Wesley College to receive $3 million in state funding

DOVER — A state panel this week approved a request for $3 million from Wesley College, with conditions.

The funding is expected to help the college continue operations until it can come to an accord on a merger with another higher education institution, which could be announced in the coming weeks.

In November, the private school submitted a request for $3.2 million from the state’s Higher Education Economic Development Investment Fund. The group, which consists of the director of the Office of Management and Budget, the secretary of state, the co-chairs of the General Assembly’s Joint Legislative Committee on Capital Improvement and the controller general, previously awarded $2 million to the college in 2019.

Wesley also was given permission in the spring to move $1.375 million earmarked for it the prior year to renovate the former Dover library.

College officials were informed in the summer they would not receive any more funding without first submitting a long-term strategic plan to the state, which they have not done as yet.

“The decision to approve these additional funds proved difficult for the committee,” the five-member committee said in a statement. “However, the committee understands that should the college cease operations the economic impact to the state’s capital – the loss of over 200 jobs and vacancy of 19 buildings in downtown Dover – would be significant. In addition, hundreds of Delawareans would have their education disrupted without a clear path to continue their education.

“The state has entered into a Memorandum of Agreement with the college that includes a number of conditions agreed to by the college in order to be eligible to receive these additional funds. These conditions include drawing the funds on an as-needed basis, providing regular reports to the state and meeting certain milestones.”

In addition to the conditions mentioned in the statement, Wesley must agree not to request any further funding and to “provide the state with a “teach out” plan inclusive of a plan for graduating the approximately 200 spring 2020 graduates,” about half of whom are native to the First State, per the letter informing Wesley of the decision.

Should the school fail to come to terms on a merger, it will have to surrender possession of the old Dover Public Library to the state. The college purchased the South State Street property from the city in 2016 for $1.

Funding from the state will be provided monthly as needed to ensure Wesley can continue to make payroll and to leverage federal grants and similar resources, according to the letter approving the request.

Background

Both Dover City Council and Kent County Levy Court passed resolutions in January urging the state to financially support the college. Wesley President Bob Clark told Levy Court last month the discussion with another school is “moving from a letter of intent to a definitive agreement.”

As part of the state’s efforts to help the small private school, lawmakers in 2019 expanded a fund created the year before. The Higher Education Economic Development Investment Fund, which was initially intended primarily for the University of Delaware, Delaware State University and Delaware Technical Community College, received more money and new guidelines.

The addition, which opened the $20 million fund to “projects and efforts that will help create or retain a significant number of high quality, full-time jobs and/or continue to provide access to higher education opportunities for in-state residents,” was made with an eye on Wesley College.

In its Nov. 26 application, obtained through a Freedom of Information Act request, President Clark wrote the school has “made great progress in identifying a path forward for a potential merger by signing agreements with two financially strong institutions of higher learning.” A sentence following that line appears to name those institutions, but the information was redacted by the state.

A merger would prove especially beneficial in the fields of health care, education, science, technology, math and engineering, according to the application. The letter to state officials also notes the school has hired two consulting firms to help plot a course forward, including assistance in negotiations. The names of the firms are among the redacted items.

According to the letter, the companies were set to provide recommendations to the respective institutions’ leadership by the end of January.

While part of the request was blacked out, the letter does note the sum would be used to “maintain enrollment/retention initiatives and ensure we retain the proper bank account balance so that we can continue to access federal aid money from the Department of Education to allow Wesley College to continue providing Delawareans educational opportunities that improve their lives and enhance the opportunities that they will serve” and “provide a bridge that affords Wesley College the time to complete a definitive agreement with the partner that will provide the best long term solution.”

The private school has been placed on a list of colleges and universities maintained by the U.S. Department of Education to track institutions facing various issues, although Wesley is on the list specifically for finances. The designation means the Federal Student Aid office has greater oversight than with schools not included in the count.

According to Internal Revenue Service documents filed with GuideStar, which maintains a database of nonprofit tax forms, Wesley reported total revenue of about $48.3 million and expenses of $49 million for 2016, with approximately $25.3 million in net assets.

The prior year, its revenue came to nearly $50.8 million, while its costs were a little more than $51.2 million, according to the IRS forms. It had approximate revenue of $49.5 million in 2014, with expenses of about $49.2 million.

Information for more recent years was not available.

Because Wesley is a private college, its finances are not easily accessible, and several emails obtained through a Freedom of Information Act request contained thorough redactions of financial data and other information.

The situation facing the college, which was founded in 1873, is far from unique. Many small private schools around the nation are facing crunches as enrollment dwindles and their funds run dry. According to Moody’s Investors Service, about a quarter of private higher education institutions were in the red in fiscal year 2017.

Per Wesley’s website, its undergraduate enrollment was 1,228 in the fall of 2018, down 219 from the year before and 372 from five years prior. Of those 1,228 students, 1,125 were full-time.

Rumors about Wesley have swirled since at least early last year, as evidenced by two March emails from the college’s president. On March 14, in a message to faculty, President Clark shot down “uninformed & untrue” speculation about Wesley being bought out.

He sent another email to college personnel almost two weeks later reiterating “there is no plan, or talk of anyone buying Wesley out, nor are there plans to close.”

Although not mentioned by the president then, among the most persistent rumors is that Wesley is being bought out by or entering into some type of agreement with the University of Delaware. According to UD spokeswoman Andrea Boyle Tippett, there were conversations between the institution and Wesley early in 2019, but they had stopped by June.

Also awarded money from the Higher Education Economic Development Investment Fund are the University of Delaware, Delaware State University, Delaware Technical Community College and the Delaware College of Art and Design. The first three each got $4.83 million, while the fine arts school received $500,000.