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September 23, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

The College of New Rochelle ‘unlikely’ to operate beyond this summer

After 114 years, The College of New Rochelle may be closed by the fall semester.

An email to its 2,900 students Friday said it appears “unlikely” the college will be able to continue its operations beyond the summer 2019 semester. The letter, signed by college President William Latimer and interim board chair Marlene Tutera, said the school is still facing “significant cash flow challenges” stemming from a financial crisis that started to unravel in 2016.

The college disclosed in December that it was in negotiations with a potential educational institutional partner. But that institution, unnamed to this point, is not interested in taking on the college’s debts or in acquiring CNR, the letter stated. Rather, the partner would arrange to “meet the continuing educational needs of CNR’s students without interruption,” possibly by retaining some of college’s faculty and staff.

A notice to bondholders Friday used stronger language, calling it “highly unlikely” the college can continue to operate past the summer. The New York State Department of Education has called on the college to provide a plan to either show it has the resources to continue its programs or provide a plan to transfer its students to another institution. The college has until March 6 to respond.

Meanwhile, some college leaders are already leaving. The college disclosed to bondholders that it has recently lost or will lose its vice president for finance and administration, the dean of its School of Nursing and Healthcare Professions and its executive vice president for strategy and development.

The college’s 2018 financial statement still has certain items under audit, which officials said has delayed a final determination on the school’s future. The federal shutdown also complicated matters, delaying negotiations between the college and the Internal Revenue Service over tax penalties.

“Because of this matter and the ongoing financial challenges, the college’s auditor has not yet made a final determination as to CNR’s ability to continue as a going concern,” the letter stated.

The issues first were made public in fall 2016, when former college President Judith Huntington resigned after the CNR board said it found “significant unmet financial obligations” threatening the school’s survival. Later that month, college trustees announced that a probe into the school’s finances found $20 million in unpaid payroll taxes dating back to 2014, with an additional $11.2 million in debts and liabilities.

Since then, the college has tried to stabilize it finances while finding a sustainable path for its future. It was helped by a $5 million anonymous donation at the end of 2016, but the school also laid off about 70 employees and faculty to cut costs in 2016 and 2017. Those layoffs led to a pair of ongoing lawsuits, filed in the fall of 2017. The college also sold off properties it owned within the city.

But recent disclosures hinted at signs of continuing financial stress, even before Friday’s announcement. The college missed a $1.2 million bond payment in July to the New Rochelle Industrial Development Agency, which it paid back in December with interest. The college also received a tax warrant in May by the state for more than $3 million in owed taxes, which accrues interest at 9 percent per year.

The college – the first Catholic women’s college in New York state – also was hit with a legal setback this week. The Journal News reported Thursday that a judge ruled in favor of 14 former college faculty members, agreeing that the school had not followed its faculty handbook procedures in the layoffs.