Eastern Gateway Community College in Ohio is disbanded and closed after a series of missteps and scandals.
Red flags include the settlement of a lawsuit with the Department of Education over its handling of Pell Grants for students, a grand jury indictment of the former president and his chief of staff, and the failure to file required annual financial reports on the Municipal Securities Rulemaking Board’s EMMA website.
In July, Ohio Governor Mike DeWine appointed Fred Ransier, a retired partner at Vorys, Sater, Seymour and Pease LLP and receiver for the Southern District of Ohio since 1988, as receiver of the college.
Eastern Gateway Community College
Ransier told The Bond Buyer that since his appointment, he has met with college and community representatives and gathered information to guide the dissolution and closure process.
Ransier said it was too early to provide details of the recovery process to creditors and that his next step would be to provide a status report to the regulator at its first meeting.
The management of the dissolution and closure process must pass from a guardianship to a five-member administrative board by the end of this month.
He and the administrative authority “are focused on an orderly resolution and closure, adhering to applicable administrative and legal procedures,” Ransier said.
“We tried everything we could,” Republican Rep. Tom Young of Washington Township, chairman of the House Higher Education Committee, told The Bond Buyer. “We gave Eastern Gateway more than enough time to get itself caught up. You can’t be behind and run a public institution… The governor’s office, the House and the Senate worked very hard to find the best way forward and make sure students are helped.”
In a statement, DeWine said, “Our top priority has been to ensure that all affected students are taken care of. We have worked with Eastern Gateway and other institutions to ensure that the transition of students can be as smooth as possible.”
In June 2020, the college issued $12.585 million in general revenue improvement bonds.
According to the
Proceeds from the bond were intended for the purchase of two buildings the college had previously leased, the renovation of the Health Education Workforce Building, and other improvements and purchases.
On 21 October 2021
In 2023, Eastern Gateway closed its free college for union families after the U.S. Department of Education issued a cease-and-desist order against the program.
The program was specifically geared toward members of the American Federation of State, County and Municipal Employees and their families, offering them a college education with no tuition, fees or book costs. According to Inside Higher Ed, enrollment doubled after its launch.
The DOE said the program used leftover Pell Grant funds to cover the cost of educating students who were ineligible for the Pell Grant and charged eligible students only the cost of their scholarship, a violation of federal financial aid regulations.
“The structure of this school and the way that this school’s finances were tied to federal funds and the Pell program was not sustainable,” Young said. “The mechanism they used is not working.”
Around the same time, a grand jury in the state of Ohio 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 charge was
Eastern Gateway’s financial problems go back “at least 10 years or more,” Young said. “This was not an easy decision… It was a lot of hard work to figure out if it was possible to keep this (college) open. You can’t use taxpayer money to maintain something that was damaged by previous decisions.”
Young thanked nearby Youngstown State University for its strong support of Eastern Gateway students.
