STEUBENVILLE, Ohio – Eastern Gateway Community College can sell its Pugliese Center to the Steubenville City School District.
The college and Student Resource Center, the company with which it contracted to offer its free college benefit program, agreed last week to the sale. An agreed order was filed last week in the U.S. District Court for the Southern District of Ohio and signed by Judge Algenon L. Marbley.
SRC is suing Eastern Gateway for breach of contract. The company filed a motion for summary judgment, which awaits the judge’s decision.
The college “shall cause the net proceeds it receives from the sale to be escrowed with the clerk of court as a bond and security for SRC’s claims asserted against EGCC in this action,” the order says.
The order also directs the sheriff of Jefferson County, where the college is based, to discharge and remove the lien on the property “in favor of SRC as security for the claims against EGCC asserted in this action.”
The Pugliese Center property, 110 John Scott Highway, is valued at $2,015,400.
The classroom building on campus was deeded to the college in the 1960s by Jefferson County commissioners with a clause that it would revert to the county if the building ceased use for educational purposes.
The Jefferson County Budget Commission filed a complaint for declaratory judgment last August in Jefferson County Common Pleas Court against the college regarding a property tax levy. Also in August, Jefferson County commissioners filed a complaint for declaratory judgment against the college related to a building the county deeded to it for educational purposes.
On Dec. 19, a Jefferson County Common Pleas Court judge stayed those proceedings pending further order of the federal court.
Last month, Ohio Auditor Keith Faber filed a motion asking the federal court to pause for six months the civil case between Eastern Gateway and SRC. His office is investigating the use of public funds by the college and its employees and agents.
“The scope of the auditor’s investigation, by necessity, includes contracts and business dealings with numerous private individuals and companies,” that motion said.
Identification and recovery of ill-gotten or illegally expended public funds is of paramount importance, the filing added.
The college didn’t object to the pause, but SRC did.
Eastern Gateway is dissolving and hasn’t offered classes since summer 2024. The dissolution traces to financial struggles connected to the free college program.
The program allowed union members from across the country to take classes and earn degrees from Eastern Gateway at no cost to them. Students took classes virtually, and enrollment grew from about 4,000 to more than 40,000.
But in August 2022, the U.S. Department of Education placed Eastern Gateway on Heightened Cash Monitoring 2, meaning the college had to use its own resources to credit student accounts and wait for federal student aid reimbursements from the federal department.
Also in 2022, U.S. DOE ordered the college to end the free college program, saying that Eastern Gateway was charging students who received Pell grants more than those who didn’t. The program ended in August 2023, and fall 2023 enrollment dropped 50% compared with fall 2022. By spring 2024, enrollment had fallen 63% compared with the previous year.