College's latest endowment report gives only clues of how much it lost on pharmacy-school project

By Megan Ingros
University of Kentucky School of Journalism and Telecommunications

Three years after Midway College’s venture for a pharmacy school in Eastern Kentucky fell short, the question remains: How much money was lost?

Though the private institution won’t say, it has to file a public report on its endowment, investments that produce income – but which college officials discussed tapping, perhaps not for the first time, as the pharmacy venture was falling apart.

The college’s 2012 report to the state Council on Postsecondary Education showed a plateau in the endowment, which had been growing steadily. That suggests the college may have tapped into the endowment. 

The latest report to the CPE, made April 1, showed an unrestricted endowment a year ago of $9,021,339, an $1,361,306 increase from 2012.

From 2011 to 2012, reports showed an increase of only $217,369, much smaller than the norm.  The figure for 2013 is an estimate, based on the average of the previous and following years. The actual figure is not available because the state has changed its rules to require such reporting every two years.

The college had to twice withdraw applications for accreditation of the pharmacy school in Paintsville, 130 miles east of Midway, because the accrediting agency said it would not be accredited. That had major financial implications because in order to be accredited, the school had to hire and pay faculty, starting a year in advance of its first application.

The Accreditation Council for Pharmacy Education was concerned with the inexperience shown by the dean and didn’t see any proof that there was an understanding of what it would take to run and build the school. The ACPE also noted that the college had to show sufficient financial backing. The building cost turned out to be double the initial $12 million pledged by the Paintsville couple who launched the project. Also, at the time the college had a debt of $10.5 million to PNC Bank, which denied the college’s request for an additional loan.

The college tried to get the University of Charleston, which closer than Midway to Paintsville, to keep the project going, but the pledge was withdrawn. The project died, and President William Drake resigned at the request of the college trustees in March 2012.

That fall, the college suffered an 18 percent decline in enrollment from the previous year. It released 16 staff members, terminated about a dozen faculty members’ contracts and suspended contributions to faculty retirement accounts in order to balance its budget for the 2013-14 year. Enrollment has since rebounded.

Midway College declined to offer any comment on the issue. Vice President of Marketing and Communications Ellen Gregory said in an email, “The project has been closed for many years. The college does not and will not have any further comment on any issues related to the school of pharmacy.”

Robert King, president of the Council on Postsecondary Education, said he was unsure of the project’s financial impact on the college, but said, “I know currently they are back on solid footing.” King said the college just went through an accreditation that came through with very positive results.

Gregory said the college is moving on from the past and leaving the pharmacy school behind. “Our most important focus remains on providing the best possible education for our students, and despite recent challenges, we are pleased with the progress that Midway is making,” she said. The college will change its name to Midway University on July 1.