Ohio's Eastern Gateway Community College will dissolve and close after a series of missteps and scandals.
Red flags include settling a lawsuit with the Department of Education over its handling of Pell Grants for students; a grand jury indictment of its former president and his chief of staff; and failing to file on the Municipal Securities Rulemaking Board's EMMA website the required annual financial reports.
Ohio Gov. Mike DeWine in July appointed Fred Ransier, a retired partner at Vorys, Sater, Seymour and Pease LLP and a bankruptcy trustee for the Southern District of Ohio since 1988, as conservator of the college.
Ransier told The Bond Buyer that since his appointment, he has been meeting with representatives of the college and the community and gathering information to help guide the dissolution and closure process.
Ransier said it is too early in the process to share any details about the recovery process for creditors. His next step is to provide a status update to the governance authority when it holds its first meeting.
The management of the dissolution and closure process is required to pass from a conservatorship to a five-member governance authority by the end of this month.
He and the governance authority "are focused on an orderly dissolution and closure, managing through the applicable administrative and legal processes," Ransier said.
"We tried everything we could," state Rep. Tom Young, R-Washington Township, chairman of the state House Higher Education Committee, told The Bond Buyer. "We've given Eastern Gateway more than sufficient time to get their act together. You can't be in arrears and run a public institution… The governor's office and the House and the Senate, we've worked very hard to see what the best path was, and to make sure that the students were helped."
In a statement, DeWine said: "Our first priority was making sure that all of the affected students were taken care of. We worked with Eastern Gateway and other institutions to ensure students could transfer as smoothly as possible."
In June 2020, the college issued $12.585 million of general receipts improvement bonds.
According to the
Bond proceeds were to acquire two buildings the college had previously leased, renovate the Health Education Workforce Building and to make other capital improvements and acquisitions.
An Oct. 21, 2021,
In 2023, Eastern Gateway shut down its free college for union families benefit after the U.S. Department of Education filed a cease and desist order targeting the program,
The program specifically courted members of the American Federation of State, County and Municipal Employees and their families, offering them a college education free of tuition, fees or book costs. It drove a doubling of enrollment after its launch, according to Inside Higher Ed.
The DOE said the program used leftover Pell Grant funds to cover the costs of educating Pell-ineligible students, and it only charged eligible students the cost of their grants, and as such was a violation of federal financial aid rules.
"The structure of that school, and the way that the finances in that school were tied to federal funding, to the Pell program, it wasn't sustainable," said Young. "This mechanism that they've been using does not work."
Around the same time, an Ohio grand jury indicted former Eastern Gateway Community College President Jimmie Bruce and his chief of staff, Jim Miller, after they allegedly spent $32,704 and $10,415 in public funds, respectively, without authorization.
The charges were
Eastern Gateway's financial struggles go back "at least 10 years or more," Young said. "This was not an easy decision… It's been a lot of hard work to see if it was possible for this [college] to stay open. You can't use taxpayers' dollars to sustain something that has been damaged by previous decisions."
Young credited Youngstown State University, which is nearby, with stepping up to help Eastern Gateway's students.
