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WEBSTER GROVES — The agency tasked with accrediting colleges and universities is warning the public that Webster University is facing financial headwinds that put its educational programs at risk.

The Higher Learning Commission on Monday assigned Webster a “financial distress� designation after years of deficit spending and enrollment declines at the private university.

The commission based its decision on information received by the federal student aid office that indicated its auditors made a “going concern finding,� an accounting term regarding an organization’s financial solvency.

Webster remains accredited while it “pursues efforts to address the circumstances that led to the designation,� the commission wrote in its .

Responding to the warning, Chancellor Tim Keane sought to assure faculty and staff in an email Tuesday morning that Webster was on track to break even this year through a “commitment to innovation and efficient operations.�

Keane, who replaced Beth Stroble on Aug. 1, previously told the Post-Dispatch Webster is scrutinizing every cost it incurs, and part of the “rebooting� of the institution includes the shutting down of the university’s nine remaining military campuses.

Webster operated at a deficit for seven straight years as of fiscal year 2023. Its deficit more than tripled between 2022 and 2023, to $39.3 million, even as enrollment started to rebound after years of decline.

In February, several donors sued and later settled with Webster after the university attempted to use restricted endowment funds earmarked for scholarships to cover a loan obligation.

The financial distress designation was based on an audit of fiscal year 2023, which prompted the U.S. Department of Education to require Webster to provide additional assurances it would protect Title IV financial aid funds. Keane said Webster has appealed, arguing the federal audit did not follow GAAP, or generally accepted accounting principles.

“The FY 2023 results were at least partially driven by the pandemic’s disproportionate impact on WU due to our business model that was premised on multiple geographic locations to promote in-person learning,� Keane told employees.

The Higher Learning Commission’s designation comes at a time when Webster’s undergraduate enrollment is at the highest it’s been in years, with 7,005 students worldwide. But Webster’s preliminary undergraduate and graduate student headcount this fall — 14,791 — is still nowhere near where it was at Webster’s peak in the early 2000s, when worldwide enrollment hovered around 21,500 students.

Keane told employees a new strategic plan, which he called Kairos, will be presented to the university’s board of trustees on Dec. 19.