Eastern Gateway Community College engaged in "rampant financial mismanagement" before it closed in 2024, Ohio Auditor of State Keith Faber said in a new report.
“This goes beyond sloppiness and honest mistakes,” Faber said in a news release last week. “The public should be outraged.”
The report identified 44 "findings," or failures to comply with the law or state rules, in one year of the college's operations stretching from July 2022 to June 2023. The investigation is "ongoing," the news release added, with more potential findings in the future as the investigation continues.
The college had locations in Youngstown and Steubenville.
The audit for the college's 2023 fiscal year in particular cites concerns about $17.3 million in federal Pell grants received by the college in 2023, and lax record keeping and untracked spending.
It also notes others had sounded the alarm before, including the U.S. Department of Education in April 2023; a consultant in February 2019; and a "prior audit" performed by an outside accounting firm.
The state executed a search warrant on the college in January 2024. The college announced it would be closing several months later, less than a year after the U.S. Department of Education ordered it to end a free college tuition program.
The government had alleged at the time that Eastern Gateway was illegally charging federal Pell grant students a higher tuition rate to attend the school.
The audit explained how that happened, saying the college "merely wrote off" all non-Pell and Federal Supplemental Educational Opportunity grants, "and in some cases state grant charges on student accounts."
The college also "improperly made it appear that the students are being funded by outside entities," the report said. "Essentially, under this program, students who receive Pell funding were charged for the program, but students not receiving Pell were not."
The audit found dozens of other issues, including:
- A lack of control and policies around employee credit card usage and travel. The college reportedly could not provide a list of all employees with company credit cards.
- An authorization by the college's board of trustees issuing $13.6 million in debt to acquire a parking garage in Youngstown for which the cost of demolition exceeded the estimated land value. The college's former chief financial officer allegedly did not provide an "accurate appraisal" of the facility.
- Documentation of federal financial aid that was "incomplete and inconsistent."
- An absence of a formal commission on records keeping, and no public records policies displayed publicly.
- No board-approved appropriations measure, meaning “all expenses [accumulated by] the college’s former chief finance officer and former controller” were in violation of state law.
Youngstown State University plans to start a satellite campus at Eastern Gateway’s Steubenville building after YSU's board of trustees voted last month to accept the property from the Jefferson County Commissioners. It could open as soon as next summer.
