CINCINNATI — A cash crunch at the Union Institute & University has forced employees to do without their last two paychecks, according to internal emails obtained by the WCPO 9 I-Team.
School officials have told employees they will be paid early next week, but many are skeptical because similar promises were made in mid-March, according to one employee who requested anonymity.
The nonprofit university has been trying to arrange financing to make up for “disbursement problems” and “unpaid tuition,” according to a Mar. 16 email to employees from President Karen Schuster Webb.
“Federal funding of over $3.2 million was to have been sent to Union this fall, and the university is still waiting,” Webb wrote. “This semester, a significant percentage of our students have not paid, nor made payment arrangements, further challenging the budget.”
Webb did not return calls and emails seeking comment. A receptionist at Union’s headquarters said all employees were working remotely and none were available for comment.
“They’re not in a good place if they can’t make their payroll,” said Kelly Mulloy Myers, managing partner at the Freking Myers & Ruehl law firm downtown. “Hopefully, they can get things in order and they’re able to pull out of this.”
Myers has no clients at Union, but offered some advice to those who haven’t been paid.
“First thing they should do is contact their HR in writing so that they have a record requesting the pay and advising Union that they have not been paid,” Myers said. “The other thing employees should consider is whether or not they want to continue working for free.”
Ohio typically doesn’t pay unemployment benefits to employees who voluntarily leave their jobs, but Myers said exceptions are made for employees with “just cause” for quitting.
“In this situation, the state would likely consider nonpayment of wages to be just cause for that employee to quit,” Myers said. “So, they should definitely apply for unemployment benefits and they should receive them.”
Employees can file complaints with the Bureau of Wage and Hour Administration, a division of the Ohio Department of Commerce. Two employees have filed complaints about Union so far, but the bureau has yet to finalize its review of the complaints, spokesman Jarrod Clay said.
Myers said state law allows employees to collect penalties of up to 6% of unpaid wages or $200, whichever is larger, but it could require an attorney to collect those penalties.
Founded in 1964, Union Institute describes itself as a pioneer in distance learning. Among its claims to fame are an alumni base that includes two dozen college presidents and the first female prime minister of Jamaica, Portia Lucretia Simpson-Miller.
The school, with 17 full-time and 174 part-time faculty, had fall enrollment of 776 full-time-equivalent students in 2021, down 24% from 2018, according to the U.S. Department of Education.
Its most recent tax returns show Union did not operate profitably in 2019 or 2020, spending $4.2 million more than revenue in the two years ending in June 2020.
In August 2021, the Higher Learning Commission cited concerns about Union’s financial condition in an assurance review that followed its last letter of accreditation in 2017. Those concerns included “the continued heightened monitoring by the institutional bank and the large number of fiscal changes around the sale and subleasing of properties that warrants continued monitoring to determine success of these initiatives.”
In 2021, Union Institute sold its historic Walnut Hills campus to the University of Cincinnati for $4.7 million, relocating its headquarters to the Baldwin office complex near Eden Park while continuing to operate “academic centers” in Florida and California.
"Our online and low residency instructional models no longer require the same amount of square footage for instructional space," Webb said in a press release explaining the sale.
But Union’s finances took a turn for the worse this year, when it didn’t have enough cash to meet payroll on the 10th and 24th of March. A series of emails, distributed to more than 100 employees, tell the story:
- On Mar. 22, Webb’s Executive Assistant Susan Grace told employees that Union still working to obtain “a bridge loan” but warned it “may not have the funds secured by payroll deadlines.”
- On Mar. 24, Webb told employees she was still working to alleviate their concerns. “The world needs Union, and all of us as her protectors, as her providers, as her strength, we will not let our beloved university down,” she wrote. “Union is not closing. Our insurances remain in force.”
- On Mar. 27, Webb told employees that the school was setting up “a restricted emergency fund” to let employees apply for “an interest-free loan of up to $1,000.”
- On Mar. 29, Webb provided an update: “Union has been approved for a line of credit sufficient to fund payroll. The funds are expected to be available early next week.”
