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Editor's Note: This story misattributed to Louis DeJoy a statement that lawyers for the school and for Bank of America reviewed the decision to put the endowment up as collateral on the college’s debt. The statement should have been attributed to restructuring officer Edward Sanz.

GREENSBORO — As administrators of the city’s second-oldest college rang up a $19 million debt since 2001, neither faculty nor most of the board of trustees knew how high the bills would run for Greensboro College.

Until the controller sent out a campuswide e-mail in advance of a July 18 News & Record report, faculty leaders say they were not told that the school had pledged its entire campus, endowment and all remaining real estate as collateral to Bank of America.

In the wake of President Craven Williams’ retirement, which the college announced effective immediately July 7, an interim leadership team convened a series of closed meetings last week with faculty and staff. They announced 10 layoffs due to the fiscal crisis, but vowed better communication.

Since Williams’ departure, the governing board of trustees has declined to be interviewed. But former trustees who served recently paint a picture of a 40-member volunteer board that was mostly removed from financial decision-making.

“There wasn’t a whole lot up for discussion,” recalled former trustee Tom Wright. “There would be a plenary session, but anything presented, it was as if the financial committee had already reviewed it.”

Said another former trustee, Richard Levy: “If you’re told, 'Everything’s running OK,’ and you’re not told about problems, you don’t go looking for them. You’re there to help.”

Faculty members and staff, likewise, appeared blindsided when Williams announced a 20 percent pay cut and a reduction in benefits in April.

Faculty member Cheryl Brown, chapter president of the American Association of University Professors, called the predicament a “wake-up call” to trustees and faculty to seek more openness.

“Trustees have an amazing amount of power. They’re starting to understand that,” Brown said. “Before, it was concentrated in just a few hands. When times are good, nobody cares who’s making the decisions.”

The biggest decision so far — to put up the endowment fund that is the college’s $12 to $15 million nest egg — came at the insistence of Bank of America. The bank made this a condition of granting the college further credit, said investment committee chairman Louis DeJoy.

Attempting to meet payroll in June, and having already pledged its real estate, the college agreed to sign over the endowment fund as a guarantee on its long-term debt.

Chief restructuring officer Edward Sanz said lawyers for the college were assured by lawyers for the bank that, like a college campus, an endowment could be put up as collateral.

But a policy analyst for the Washington, D.C.-based National Association of College and University Business Officers said it is rare, if not unheard of, to use an endowment for this purpose.

The analyst, Kenneth Redd, said that putting up such a fund runs counter to generally accepted accounting and endowment investing principles.

Asked what the possible risk might be, the former president of a nearby religious-affiliated college gave a worst-case scenario: “If something happens — like the college goes under,” said Rev. Brian Donley, retired president of John Wesley College in High Point, “you could get into difficulty with the families who gave the endowment.”

Donley observed that at small, tuition-driven colleges, the only two sources of growth in revenue are through gifts and enrollment.

Both are uphill struggles at the moment: major gifts, because of the economy, and enrollment, because there is such an oversupply of colleges and universities from which to choose, including public schools that cost a fraction of Greensboro College’s $30,000 annual tuition.

Much of the college’s debt stems from Williams’ vision to grow the campus and set it apart, through purchases including the YMCA, the University Inn and J.C. Price School, an ambition few fault.

“We’re a little landlocked campus, and they were great acquisitions, I think,” said Brown, who teaches sociology and criminal justice. “If we had been able to pull it off, we would look brilliant. And who knows how it will look a few years from now?”

Wright, the former trustee, estimates Williams raised $50 to $70 million in his tenure.

“He was doing a good job until things went south on him,” Wright said.

“I think his luck ran out.”

Contact Lorraine Ahearn at 373-7334 or lorraine.ahearn@news-record.com