Keystone College and a strategic partner have signed a letter of intent on a deal that will ensure the school stays open, the college announced Friday.
Financially struggling Keystone said the college and partner have agreed to keep the partner’s identity a secret for now, the school’s statement said.
“The letter of intent creates the means for both parties to move expeditiously to a definitive agreement,” the statement said.
The college referred to the deal as “a new alliance that provides Keystone with a more secure roadmap for a long-term path forward.”
Efforts to reach Keystone president John F. Pullo Sr. were unsuccessful.
Pullo, a WVIA board member, has declined all interview requests since Keystone’s previous negotiations with a potential partner, the Washington Institute for Education and Research, fell apart in March.
The letter of intent stipulates the school’s day-to-day operations and academic mission will remain “essentially unchanged,” Keystone said.
“Additional details of the agreement will be made available after reviews by the necessary accrediting and regulatory agencies,” the statement said.
The deal will require the approval of the Middle States Commission on Higher Education. The commission’s accreditations allow colleges to accept federal aid passed on to students. The state and federal education departments and the state attorney general’s office must also sign off.
Last Friday, Keystone announced it was in “the final stages of executing a letter of intent and funding agreement with a strategic partner.”
Keystone said the college and the partner felt the talks were far enough along to allow the announcement, which came the day before seniors graduated.
The college said the reviews by the outside agencies could take up to a year. In the meantime, classes, sports and other activities will go on as usual, and the school will keep enrolling freshmen and transfer students for the fall semester.
Keystone said it’s grateful for the partner’s “shared commitment” to the school’s future.
“Keystone College is very fortunate to have secured this letter of intent with a committed strategic partner as we navigate the future of the college in this highly competitive education marketplace together,” Pullo said in the statement.
Pullo said the talks over the past two months “solidified a collective determination to secure a path forward for Keystone.”
The college wants to continue to offer a quality, affordable education “while also seeking to expand opportunities for a diverse array of learners across the ever-changing landscape in higher education,” he said.
In the last two months, Keystone’s prospects appeared dire.
Days after the Washington Institute deal fell apart, the college suddenly put Stuart Renda, its vice president for finance and administration, on leave and told faculty and staff to avoid communicating with him. The school said it was cooperating with an independent investigation.
The school did not disclose why Renda was suspended.
Based in LaPlume Twp., Keystone’s campus straddles the border of Lackawanna and Wyoming counties.
The attorney general’s office confirmed receiving a referral from Wyoming County District Attorney Joseph Peters, but a spokesman declined to say the agency is investigating. Peters has declined to comment.
A month after Renda’s suspension, the Middle States commission asked the school to write a teach-out plan to ensure students can complete their educations elsewhere if the school closes.
The school has been on a Department of Education watchlist for more than a decade because of its financial struggles. The college has struggled to submit federal tax forms that nonprofits must file and to complete audits on time.
The college filed the form for the year ending May 31, 2021, on March 4 and the 2022 or 2023 remain overdue. In September, the U.S. Department of Education cited the college for filing 2021 and 2022 financial statements and audits late.
The school downplayed the significance of the commission’s request for a teach-out plan. It said developing a teach-out plan doesn’t mean the plan will be implemented.
Three weeks later, in a letter to faculty, Pullo announced negotiations with a potential “investment partner.” In the same letter, he said the commission asked the school to submit a closure plan. The commission, he said, considered Keystone in danger of “imminent closure.”
The letter followed by a day the commission’s warning that the school could lose its accreditation unless it met a lengthy list of criteria. Among other things, the commission wanted an updated teach-out plan by May 15 and proof of Keystone’s financial stability by Aug. 1.
The commission challenged Pullo’s claim about the closure plan in a rare public statement of its own on May 8.
Middle States said the school reported the possibility of “imminent closure,” which is why the commission asked for a closure plan.
In the school’s Friday statement, Pullo celebrated the chance to share the letter of intent with the commission, but warned the letter doesn’t mean Keystone’s troubles are over.
“While this newly executed letter of intent creates a renewed path forward, there is still a significant effort ahead to create a more durable future for the college,” he said.
