St. Catharine College closing because of financial challenges

St. Catharine College, shown in December 2003, was proud of being able to offer four-year programs.
St. Catharine College, shown in December 2003, was proud of being able to offer four-year programs. LEXINGTON HERALD-LEADER

St. Catharine College, a small Catholic school outside of Springfield, will close its doors in July because of widespread financial problems.

“It is with great sadness that I announce today, after exploring all possible options, the Board of Trustees has determined the challenges facing St. Catharine College are insurmountable and we will be closing the college at the end of July,” Board of Trustees chairman John Turner said Wednesday.

Enrollment dropped from 600 students to an expected 475 next fall, a decrease officials blamed on a longstanding fight with the U.S. Department of Education over withheld student aid. That problem was made worse by debt the school took on in recent years to build new residence halls, a health-sciences building and library. This fall the school faced a $5 million deficit.

When the school closes on July 31, its ownership will transfer to its bondholders, said St. Catharine spokesman Jesse Osbourne. Huntington National Bank is the trustees for the bondholders, and the fate of the 84-acre property will probably end up in court, officials said.

President Cindy Gnadinger and the college’s trustees tried to raise hundreds of thousands of dollars in immediate operating funds during the spring semester.

“Without the enrollment and with the DOE’s choke hold on our cash flow, the debt is simply not manageable,” Turner said.

According to a newsletter from Gnadinger on April 18, “a detailed and lengthy mediation process… failed to resolve the profound negative impacts that prior DOE decisions have had on our institution.” St. Catharine sued the federal education department in February in federal court in Louisville.

According to past media reports, St. Catharine came under scrutiny between 2011 and 2014 because it had offered financial aid to students in its relatively new four-year class offerings without first getting approval. School officials said they did not think it was necessary to do so because the programs had not substantially changed the school’s education curriculum.

“I am extremely saddened by the DoE’s failure to act responsibly to resolve what they eventually agreed were inappropriately applied administrative compliance demands,” said Gary Cox, president of the Association of Independent Kentucky Colleges and Universities. “The result is this 85-year-old college, with an educational legacy in the area stretching back 200 years, has been forced to close, displacing hundreds of students, faculty and staff and leaving an educational void in their region.”

Stephanie Collins, a spokeswoman for the U.S. Attorney for the Western District of Kentucky, said the Department of Education has worked with St. Catharine to correct past problems with financial aid submissions and paid the school millions of dollars in financial aid before and after the court case was filed in February.

The U.S. Attorney for the Western District is representing the Department of Education in the litigation with St. Catharine.

From April to February, the department paid the school $3.16 million, Collins said.

“The Department of Education also has been working with SCC to process new financial aid submissions in a timely fashion. Since the filing of litigation, the Department of Education has paid an additional $1.6 million to SCC,” Collins said. Since April of 2015, the school has received $4.76 million in financial aid.

Gnadinger said St. Catharine had explored the possibility of merging with other schools, but those efforts were unsuccessful.

Officials said they are working to find places for students to transfer next fall that will accept the academic credits students have already earned. Late Wednesday, nearby Campbellsville University offered to help.

President Michael Carter said the school stands ready “to assist students, making their transition into Campbellsville University seamless and stress-free, without delaying their expected graduation date.”

Dawn Scott was signed up for 18 credits at St. Catharine next fall.

“This has totally devastated me,” she said of the school’s closure.

Scott, 52, went back to school after 30 years away and first attended Mid-Continent University, a Baptist school that was shut down after it lost accreditation. She became a psychology major and art minor at St. Catharine partly because it was close to her home in Lebanon.

“I know the college is working on basically getting something together for the students so the credits transfer somewhere else,” Scott said.

The school said summer camps and classes will proceed as scheduled, but no classes will begin in the fall.

SCC employed 118 full-time faculty and staff, as well as numerous part-time staff and adjunct instructors.

The school traces its roots to classes held in a “still house” in the early 1800s and was founded by the Dominican Sisters of Peace in 1931. The two-year college won approval in late 2003 to begin offering four-year programs.

The school has concentrated its mission on a tri-county region of Washington, Nelson and Marion counties.

“It’s a very sad day,” said Roger Marcum, a former superintendent of Marion County schools who retired from St. Catharine as an administrator in 2013. “The college has made a difference in the lives of a lot of kids who were first-generation college graduates.”

St. Catharine had open enrollment, Marcum said, so it gave many young and returning students a chance to earn a college degree.

“It met a real need in Central Kentucky, and there’s going to be a void,” Marcum said. “But without federal aid, St. Catharine can’t survive because it has so many low-income students.”

“The closing of St. Catharine College is a devastating loss to our community,” said Rep. Kim King, R-Harrodsburg, who represents Washington County.

“I am disappointed the Obama Administration and officials at St. Catharine College were unable to settle this dispute, and my heart goes out to the students, faculty, and community members who will most be impacted by the closing,” U.S. Sen. Mitch McConnell said in a statement.

Mary Jones of Loretto was another non-traditional student who graduated from St. Catharine in 1995 with a two-year degree in accounting. She went on to receive a four-year degree in accounting from Campbellsville University and now works as a field auditor in State Auditor Mike Harmon’s office.

“The classes were small, the teachers would take the time to get to know you, and they seemed to take a lot of interest in what you were doing, and how you were doing,” Jones said. “I loved every minute of it.”

St. Catharine also housed the Berry Farming Program, set up by Mary Berry, executive director of the Berry Center in New Castle, which uses the work of writer Wendell Berry and his family to advocate for farmers and rural land use.

Berry said she visited several schools before housing the interdisciplinary agricultural degree program at St. Catharine.

“It’s a wonderful place,” Berry said. “One of the reasons I went there is because they asked how my work and my father’s work fit in with the four pillars of Dominican life (community, service, spirituality and study) and I thought, ‘that is the correct question.’”

The Berry Farming Program will move, but Berry was not yet ready to release where. The program just graduated its first class, and had about 20 students enrolled.

“I’m not sorry we went there,” Berry said. “I wish that things had worked out differently with the Department of Education.”

Michael Lewis, founder and director of the Growing Warriors Project in Livingston, which provides farming education to veterans and others, graduated in May with the Berry program’s first class.

Lewis said he learned much about farm policy, philosophy and community development, and said he found it ironic that St. Catharine, a community anchor in a largely agrarian area, would close.

“It’s the economic anchor of this community,” he said. “I think it speaks to the ways our communities and cultures are controlled from afar. It’s really going to affect a lot of people, and it’s something that didn’t have to happen.”

Linda Blackford: 859-231-1359, @lbblackford