NEW ROCHELLE, NY — The Board of Trustees engaged a team of professionals to assess the current condition and future viability of The College of New Rochelle (CNR). The review is still in progress, but preliminary findings indicate that there is a path forward for the College to remain a stand-alone institution. It will require significant cost-cutting and a significant amount of outside funding; however, it is the primary goal of the Board.
In early September 2016 the Board of Trustees of The College of New Rochelle (CNR) was notified that approximately $20 million in payroll taxes were not paid for eight quarters, beginning in 2014. This finding resulted in an immediate investigation led by a Special Committee of Trustees. A Chief Restructuring Officer (CRO) from Grassi & Associates was engaged to restructure and manage CNR’s finances; the forensic accounting firm PKF O’Connor Davies was engaged to review the school’s financial records and practices; and the external law firm Pepper Hamilton LLP was engaged to conduct an investigation of all facts for legal ramifications.
The goal of the investigation is to determine how and why the payroll taxes went unpaid, who was responsible for the non-payment, if any funds were diverted from CNR, and if there were any other undiscovered related issues. The investigation is not complete, but the Special Committee did not want to delay any longer sharing preliminary findings with the CNR Community.
To date, the investigation has determined that the CNR’s controller failed to file the required tax returns and pay the taxes due. Related matters are still being investigated. It has further established that CNR’s senior management at that time did not provide accurate information to the Board about the College’s finances. The financial information that was provided to the Board was incorrect, incomplete, and lacked transparency. Additionally, an independent external auditing firm audited CNR’s financial statements for recent years and found no material issues. The Board was permitted to rely upon these audits.
The investigation has also revealed other significant debts, liabilities, and depletion of assets including the unrestricted endowment. The additional debts and liabilities total $11.2 million.
Based upon the discovery of the College’s true financial status, the Board has taken critical steps to stabilize the institution. These include the appointment of Interim President Dorothy Escribano and Executive Vice President Kevin Cavanagh, the institution of mandatory new financial controls, and the identification of essential cost-cutting opportunities. It has also noted the need to revamp overall practices and procedures as the College moves into the future.
Because the tax liability was undisclosed for so long, the Trustees do not have the normal course of time to address the College’s financial stress. This is an urgent matter. CNR needs a significant amount of outside funding to meet its immediate needs. The Board is diligently examining all feasible options to protect the students and preserve the school’s mission. This effort includes discussions about various possible options with other institutions. The very last resort is closing the College and placing students in other schools.
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