[T]he College of St. Joseph made it to graduation day, but employees, vendors, and taxpayers could be left holding the bag.
The small private Rutland college announced in late March it would close because of declining enrollments and unsustainable finances.
The school kept its door open through commencement – despite cancelling exam week and laying off a bulk of its staff a week prior. But former employees and a vendor say they’re still owed thousands of dollars. And the federal government this week decided to write off a $1 million debt CSJ still owed.
James Curtis, a former English professor at the college, was laid off on May 10 and received his last paycheck a week later. But administrators apparently forgot to factor in that, despite being on a 9-month contract, he had opted to take a 12-month salary spread. Curtis estimates he’s still owed close to $4,000.
In a message to Curtis, CSJ president Jennifer Scott acknowledged the error and said the college simply didn’t have the money to pay out vacation benefits or the wages still owed to the three faculty members that had chosen to be paid out over 12 months.
“The CFO is hopeful that enough student payments will come in to pay those wages and benefits; however, CSJ is not able to pay them out at this time,” she wrote.
Curtis said he feels powerless to do much – going to court would cost about as much as he might ultimately recover.
“I feel like they’re aware of that situation and assuming that no one is going to do anything,” he said.
Kelly Burkett, a former learning specialist, believes the college incorrectly calculated her last paycheck by over $1,000. She’s filed a wage complaint with the Vermont Department of Labor.
Burkett said she’s sympathetic the college may be running low on cash. But she points out her salary was funded from a Title III grant.
“This is federal money,” she said.
Jim Eckhardt, the president of Censor Integrated Facility Services, a security company based in Rutland, said he pulled his business in late March after the school had racked up an unpaid bill “in the neighborhood of $20,000.”
Eckhardt said he went back-and-forth with college officials for a few weeks before they stopped answering his calls and emails. He finally went to the campus himself, where employees gave him an email for Jeff Sands at Dorset Insolvency Services.
Eckhardt wrote to the address, and received a letter back on March 30, addressed to “Dear Claimant of the College of St. Joseph,” telling him that the school “cannot currently afford to pay your invoices and has frozen all past-due, un-secured debts until assets can be liquidated to generate the funds to pay these debts.”
“Most of the value is in the real estate which could take years to sell. It is likely that all the unsecured creditors will be stuck waiting for resolution during that time,” the letter continued.
“In the whole 34 years that I’ve been in business,” Eckhardt said, “I’ve only been burned one time.”
The US Department of Agriculture’s Office of Rural Development loaned the college $2.4 million in 2017 to fund the acquisition of a 32-unit apartment complex on Campbell Road to house students and staff. A spokesperson for the agency said the USDA had come to an agreement with the college on Wednesday to write off the remaining $1 million balance.
“USDA determined the College of St. Joseph did not have the funds or access to funds to make further payments on their loan,” USDA spokesperson Megan Roush said in an email.
The apartment complex was purchased by the college in 2017 for $2.3 million from Jetbar Inc., a company owned by Rutland businessman Charles Coughlin, according to the Rutland City assessor’s office. CSJ sold the property this spring at a $731,000 loss, when Equinox Mountain Partners LLC, a company with a Manchester address, purchased the property for just shy of $1.6 million.
The USDA has also loaned money to another Vermont college that announced it would close this year. Green Mountain College in Poultney received $19.5 million, also in 2017, to refinance its debts and acquire some property. The USDA has not written off that loan, Roush said. College officials have said they had set aside the necessary dollars to fund this year’s payment.
Scott, CSJ’s president, declined a phone interview, but in a statement said that “the college values its professional relationships and is working to satisfy its financial obligations to its creditors.”
The Rutland college is not the only one suffering from a messy wind-down. Southern Vermont College, which announced in March it would shutter at the end of the year, is facing two separate lawsuits from former donors.