Somerset LSC is debating the funding of the proposed merger of Cannington college with the much larger Bridgwater college.
Council managers, led by director Sally House, are studying the financial details and the results of a public consultation which ended last month.
A merger of the two colleges was proposed after Cannington received scathing criticism from the Office for Standards in Education last March.
Both colleges support a merger and say it is the best way to secure a land-based curriculum for students across the region.
Bridgwater was singled out as one of the top 10 performers in an Ofsted inspection 18 months ago. Its principal Fiona McMillan has already taken over as Cannington's acting principal from Richard Hinxman.
Cannington has been in decline since its most famous student, television gardener Charlie Dimmock, graduated with a national diploma in amenity horticulture in 1987 after three years' study.
Since then it has faced difficulties linked to crises such as BSE and foot and mouth disease But the report from Ofsted inspectors have been critical of the way Cannington, which has 3,140 students, has been managed over the past eight years.
It said: "Leadership and management are unsatisfactory. There has been little improvement in the quality of provision since the last inspection of the college in March 1998 and the quality of some aspects of provision has deteriorated.
"The college has faced major challenges in the form of reducing levels of funding and the effect of foot and mouth disease. Strategic and financial planning and monitoring have not addressed these challenges successfully.
"The financial position is weak. The college does not provide value for money. Student enrolments have declined over the past two years."
Cannington is more than pound;1.5 million in debt while Bridgwater had a pound;2.1m surplus on a pound;19.8m turnover, according to proposals for a merger submitted to the Somerset LSC.
The college called in management consultants RSM Robson Rhodes to review its finances after the inspection, and the firm recommended that Cannington merge with another institution.
RSM said it was surprised at the seriousness of the problems facing the college.
Its report said that Cannington had poor resources and weak management, and that it did not have the capacity to address its financial crisis.
The consultants recommended a merger for the college, which has been independent since it was founded by Somerset county council in 1921 as the Somerset Farm Institute.
It is on a 500-acre estate with outreach centres at zoos in Bristol and Paignton and in Yeovil. Assets include a college farm, golf course, heritage gardens, laboratories, equestrian centre and animal care unit.
It also has many commercial spin-off activities including the sale of plants, flowers and vintage wine.
It offers a wide range of land-based courses such as agriculture, animal care, arboriculture, countryside management, floristry, food science and horticulture.
Bridgwater College, which has 13,500 full and part-time students, is a more academic institution which offers 45 A-level courses and a wide range of vocational training.
Ms McMillan and her governors have stressed that they do not want the merger to hamper Bridgwater's own major building and expansion programme.
The merger proposal says: "Governors have made it clear to the learning and skills council that this development is crucial to the needs of local learners and will not be sacrificed to meet any inherited debts from Cannington college."
Somerset learning and skills council must now ensure that it can finance the turnaround of Cannington under the auspices of Bridgwater before it gives the go-ahead for the merger.
Alan Johnson, the lifelong learning minister, said in a recent House of Commons debate that the funding issue rested with the skills council.
He said: "The learning and skills council must ensure that there is the right financial basis for merger."
Skills council managers will have to move promptly because the proposed date for the merger is this August 1 and college staff will need to know that its future is secure if they are to plan ahead for the new term.