A woman runs by the entrance to Dowling College's main...

A woman runs by the entrance to Dowling College's main campus in Oakdale on Wednesday, June 8, 2016. Credit: Barry Sloan

Restructuring $54 million in long-term debt is the key obstacle in a potential deal between Dowling College and Global University Systems, as the Oakdale liberal arts school faces crucial decisions with its creditors and its accrediting agency, sources said.

“Creditors are putting a lot of pressure on the college,” said one person close to the situation. Officials with the 48-year-old private school and the educational investment company are trying to negotiate new terms on loans in default, the source said.

Global University Systems, or GUS, based in the United Kingdom, is providing a cash investment to keep Dowling open on a streamlined basis, the source said. The amount was not disclosed. GUS, a for-profit company that has 20 affiliated institutions and academic partners, recently reported $300 million in revenue for the 12-month period that ended Feb. 28.

If a partnership agreement is struck, there is not yet any information on what form Dowling will take, what staff would be on campus and, if a fall semester begins in mid-August, what academic programs would be offered.

Students are struggling to figure out how to pay for and complete their degrees. Faculty and staff are filing for unemployment benefits while filing union grievances related to pay and medical care. All are alleging mismanagement by the college’s governing board and have called on the state attorney general’s office, the state Education Department, and local and federal lawmakers to launch an investigation into Dowling’s finances.

Dowling officials, citing the continuing talks with Global University Systems, have declined to provide more details on the school’s finances or specifics of the potential affiliation with GUS.

The college announced May 31 that it would shut down on June 3, then twice delayed the closure before announcing the school would remain open and continue negotiating with GUS. The move affected about 1,700 students and more than 450 employees.

The Middle States Commission on Higher Education, at its meeting Thursday, came to a decision on the college’s accreditation status, said Richard Pokrass, spokesman for the Philadelphia-based agency. Dowling has been on warning with the commission since November 2014. The agency will release its decision to the college and to the state Education Department before making it publicly available on June 30, Pokrass said.

Dowling President Albert Inserra was at the meeting and asked the commission to allow the school to keep its accreditation long enough to make possible an affiliation with GUS.

“The proposed partnership will reduce the debt burden, improve marketing and enrollment services to increase international and domestic enrollment, increase opportunities for students and faculty through a global network of academic institutions, and ensure that Dowling will be able to continue its mission of being an important part of the higher education landscape on Long Island,” Inserra said in a statement released after the meeting.

On June 30, a yearlong pact that Dowling officials made with the school’s creditors to postpone payment — called a forbearance agreement — will expire. If no deal with GUS is made by then, the college could be forced to liquidate its assets, including both the Oakdale and Shirley campuses and residential properties in the waterfront areas of Oakdale and Mastic Beach.

“These are the two deadlines we think are the most important deadlines,” said Edith Behr, the senior credit officer who manages the higher education and not-for-profit team at Moody’s, referring to the accreditation decision and expiration of the forbearance agreement.

Dowling is the only four-year, private, nonprofit college Moody’s Investors Services rates that has ever defaulted on its loans, Moody’s analysts said, and there is no precedent for the affiliation agreement that the college and GUS might create. The college’s credit rating is Ca, next to the lowest on Moody’s scale.

In addition to the forbearance agreement with debt-holders in June 2015, Dowling at that time entered into a new debt agreement for $6.7 million, which provided short-term cash for operations and paying down some of its long-term debt. That gave the college enough money to continue operating for the 2015-16 academic year.

The agreement included a mortgage on 32 residential real estate properties as additional collateral, according to a July 2015 Moody’s report. At that time, the credit agency estimated the college had 12 days of cash on hand.

GUS already has students “waiting in the wings” from their domestic and international recruiting efforts, a source said. Those students would join the ones currently enrolled for classes in the fall semester, if the deal goes through. Among the concerns for GUS officials is whether the college has strong alumni and community relations.

Meanwhile, Dowling’s undergraduate and graduate students continue in a state of limbo.

The school’s framework for completing the education of students, called a teach-out plan, never was fully implemented because Dowling did not close. That plan — required under federal and state law, as well as the school’s accrediting agency, the Middle States Commission — named Molloy College, a 4,500-student private college in Rockville Centre, to help students map out their education needs and transfer to other schools.

Over the last few weeks, students collected their course transcripts and sought out other institutions to continue their education. It remains unclear how many could remain at Dowling, and without a teach-out plan in place, the process of transferring is costing some students time and money, as waivers of certain fees do not apply.

Several students said they have met with attorneys about possible legal action against the college, and they are creating a petition to send to state Attorney General Eric T. Schneiderman. Newsday’s calls to the attorney general’s office regarding Dowling were not returned.

“There’s still a lot of anger and resentment among the students,” said Tyler Whitworth, 23, of Central Islip. He is among those who run a Facebook group called the Dowling LOSER Club — a page initially created to play online video games that has morphed into an unofficial message board for students and faculty to share information on the college’s future.

“Most everyone I know has said they refuse to come back if the school stays open — a ‘fool me once, shame on you’ sort of situation,” he said. “Unfortunately, some of us have too many credits to transfer and we’re forced to stay.”

Whitworth, who is trying to finish a bachelor’s of science degree with a double major in biology and chemistry, is among 90 Dowling students in the Higher Education Opportunity Program. The competitive grant program pays for economically and academically disadvantaged students to attend private, independent colleges approved by the state Board of Regents.

“We only get five years of financial aid and if I take a big hit to my credits, not only am I looking at potentially being forced into six years of school for what’s only a four-year degree, but I’ll have to take massive loans once my aid runs out,” Whitworth said. “There are many more students in my shoes.”

The state Education Department “would make every effort to assist those HEOP students in transferring to another HEOP institution. This assistance would include the transfer of the HEOP funding associated with those students,” spokesman Jonathan Burman said in a statement.

If Dowling trustees strike a deal with GUS, officials have not publicly guaranteed that the courses students need to complete their degrees would be offered in the fall semester, or indicated if those classes would be taught by professors who worked at Dowling before the school’s initial May 31 closure announcement.

On that day, the college’s faculty and staff were informed via email that their employment was ending at the close of business on June 1, and that they should not report to work on June 2. All benefits, including health insurance, were to end on June 2, the email said.

Since Inserra’s announcement on June 9 that Dowling would remain open while talks continue with GUS, the college has been operating with a bare-bones staff of 19 people, including the president.

Forty-seven Dowling professors who are members of the full-time faculty union voted unanimously June 18 to reject the school administration’s request for givebacks, assuming the school rehires them. The concessions would cut faculty pay by 30 percent and eliminate tenure, according to a memo from the union leadership. Newsday obtained a copy of the emailed memo.

The college also deactivated professors’ school email addresses, so many have resorted to communicating through a Facebook group created to bring together faculty, parents and students affected by the uncertainty of the Dowling-GUS negotiations.

The union, a chapter of New York United Teachers, has filed more than 10 grievances, ranging from failure to pay severance to unpaid medical claims that were incurred in the months prior to termination, said Lori Zaikowski, a former Dowling faculty union president.

The former Dowling faculty have no local leader. Marcus Tye, who had been president of the school’s faculty union, announced Tuesday he was stepping down immediately.

“We are doing what we can to protect the college and our members’ rights,” said Carl Korn, spokesman for New York State United Teachers, which with 600,000 members is the state’s largest teacher union.

Zaikowski, a full-time, tenured professor of chemistry who during her 24 years at the school had chaired the chemistry and physics department, said “everyone is looking for other jobs.”

“Faculty are angry about how everybody was treated,” said Zaikowski, 51, of Patchogue. “Of course, we are upset about our own situation, but we are very angry about how the students are still being treated.”

Zaikowski said in addition to the union grievances, she and others have filed complaints with the state attorney general’s office.

“I really don’t know who would go back. The faculty is so disgusted with the institution,” she said. “I don’t see how they’re going to be able to offer courses for the fall with any full-time faculty.”

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