Turmoil continues at an Idaho community college district where management dysfunction was a major factor in a February downgrade.
A Kootenai County district judge ordered North Idaho College trustees to reinstate Nick Swayne, the college president they had placed on administrative leave in December.
Tumult that put its accreditation in jeopardy was cited when Moody’s Investors Service downgraded the college’s ratings on Feb. 16, assigning a negative outlook and warning that a multiple-notch downgrade could be in the offing if the college loses accreditation.
The downgrade brings the college’s issuer rating to A3 from A1 and student fee revenue bonds to A3 from A2, reflecting “a continuing period of significant governance and management dysfunction,” according to Moody’s. The action affects $7.9 million in rated debt.
Judge Cynthia Meyer wrote in a decision issued late Friday that NIC trustees violated Swayne’s contractual rights when they voted 3-1 in December to place him on administrative leave for no disciplinary reason, according to the Bonner County Daily Bee.
The board’s initial decision to place Swayne on leave without cause “could be characterized in the most charitable light as misguided,” but the board’s decision to keep him on leave without cause is “hostile and arbitrary,” Meyer wrote.
The elected board has driven turmoil at the college, which was forced to pay $500,000 for violating the previous president’s contract in 2021 for firing him without cause according to reports in Inside Higher Ed and the Coeur d’Alene/Post Falls Press.
“Prolonged and public disputes among the board and the college, as well as the local community, have resulted in turnover in the office of the president and legal counsel, litigation, delayed audits, and most notably, possible loss of accreditation,” Moody’s wrote.
Hard right-wing trustees with a stated desire to root out the “deep state” at the two-year school have majority control of the community college board, according to published reports.
The college in Coeur d’Alene is a feeder school for the University of Idaho in Moscow. The college generated nearly $68 million in operating revenue in fiscal 2021 and had 4,577 students enrolled in fall 2021, Moody’s said.
The Northwest Commission on Colleges and Universities is considering pulling the community college’s accreditation. The accreditation panel, expected to visit the college in mid-April, cited leadership questions, including the decision to put Swayne on leave, as a factor placing accreditation at risk. The trustees have until March 13 to provide the panel with a document demonstrating why it should retain accreditation.
Loss of accreditation, which is very rare, would result in multi-notch downgrade as it would have a severe and immediate impact on enrollment and operations, Moody’s analysts wrote.
The outlook was revised to negative from under review, concluding the rating under review for downgrade initiated on December 21.
“Governance considerations, notably heightened board structure, policies and procedures risks, a loss of management credibility and track record, and heightened risk appetite are all key drivers of this rating action,” Moody’s analysts said.
The college retained its investment grade rating despite the management dysfunction, Moody’s analysts said, because the college reported good operating performance through fiscal 2022, increased cash reserves, low debt, and fiscal 2023 is expected to end with a modest surplus.
The college also benefits from diverse revenue streams, including property taxes, state aid, tuition and fees.