In August, Keystone College officials thought they saved the financially struggling school from closing.
They announced a deal to merge with a newly formed subsidiary of the Washington Institute for Education and Research, a Washington, D.C.-based nonprofit group that aids schools.
Their hopes for a brighter future for Keystone may soon be dashed for good.
Keystone’s accrediting agency isn’t buying the merger alone as a permanent solution and that again could mean the school must close.
In a Monday letter to Keystone president John F. Pullo Sr., the Middle States Commission on Higher Education said Keystone will lose its accreditation on Dec. 31 unless it appeals for a reversal.
Keystone plans to appeal to Middle States this week and can keep operating in the meantime. Pullo estimated an appeal hearing could take place in March. Middle States wants to withdraw accreditation because the school failed to:
- Comply with federal standards that, among other things, require demonstrating sound finances and future financial stability.
- Prove its board of directors serves the public interest and pays attention to operations, finances and policies.
Accreditation allows students to obtain access to federal and state financial aid to attend a school. They spend that on tuition that helps cover a school’s expenses. Without students who can get aid, schools can’t afford to stay open.
Middle States is again requiring Keystone to come up with a “teach-out plan” that includes signed contracts allowing students to finish their educations at other schools. The deadline for submitting that is Dec. 6.
In a statement to the campus community, Pullo said school officials “strongly disagree" and are "extremely disappointed" with the commission’s decision.
“We all knew that the process of rebuilding Keystone and changing our trajectory would not be easy,” Pullo wrote.
Pullo, a WVIA board member, said the decision “significantly undervalues” the school’s progress in strengthening its finances and fixing its weaknesses.
“I pledge that we will pursue every possible opportunity as we prepare our appeal,” he wrote. “During the appeal process, Keystone will retain its accreditation status and will continue to operate.”
Efforts to interview Pullo failed as they have for months.
The commission’s letter says staying open is required to allow an appeal, but during the appeal Keystone can’t enroll or market itself to new students.
If the appeal fails, Keystone can seek arbitration to overturn the loss of accreditation. In arbitration, a neutral party – usually a lawyer chosen by both sides – determines a final outcome.
The commission says the college failed to:
- Show compliance with government laws and regulations.
- Document financial resources, a funding base and plans for development that will “support its educational purposes and programs and ... ensure financial stability.”
- Produce a record of “responsible financial management,” including a multi-year budget.
- Produce audits of financial aid programs as state and federal laws require.
- Show it has a board that serves the public interest, ensures Keystone “clearly states and fulfills its mission and goals” and takes responsibility for overseeing the school’s finances and its “academic quality, integrity, planning, and fiscal well-being.”
- Show the board “plays a basic policy-making role in financial affairs to ensure integrity and strong financial management, including ... timely review of audited financial statements” and other documents that demonstrate financial viability.
The school has faced financial troubles for more than a decade, including being on the U.S. Department of Education’s list of schools requiring heightened monitoring.
Like many schools, Keystone suffered with a loss of enrollment during the COVID-19 pandemic and that damaged its finances.
The school sought solutions and, in January 2023, Keystone’s board authorized exploring a merger with the institute. The two sides signed agreements a month later.
The agreements didn’t last long.
In March, both sides agreed to withdraw from the agreements because the college’s finances worsened in 2023 and 2024, but talks continued, according to Keystone’s latest audit covering the year ending May 31, 2023.
Days after the deal fell apart, the college suddenly placed vice president for finance and administration Stuart Renda on leave and said it was cooperating with an “independent investigation” without naming the investigating agency.
The state attorney general’s office later acknowledged accepting a referral from Wyoming County District Attorney Joseph Peters but the office and Peters declined to comment further.
In April, Middle States announced the school could lose its accreditation, citing some of the same reasons in its latest notice.
That included a dispute between the school and Middle States on a potential closure. The agency said the school submitted a plan for closing, but Pullo said Middle States asked for a closure plan.
The commission gave the school until Aug. 1 to show why its accreditation should continue. The school met that deadline.
In May, the school announced the signing of a letter of intent with a strategic partner to keep the school open. The school did not name the partner then, but it turned out to be the institute. The letter of intent included the institute renewing a $10 million commitment to aid the college’s growth, according to the May 2023 audit.
The audit says the institute also provided operating money through grants and was helping restructure debt so Keystone could eliminate up to $12.5 million in future payments to lenders.
The school also projected saving $1 million by negotiating bills with unsecured creditors.
The merger was expected to be finalized in April 2025.
In June, to cut costs, the school announced the layoffs of 29 faculty and staff and announced it would no longer offer chemistry, forensic biology and child and family studies degrees because of low enrollment. The audit estimated savings of $3.8 million.
About two weeks after the merger announcement, Middle States reviewers visited Keystone to re-evaluate the situation.
Based on the merger agreement, Keystone asked the commission Sept. 6 to allow withdrawal of the closure plan.
School officials went before the commission Nov. 20 to formally present arguments for staying open, but did not convince the commission to continue accreditation.
