Commentary of the Day - March 26, 2001:   How to Steal a College:

By all accounts tiny Mount Vernon College in the District of Columbia was in dire straits back in 1993 when it borrowed $6.5 million from nearby Georgetown University to stay afloat.  It's inability to repay this loan initiated a series of events that left Mount Vernon out of business, its faculty out of work, and another major Washington, D.C. institution -- George Washington University -- in possession of the Mount Vernon College campus.

Mount Vernon College began life in 1875 as a high school and junior college for women.  In the mid-1970's the high school was closed, and the college expanded from a two-year junior college to a four-year institution.  Unfortunately, this expansion occurred at a time when the number of all-women's colleges in the United States was declining rapidly.

According to a story by Scott Smallwood in The Chronicle of Higher Education, the closing of the high school led to some loss of support from wealthy alumnae; and, by 1993 the college was having difficulty meeting its financial obligations.  The then president, LucyAnn Geiselman, negotiated a $6.5 million loan from Georgetown University that was secured by the college property.  (The 26-acre campus in the exclusive Foxhall area of Washington is estimated to have a land value of at least $40 million.)  Sources familiar with this deal have informed the IP that Georgetown had no interest in merging with or taking over Mount Vernon College.  However, Georgetown did set certain performance goals that the College would need to meet to avoid having the loan called.

Mount Vernon expanded its extended education and graduate offerings, which improved enrollment and income.  However, by 1996 it was apparent that the performance goals could not be met, and that the Mount Vernon administration was looking actively for a benefactor who could keep the college going.  At that point George Washington University stepped into the picture.  GWU took over the $6.5 million loan in an "affiliation" deal with Mount Vernon, promising to make it "one of the best women's colleges in the country".  Mount Vernon faculty members were assured by their administration that their tenure was going to be preserved under this affiliation agreement.

However, shortly after the affiliation agreement went into effect the picture changed markedly.  GWU replaced the Mount Vernon board with a board composed entirely of GWU administrators.  Recruiting for new Mount Vernon students was brought to a halt, and severe restrictions were placed on president Geiselman's spending authority.  Within a short period of time Mount Vernon's president and vice president resigned.  The GWU-controlled board appointed an acting president, Grae Baxter, who set about terminating the Mount Vernon programs and preparing to have the campus reemerge as a branch of GWU with a substantially different academic mission.

Shortly before the Christmas break in 1997 the Mount Vernon faculty were informed that their college would cease to exist when its current students had graduated, and at that time their faculty positions also would cease to exist.  This gave the Mount Vernon faculty members three semesters to look for other work, while GWU began a $30 million transformation of the Foxhall location into a new branch campus.  In addition to the three-semester notice, Mount Vernon faculty members each were given $1,000 to search for new positions elsewhere.  No offer was made by GWU either to absorb Mount Vernon faculty members into the GWU faculty, or to provide buyout or severance packages.

Many of the younger Mount Vernon faculty members were able to find other academic positions.  Older tenured or tenure-track faculty members were not so lucky.  Finding a new position in academia when one is in his or her late forties or fifties is not an easy task.  Thirteen faculty members who were tenured or about to come up for tenure filed suit against GWU alleging, among other things, breach of contract under the theory that they were third-party beneficiaries of the "affiliation agreement" between Mount Vernon College and GWU.

Attorneys for GWU argue that because Mount Vernon College was out of business, the university was under no legal obligation to continue the employment of Mount Vernon College faculty members.  Initially, GWU even declined to extend COBRA health benefits to the terminated faculty members; but, later reversed that decision.

The real issue here, as the Irascible Professor sees it, is not the legal rights of either the terminated faculty members or GWU.  Rather, it is the ethical and moral obligation of GWU to deal fairly with the Mount Vernon faculty members.  GWU obtained possession of the Mount Vernon campus at a price that was substantially under market value -- essentially at pennies on the dollar.  If GWU had paid fair market value for the campus land and improvements, there likely would have been adequate funds available for Mount Vernon to provide decent severance packages to their faculty.  GWU, instead, chose to enter into an "affiliation agreement" with a pledge to make Mount Vernon one of the best women's colleges in the country.  It reneged on that pledge, and substantially changed the focus of the institution.  At the very least, GWU should have provided the tenured and tenure-track Mount Vernon faculty members with a fair and reasonable severance package when it decided to abandon its pledge.

It's ironic that a university that bears the name of the father of our country, George Washington -- a leader revered for his integrity -- has acted with so little integrity in this case.