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The campus of Loyola University New Orleans on Friday, December 7, 2018.

After years of financial turbulence due to dips in undergraduate enrollment, Loyola University of New Orleans has been placed on a year of probation by its accrediting agency.

The Southern Association of Colleges and Schools Commission on Colleges announced Tuesday that while it did not go as far as to revoke accreditation, it placed the school on probation because during two years of financial monitoring, Loyola failed to meet two key standards: having sound financial resources and managing those resources in a responsible manner.

The commission is one of the six major accrediting bodies for colleges and universities recognized by the U.S. Department of Education.

Accreditation is required for Loyola to offer certain degrees and receive some federal grants and low-interest loans for students, among other things.

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Tania Tetlow, president of Loyola University, pictured here on May 18, 2018.

The decision comes just months after the Jesuit university named its first layperson as president and took additional steps to keep its books in the black. After years of declining enrollment that led to a $25 million deficit, dozens of layoffs and other sharp budget cuts, Loyola has seen its incoming classes rebound for two years running.

"The Loyola community has done extraordinary work to turn around our deficits and balance our budget through admissions success and difficult but careful cuts," said Tania Tetlow, the school’s president. "As part of its review, SACSCOC will want to ensure that we live within that balanced budget this fiscal year. We know that we will. We are almost halfway there.”

Helped by the enrollment increase, the school in August approved a balanced budget for fiscal year 2019, the first time in five years it expects to operate without spending more than it takes in.

But that wasn't enough to sway the accreditation group to clear the university.

Loyola last went through an accreditation process in 2016. While the school passed all 96 of the necessary academic requirements, the agency was concerned about its financial position and placed the university on two years of financial monitoring.

In a letter to staff and students, Tetlow sought to ease concerns that the probation designation would damage the school’s reputation with prospective students during a critical time in the application process.

“Probation is a hurdle faced by many other institutions, who quickly overcame it,” she said, citing the University of North Carolina, Texas Tech and the University of Louisville. “We will too.”

In an interview, Tetlow also defended Loyola’s past financial decisions. She said accreditors had been expecting Loyola to pass a balanced budget in 2018, but that would have required eliminating the deficit in just six months, causing even deeper cuts to staff and programs.

The university hit hard times in 2012, when administrators made missteps in calculating a delicate balance between providing enough merit-based financial aid to competitively lure high-achieving students and pulling in the right amount of revenue through charging full tuition.

In 2013, 200 fewer freshman enrolled than were expected, resulting in the loss of millions of dollars in tuition and fees. Low enrollment in the next two years only compounded the problem.

Then-President Rev. Kevin Wildes tried to address the problem by drawing from the university's $230 million endowment, trimming programming, making strategic investments and cutting staff.

But school officials in 2016 abandoned Wildes' plan and hired a global management consulting firm, McKinsey & Co., to help plug the budget hole.​ In all there were five rounds of layoffs.

“It was certainly a painful set of decisions,” Tetlow said. 

On Tuesday, Tetlow assured staff and students that the university is in a “much better financial position” now, thanks in part to aggressive recruitment and other efforts.

Since 2016, the university’s total enrollment has jumped 12 percent, to 4,302 students. In addition, its retention rate after freshman year is now 85 percent, up 8 percentage points in three years.

Loyola has also raised $90 million through a campaign called “Faith in the Future” and reduced overall spending by more than $1.4 million this year, Tetlow said.

Moreover, she said, the university has committed to finding new revenue by investing in more online degree programs, expanding continuing education and adding innovative programming that is more likely to appeal to newer generations of incoming freshmen.

Stanton McNeely, the president of the Louisiana Association of Independent Colleges and Universities, of which Loyola is a member, agreed that the university has “turned a corner” financially, without letting its academic standing suffer.

“The most important thing for students and families is quality of academic programs, and Loyola’s programs are excellent,” McNeely said.

Follow Della Hasselle on Twitter, @dellahasselle.