On Wednesday, the administration at Eastern Gateway Community College announced that it will lay off 28 faculty members. These reductions come in addition to the nearly six dozen layoffs EGCC conducted last year. The layoffs will help the college address its ongoing financial difficulties as it tries to extricate itself from a disastrous ending to a “free college” partnership with the AFSCME union.
The Department of Education ordered EGCC to terminate the Free College Benefit in July 2023 after finding irregularities in the way the college charged student accounts. EGCC charged students who received Pell Grants one amount, while sweeping away account balances of Pell-ineligible students. EGCC denied misusing Pell Grant funds and sued the Department of Education.
In lieu of terminating the program, the Department of Education placed the school on a Heightened Cash Monitoring 2 status, which required the school to disburse federal financial aid from its own resources and seek reimbursement from the Department. Due to filing issues with the reimbursement requests, EGCC sought a $6M advance on funding from the State of Ohio to ensure that it could meet its payroll obligations. The layoffs are among the conditions that the State of Ohio placed on the college related to the $6M advance.
At the same time, EGCC sued the Student Resource Center, an online program manager with ties to AFSCME that it had selected to run the program, claiming that the SRC defaulted on contractually obligated services. SRC countersued the EGCC, claiming that EGCC had defaulted on its obligations to SRC, leaving the firm virtually bankrupt. The parties have not yet resolved the claims, but they represent a potential $23M liability for the college, should the court find in SRC’s favor.
The cost of failure at EGCC continues to grow
If all that weren’t enough, the Higher Learning Commission has placed the school’s accreditation on a warning status because it failed to meet a number of academic and financial accreditation standards. To address those, EGCC has brought in a pair of consultants on a short-term basis to address HLC’s academic and fiscal concerns.
It’s hard NOT to point out that the EGCC administration decided to become fully enmeshed in the “Free College Benefit” program without consulting the school’s faculty and staff. For their part, the school’s faculty have issued votes of no confidence in both the administration and the board of trustees to no effect. The administrators who signed the papers on this deal are all long gone (voluntarily), but the circumstances have tasked the school, its faculty and staff with picking up the pieces. Further, more than 80 employees have lost or will lose their jobs as a direct result of the “Free College Benefit” program.
In addition to driving the school to the edge of bankruptcy, the administration’s decision to throw all in with the union caused the Ohio State Legislature to rewrite the funding formula for its community colleges. The new rules virtually exclude EGCC from state funding.
EGCC is not in a heavily populated area, so its tax base isn’t huge. The taxpayers shouldn’t get soaked because the executive administration of their community college made poor decisions. The EGCC faculty and staff shouldn’t get fired because executives (who slid out the door when things started heating up) made decisions without consulting those who would bear the highest risk while reaping the lowest reward.
Trustees should demand an exit strategy for every “surefire” plan
It is sad that more community college trustees can’t/don’t/won’t look out for the taxpayers who elected them. Instead, they continue to accept half-baked plans put forth by unaccountable executives who vanish at the first sign of trouble.
It also underscores the need for Trustees to demand an exit strategy (or multiple exit strategies) that the college can employ for any plan the administration presents – regardless of what the plan may be – when things go sideways. This should be a non-negotiable element of every approval. Every plan comes with the risk that something will go wrong, but when a plan is poor at the outset, a disastrous outcome is a virtual inevitability.
Some people will claim that it is impossible to account for all the risks that a plan may present. They may be right, but high reward and high risk are constant companions. Any executive that brings a “high reward” plan to the Board of Trustees should be required to present an exit strategy. And the higher the risk, the better the exit strategy needs to be.
Since the Trustees only seem to look at potential reward without considering real risk, the taxpayers need to hold those Trustees accountable for their lack of deliberation when committing an institution (and public funds) to a dangerous plan.
The only question the Trustees ever need to ask is, What could possibly go wrong?
Photo Credit: Brett Jordan , via Flickr
