Chapter 6, Part 4 – Signs of Recovery Fall 1974
Signs of Recovery
By October 1974, the college was showing signs of recovery on a number of fronts. A phenomenal $163,000 had been gathered in pledges to the college.
As per the agreement, the pledges were surrendered to Continental Securities. Using a standard formula for converting pledges to cash value, CSC was to provide $117,500 towards the $125,000 mortgage payment and the college was to provide the remaining $7,500, in cash.
During the summer, Dr. McFadden was promoted to dean of administration and development and given oversight of the Admissions Department. The weeks following his promotion were spent recruiting on behalf of the college. His efforts generated far more students than had been projected. For fall 1974, the college enrolled 75 freshmen, 62 sophomores, 22 juniors, and 22 seniors. Additionally, 30 freshmen were projected for the spring 1975 class.
In light of this sudden and unanticipated increase in the enrollment pattern, the college announced plans to enroll a summer class. New faculty members were appointed for the fall term. Not only would the addition of new faculty enhance the quality of the education, it would also address the accreditation site team’s concern about excessive faculty teaching loads.
In September, the college received more good news: Linfield College agreed to offer a Bachelor of Science degree to any student having completed three years of education at Linfield and four years at WSCC. That same month, the board moved to broaden its representation by electing Samuel Warren, a local attorney. The college was definitely growing, in stature as well as stability.
In early October the college was notified that it had been awarded a $5,000 matching grant from the Jackson Foundation of Portland. Even better news arrived later that month. Through direct negotiations with representatives from the U.S. Department of Health, Education and Welfare (HEW), Dr. Elliot was able to secure an HEW application identification number, allowing the college to participate in the Federal Student Financial Aid Program. WSCC students would now have access to low-interest student loans. It was announced to students that tuition for the following year would be increased only slightly to $625 per quarter ($2,500 for a four-term year).
Enrollment projections were skyrocketing. Within two years, student enrollment was expected to reach 400. Accreditation prospects were also improving. In the college’s response to concerns identified by the accreditation site team, Dr. Elliot provided evidence of recent progress made by the college. Enrollment had increased significantly and plans were in place to maintain that trend. The financial difficulties facing the college had disappeared by virtue of the agreement with Continental Securities Corporation. Student financial aid was now available through HEW and Dr. Elliot expressed his pleasure with the progress of negotiations between the college and the Washington Board of Chiropractic Examiners; an agreement was expected soon that would allow graduates from WSCC to sit for licensure in Washington. (As it would turn out, an agreement would not be reached for another 18 months.)
For a while in October 1974, things were looking up–or at least it appeared that way. At the end of the month, the college received devastating news: the agreement with Continental Securities Corporation had fallen apart. The college had been led to believe the pledges obtained between February and September converted to sufficient cash value for CSC to make the second $125,000 payment. The college was stunned to learn from CSC that it had not made the $125,000 payment. CSC’s representatives claimed their re-insurance underwriter had withdrawn its offer to cover the WSCC/CSC transaction. CSC representatives went on to suggest there was no cause for alarm because they were already conducting a search for another underwriter and assured the college the monies owed the Sisters would be paid “immediately.”
In early November, the Board of Trustees met with the Sisters of St. Dominic to discuss the situation. Having reneged on a contract with the Sisters for a second time in less than a year, the college didn’t have much in the way of bargaining leverage. Despite their dissatisfaction with the college, the Sisters graciously agreed to accept $125,000 within 30 days; only then would they consider extending the contract with the college. This was as good of an outcome as the college could have hoped for. Legal counsel for the college provided CSC with written details of the meeting with the Sisters and demanded CSC take the immediate and necessary steps to resolve this situation. (link – Cont secur legal letter.pdf and title: “Letter from college legal counsel to Continental Securities Corp.”) Continental Securities Corporation reiterated its promise to send the $125,000 to the Sisters immediately. Hopefully, this would appease the Sisters. CSC would find another underwriter and the contract between Continental and the college would remain in effect and a disaster of monumental proportions would be averted.
In retrospect, CSC and WSCC were obviously operating under different interpretations of what “immediately” meant. The Sisters 30-day deadline came and went without a payment from CSC.
When confronted with this latest default, Continental Securities claimed that another underwriter had been found, but it would take until January 15th before the funds would be available. Nevertheless, CSC assured the college it was committed to honoring the contract and as a good faith gesture, promised to write a check for delinquent payment from the CSC corporate bank account “today.” Three days later, the college received notification from legal counsel for the Sisters of St. Dominic Convent that if payment was not made within four days, they would begin foreclosure proceedings.
Further accommodation of Continental Securities Corporation ended; the college no longer trusted anything represented by them. College legal counsel contacted the underwriter identified by Continental Securities. The underwriter denied the existence of any agreement with Continental Securities Corporation. The WSCC Board was uncertain if foreclosure proceedings could be delayed, but it directed legal counsel to approach the Sisters and reveal all that was known; the board also directed legal counsel to file a $10 million claim against Continental Securities Corporation and their underwriter, “immediately.”