Burlington College defaults on loan to Catholic Diocese
Burlington College is behind on its payments to the Roman Catholic Diocese of Burlington and has financial problems that raise "substantial doubt" about the college's viability, according to a recent audit.
The school is struggling to pay off $10 million in loans it owes from buying a 32-acre campus on Lake Champlain from the diocese in 2011. Burlington College is on probation from the regional accreditation agency because of the financial trouble.
The diocese says the college defaulted on its loan payment and is charging the school penalty interest. Burlington College disagrees, but acknowledged in the audit that it is suffering financially.
President Christine Plunkett called FY 2013 one of the most "challenging years in memory" at the college with regard to money. She has assembled a "financial task force" of advisers to help.
The small liberal arts school on North Avenue bought the property with money borrowed from two sources. The diocese, which sold the property to pay legal bills stemming from a clergy sex abuse scandal, loaned the school $3.65 million. The Vermont Educational and Health Buildings Financing Agency loaned the college $6.5 million.
The school has suffered repeated losses from operations, has not met certain debt service covenants and has an unrestricted designated net assets deficit of $1.7 million, the audit says. Burlington College also extended its line of credit with People's United Bank from $650,000 to $1 million, presumably to help meet operating costs.
The audit of the college revealed facts it said "raise substantial doubt about its ability to continue as a going concern."
The college has used endowment money to cover operating expenses, the audit said.
In a response contained in the audit, Plunkett outlined ways the school plans to correct several accounting deficiencies identified by the audit, but offered no plan for how the school plans to pay its debt.
Plunkett on Wednesday declined comment on the audit or the school's financial condition. Board of Trustees President Yves Bradley also did not return a call.
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