The federal Department of Transportation will close the Global Maritime and Transportation School (GMATS), the continuing education program at the U.S. Merchant Marine Academy, after 17 years. GMATS will be eliminated in July 2012, the DOT said.
The issue is that GMATS, like the officer's club, museum and some other facilities on campus, is run by off-campus groups and supported by fees and not the academy or federal budget. There are 14 of these "non-appropriated fund instrumentalities," or NAFIs, and two private foundations operating on campus, according to the Government Accountability Office. The GAO criticized the mixing of academy and outside funds in a 2009 report stating that the U.S. Maritime Administration (MarAd) and academy financial controls were lacking.
GMATS' volunteer board of directors was terminated immediately. Angry board members say they were blindsided by DOT while beginning the process of transferring the program to a new nonprofit corporation after MarAd had approved the idea. Now they are working with Congress to gain approval to keep the program afloat with a 501(c)(3) corporation.
GMATS, created to meet education and training needs of the transportation industry, the U.S. Navy Reserve and other federal agencies, employs 27 full-time employees, according to DOT.
The decision will make the federal academy the only maritime school in the country without a full continuing-education program.
"The U.S. Department of Transportation and the U.S. Merchant Marine Academy are committed to creating and serving a maritime transportation system that addresses 21st-century challenges," said MarAd spokeswoman Kim Riddle. "As part of this commitment and in response to recommendations from the GAO, the academy is taking steps to wind down the Global Maritime and Transportation School and determine its role in continuing education."
Riddle said a thorough evaluation of the industry's continuing education needs will be included in the academy's strategic planning process that began in January as part of the lead-up to its next accreditation evaluation in 2016. The academy will continue to offer an online master's degree in marine engineering.
While the USMMA Alumni Foundation had no comment on the GMATS decision, other alumni and industry leaders are upset.
Jack Noonan, a Kings Point alumnus who is chief executive of BLT Chembulk Group, a Connecticut tanker company, said "I think it's disappointing that the United States Merchant Marine Academy will not have a facility for continuing education."
Gene Story, who had been chairman of the GMATS board for the past decade, said in an interview that in the GAO report, "GMATS was never singled out. We operated with outside auditors and a board of directors. We ran a squeaky clean operation. The problem is there are no real regulations for NAFIs."
The academy's continuing-education efforts began in the 1950s. What became GMATS was established in 1994 by the alumni association.
GMATS was initially run by a nonprofit corporation, said Story, an academy alumnus and retired naval architect. But after a decade, the superintendent at the time said the school wanted control of the program and suggested it be run by a NAFI controlled by the superintendent. The group agreed and gave the school $150,000 to keep the program going.
After GAO raised questions about a Department of Agriculture NAFI, Story said, the GMATS board suggested resurrecting the nonprofit organization that had created GMATS to run the program.
He said a MarAd attorney objected, saying it would be a conflict of interest to have the original group take the program over again. Story said he then offered in 2010 to shift the operation to a new nonprofit 501(c)(3) corporation.
Last June, he said, MarAd asked his board to prepare a business plan, which it did in August with the help of a consulting firm. He said he received a call from MarAd Administrator David Matsuda in October approving the transition to a new nonprofit. He said his group began the filings to create the nonprofit corporation and heard nothing else until Dec. 8 when he got a call from Matsuda and a DOT official saying that they were shutting down the program.
He said he was told legislation would be required to allow the transition and Congress would not approve it. The board doesn't agree. Two Long Island congressman, Republican Peter King and Democrat Steve Israel, wrote to Matsuda in January about the decision. In addition to the full-time employees, the congressmen noted that GMATS has more than 200 part-timers.
"We believe a resolution can be found that preserves this important institution and these jobs without burdening the federal government in any way," they wrote.
MarAd's Riddle said, "We looked at several options to keep GMATS open. However, since GMATS cannot maintain its NAFI status, USMMA lacks appropriated funding for this activity, and congressional authorization is required to transition it to a non-federal entity, we had to make the very difficult decision to discontinue GMATS."
Riddle continued that "NAFIs are supposed to benefit agency employees, which in this case, would be academy midshipmen or personnel. However, GMATS customers are primarily other government agencies and commercial entities external to the academy. GMATS also operates in direct competition with private service providers, diverting commercial business to the federal government, another contradiction of basic NAFI principles."
"Mr. Story was told that the NAFI would be closed and that a 501(c)(3) would be a more appropriate structure for GMATS, as GMATS had earlier suggested," Riddle said. But she added that "no commitments were made on the timing of the closure of GMATS or on the disposition of the NAFI's assets to a specific 501(c)(3)."