UPDATE: USM to mortgage properties, seeks moratorium on payments

~ Smith: ‘It will be a black day if USM closes’ ~

POND ISLAND–University of St. Martin (USM) is speaking to an attorney about the possibilities of putting a moratorium in place for the payment of its various creditors and is looking into taking a mortgage on its properties.

USM Vice President Wycliffe Smith told The Daily Herald on Tuesday that the goal of the moratorium is for USM to be able to pay its staff only and put a temporary stop on payments to providers that offer services to USM such as utilities and Internet, etc. The intention is to put the moratorium in place as early as December.
Smith also provided this information to Members of Parliament (MPs) during a meeting of the Central Committee of Parliament on Tuesday.
He told MPs that because USM has not received any word that it is possible to rescue the institution, USM “had to go over to second option” and is currently speaking to a lawyer for advice on filing for a moratorium.
“This would require that the staff would need to be paid throughout the period of the moratorium and we have asked the Endowment Foundation [of USM – Ed.] if they can mortgage the properties of USM so that we can get a loan to pay off all that we need to do and once we do that then we would really have to close the doors of USM,” Smith told MPs during the meeting. He said another solution would be for USM to be taken over or bought out, but that such a measure would take time and it would be “a sad moment” for USM to have to close its doors.
Smith provided an overview of USM’s history and said the “strongest reason” USM is unable to recover from its current financial crisis is the lack of Government’s commitment to implement the law on higher education and to support the university. The law is crucial and, if it is not in place, USM would be dependent on “the whims” of whoever is in authority. “So it’s a priority that the law is passed as soon as possible,” he said.
Structural funding for USM would be one of the benefits of having a law on higher education, as this would be regulated in the law. Loss of revenue from classroom rentals and lower student numbers following Hurricane Irma were also identified as reasons USM is unable to recover.
“Many students were displaced after the hurricane. They didn’t have roofs and didn’t have homes and they knew that they wouldn’t have jobs and we … [knew that – Ed.] not all of them would return to USM,” Smith said.
According to figures he provided, USM had a total of 299 students prior to Hurricane Irma, which plummeted to 127 following the hurricane. There were 193 academic students before Irma, which dropped to 63; 27 pre-USM students, which dropped to 20; 58 General Education Diploma (GED) students, which dropped to 37; and 21 English as a Second Language (ESL) students, which dropped to seven.
Smith said that when USM realised it would not be able to continue providing education, it reached out to University of the Virgin Islands (UVI) to determine whether that institution could help USM “salvage” the current semester. UVI informed USM that for this to happen, it would have to receive the subsidy USM receives from Government.
However, USM said it would still have to maintain a skeleton staff of eight persons to provide services for UVI. It would cost NAf. 57,408 to maintain the skeletal staff and cover operational expenses: NAf. 34,856 to pay staff and NAf. 22,552 for operational cost (lights, water, Internet). As USM receives a monthly subsidy of NAf. 63,750 from Government, this would leave NAf. 6,343 for UVI, which Smith said would not be sufficient for UVI.
Had UVI taken over USM, this would have meant that the existing student body would have been transferred to UVI and would become UVI students. “UVI would perform operations on the existing campus and USM will be no more. … UVI will then take over, but then looking at the finances, they cannot even help us with this semester,” Smith said.
USM has a total of 72 staffers: 28 full-time and 44 part-time faculty members. Smith said USM has not increased its tuition over the past eight years because it wanted to keep its fees affordable for students.
The institution had collected US $373,813 in tuition fees, $302,447 in subsidy from Government and $197,899 from other revenues up to October of this year. Other revenues include fees from classroom rentals, trainings and donations, which Smith said are down this year. He said the major cost-driver for the institution is salaries.
“Despite the difficulties that we have, salaries have to continue to be paid,” he said. “More than ever, when St. Maarten became a country one would have thought that the people in charge of education – the government and the Ministry of Education – would have recognised the importance of higher education and would seize the opportunity to develop local expertise to empower our people and would declare USM is a national university,” Smith said. “I think that would be the best thing for St. Maarten.”
He said any government and country that does not care about tertiary education is a government that promotes brain drain and prolongs dependency on the Dutch and on other technocrats, amongst other things.
“It will be a black day if USM closes its doors,” Smith said. He issued an appeal to MPs and the coalition of eight to not let this happen and urged the incoming interim Government to place USM on its “highest priority list” as soon as they take office. He said USM has no issues helping in a transition of the institution from a private to a national university.
Several members of the USM board were present with Smith at the parliamentary session, including board president Valerie Giterson-Pantophlet. Several MPs commented, gave their opinions and asked questions on the matter following Smith’s presentation.
Following the questions, the meeting was adjourned.

Source: The Daily Herald https://www.thedailyherald.sx/islands/71358-update-usm-to-mortgage-properties-seeks-moratorium-on-payments