Debt-ridden Dowling College is shutting its doors at end of Wednesday after last-ditch efforts to salvage the Long Island liberal arts school dried up.
The private college with campuses in Oakdale and Shirley, N.Y. is losing its academic accreditation on from the Middle States Commission on Higher Education and is ceasing operations after 48 years. Dowling, which is saddled with more than $54 million in debt, initially announced its plans to shutter on May 31 and twice postponed closure dates as it unsuccessfully sought an affiliation agreement with Global University Systems in the United Kingdom. The Alumni Association of Dowling College also had launched a fundraising campaign to save the school.
Dowling saw a 53% enrollment drop in a four-year period leading up to a default last summer on debt payments owed for bonds issued through the Suffolk County Industrial Development Agency and the Town of Brookhaven Industrial Development Agency. S&P Global Ratings slashed Dowling's debt to D from B in August 2015.
Moody's Investors Service rates Dowling bonds at Ca and expects bondholders to receive a recovery rate of 35% to 65%. Dowling is the first Moody's-rated higher education institution that has ever defaulted, according to David Jacobson, a spokesman for the credit ratings agency. Mountain State University in West Virginia lost its accreditation and shuttered in 2012, but paid off all its debt before the closure, Jacobson said.
The Suffolk IDA issued $38.9 million in tax-exempt civic facility bonds for Dowling in 2006 of which $33.8 million were outstanding as of Dec. 31, 2015, according to the agency's executive director Tony Catapano. Dowling also owed about $3.1 million from a $7.2 million bond transaction in 1996, Catapano said.
A default notice posted on the Municipal Securities Rulemaking Board's EMMA website said Dowling's $34.9 million series 2006a bonds are insured by ACA Financial Guaranty Corp. The bonds, which mature on June 1, 2017, last traded on Aug. 19 at a high yield of 8.77% and a low price of 96.875 cents on the dollar.
