in counseling psychology program and allow the expansion of that student body.

Thursday’s email said the sale of the main campus is a decisive opportunity for Naropa.

“We recognize the profound value and importance that the land, which has been home to Naropa University for several decades, holds for many of us,” the email read. “We now need to balance that with the opportunity to create a significant fund for investment in Naropa’s future.”

As an alum, Melchishua said it’s sad and heartbreaking that the main campus will be sold. She’s also concerned the school may shut down.

“I will never forget my time at Naropa and I hope Naropa in some degree survives, even if it is online,” she said.

Naropa will host several town halls for the campus community this semester to discuss the sale and next steps “with the goal of improving campus communication,” the email read.

Anderson said this is a decision that will not sit well with students.

“I think students are going to be upset, I think they’re going to be really mad,” she said, adding, “I don’t think people are completely blindsided but I still think people are gonna be pretty angry.”

Originally Published: August 16, 2024 at 4:00 p.m.