College Won’t Close, USIU Students Told

Acting President Kenneth McLennan tried to reassure anxious students at the beleaguered United States International University on Monday that the institution is in no danger of shutting down, despite having filed for bankruptcy last month.

McLennan and bankruptcy lawyer David Osias told more than 200 students packed into a lecture hall on the first day of the school’s winter quarter that the filing will give the private university time to draw up a reorganization plan to pay off an estimated $14 million in debts.

That plan will include a trimmed-down expense ledger and new revenue, especially from the sale of one or more of the university’s overseas real estate holdings, Osias said. The plan must be submitted to federal court officials, who have overseen USIU’s finances since the bankruptcy filing, by March.

In the short term, McLennan said Monday, the university had no choice but to severely curtail its intercollegiate athletic programs, cut back most of the majors in its costly School of Creative and Performing Arts, lay off 55 of 314 full-time faculty members and order $200,000 in cumulative monthly pay cuts for all employees making more than $30,000 annually. Under the bankruptcy reorganization rules, the university must balance its budget immediately.

The acting president, a retired Marine Corps general, conceded under a barrage of student questions that the cuts in performing arts could cause many of the 200 students in that well-respected school to leave or transfer at the end of the spring quarter in June.

But he emphasized that most of the university’s 100 academic majors remain intact and said no decision on permanent cuts will be made until the long-range reorganization plan is completed sometime within the next two months.

Both McLennan and Osias emphasized the critical need for the university’s 2,000 students to have faith in USIU’s future, since almost all of the facility’s $29-million annual budget comes from tuition payments. The 38-year-old university has no endowment or other sources of revenue as a result of the highly unusual way it was operated by its founder, William Rust. Rust was forcibly retired from control of the school last year, and McLennan took over on a temporary basis.

“Everyone is skeptical,” one student said. “You’re relying too much on students” to continue paying tuition. A large number of students are from foreign countries.

Osias conceded the point, but said that, in the short term, USIU must continue to rely on tuition and cutting of programs until the university can attempt to sell its London campus or arrange other financing through a still-pending merger with Teikyo University of Japan.

McLennan also said the continued accreditation for USIU by the Western Assn. of Schools and Colleges, scheduled for a vote late next month, will depend on a realistic reorganization plan. Without the accreditation, USIU could not qualify for federal student loans for scholarships, and its academic degrees would lose value. The association placed the university under sanctions in 1989 for deficiencies in its academic and financial programs.