Sources: DSU in talks to acquire Wesley College

Wesley College’s campus in Dover | PHOTO C/O WESLEY COLLEGE

DOVER – Delaware State University is reportedly in the final stages of talks to acquire cash-strapped Wesley College, and a formal agreement could come sometime this summer.

A deal would still have hurdles to clear, including getting outside support for helping fund the acquisition, a deeper review of Wesley’s finances, and approval from DSU’s accrediting body, according to sources close to the talks.

During Clark’s tenure, Wesley has reduced expenses and improved its range of academic offerings, but it has been battling well-documented financial challenges, including declining enrollment and falling revenue, a situation that was not helped by the university needing to refund room and board costs to students during the pandemic.

Wesley President Robert Clark declined comment on any prospective merger partners, citing a confidentiality agreement, beyond saying that “discussions are moving forward in a positive manner.”

“Like a few of our sister institutions in the state, we have talked with Wesley about their future,” DSU Chief Operating Officer Cleon Cauley told DBT in a Tuesday statement. “They have strong academic programs and have long been a valued pillar of the Dover community. They are also a minority-serving institution which is a federal designation and emblematic of their student demographic profile. In many ways, their students are very similar to ours, so we care about their ability to provide greater access to students from underserved communities. While we have no definitive agreements with Wesley, we want to be helpful wherever we can.”

According to Wesley’s website, undergraduate enrollment was 1,035 for fall 2019, compared with 1,228 for fall 2018, 1,447 for fall 2017, and 1,600 for fall 2013. Wesley’s minority population is above 60%, according to its online Fact Book.

Wesley students and their parents may welcome a DSU acquisition. Full-year tuition and fees at Wesley for the 2020-21 school year is just over $27,000, while DSU’s published tuition and fees for the upcoming school year currently stands at $8,258 for in-state students and $17,294 for out-of-state students.

Wesley’s nursing program is one of the best in the state and provides a large portion of Delaware’s health care workforce. Its accredited Master of Occupational Therapy program, which Wesley started when Clark arrived at the university, is the only one in the region. In 2019, the school had roughly 400 to 500 applicants vying for 40 nursing program slots, and its first class from the occupational therapy program had a 2019 pass rate of 100%, which is significantly higher than the national average, Clark said.

There has been some debate over whether Wesley, as a private school, should receive state funding.

Clark, the former commandant of the U.S. Naval Academy who came to Wesley in 2015, argued in September that Wesley should be eligible for state funding since more than 50% of Wesley’s students are Delawareans and more than 80% of its graduates stay in Delaware after graduation. Additionally, he said, “Wesley employs 500 people from full professors, students, staff, maintenance, adjuncts, and we provide $80 million a year – and that’s conservative – to our region.”

The state did provide a bit of a lifeline earlier this year when Wesley was approved to receive up to $3 million, buying the school additional time to find a merger partner. Since 2018, the private college has received a total of $6.375 million from the state.

In addition, Wesley received $1.5 million in stimulus funding from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, half of which is required to go to student relief.

Wesley reportedly had discussions in February with Central Florida-based Saint Leo’s University, a Catholic university that aspires to become one of the largest faith-based universities in the United States.

Over the past few years, Saint Leo’s has walked away from other acquisition deals with schools in similar situations to Wesley, in part because of balance-sheet concerns. The Florida-based private university with 35 regional locations across seven states will also be closing 17 campuses over the next few months and shift solely online, according to a university statement sent to the Tampa Bay Times newspaper.

People familiar with the current negotiations said the acquisition is contingent on DSU’s ability to get support from sources beyond the Delaware General Assembly. The General Assembly has barred Wesley from requesting any more funding from the higher-education investment committee or any other state agency. Legislators and Dover officials have expressed deep concern about the impact on the city should Wesley and its 50-acre campus be forced to close.

As Wesley has worked through its financial challenges, it redirected $1.375 million in state funding earmarked for renovations to the Dover Public Library to help meet operational expenses.

Clark said in September that Wesley has reduced operating expenses by close to $3 million, “looking at everything from how you handle consumables to what types of lights you use.”

After his arrival, the school started renting out its residence halls during the summer. The first year, it grossed around $145,000, made a few changes, and it was expected to generate nearly $300,000 in 2019. But much of that revenue won’t be happening in 2020 as the state slowly reopens.

This is a developing story and will be updated as further details emerge.

— Peter Osborne

posborne@delawarebusinesstimes.com