A fading email print-out on the staffroom noticeboard at the Wirral Metropolitan College, Birkenhead, reads: "All is well." There it has remained since a fateful day in January 1999 when Jenny Shackleton, the former principal, typed those three words after a board meeting in the vain hope that her senior management team would believe them.
But the succession of events before and after woefully belied them: revelations of debts of more than pound;9 million, the threat by David Blunkett, the Secretary of State for Education, to dismiss the entire board, their ignominious departure, her early retirement and 170 staff redundancies.
Eighteen months on, David Murray, the Merseyside college's finance director, believes all is well, cash-wise at least. This spring, he cleared its crippling bank overdraft and could see an end, sometime in 2001, to the debt repayments the college must make to the Further Education Funding Council. "And we have our credit days (the time it takes to clear recurrent debts) down from 165 to fewer than 40," he says.
This is not just a money man talking. The depth of human misery is all too obvious. "We had staff paying out of their own pockets to help students. For example, the Construction and Industry Training Board would not supply materials. The students had paid the college but the college had not paid the CITB."
The Wirral's recovery plan has been hailed by the Association for College Management as a model to follow. The Further Education Funding Council says it is the best it has seen. More than that, the steps involved under the stewardship first of Joe West - the troubleshooter who came in from St Helens immediately after Shackleton's departure - and in more detail under Ray Dowd, the principal appointed last May, are seen as a model for avoiding crisis.
At the heart of it all was a skills audit: a review of what the college's goals are and to discover which staff have the skills to match the jobs. Dowd says: "No college should wait until crisis point before considering such issues."
But post-incorporation, college after college chose instead to deploy aggressive redundancy programmes - voluntary packages, first come first served - at the first sign of an economic (or student number) downturn. Often, everyone had to reapply for their jobs, with compulsory redundancy as a sword of Damocles.
Such signs of trouble, however, were usually too late, as at the Wirral, where an earlier round of mass redundancies compounded the debts and depth of staff hostility.
The second strand of the model recovery plan is the effort necessary to galvanise the community. After the controversial departure of Wirral's board in January 1999, John Conlan, the chairman of the local training and enterprise council, stepped in as chair of governors. "There were painfully obvious weaknesses," he says.
The message that came across from staff was that Shackleton was a "control freak and poor delegator". She had powerful links with the Labour party and friends in high places. It won her positions of influence. Feted by Blunkett and his aides as a star, she was soon on the National Advisory Task Force for the New Deal. But locally, she had made enemies. And Conlan, convinced that the college's finances were in a worse state than many suspected, admits to deploying those enemies in a pincer movement around her. "I got the TECs to disown her annual strategic plan. It went into Coventry (the FEFC's HQ) and they put the boot in." <> As the fateful "All is well" January day passed, financial records show that a series of misjudgments had cost the college dear. A new business and management centre in the heart of Birkenhead had cost around pound;5 million, partly because of protracted legal wrangles with builders. Its resale value was just pound;2.7m.
Shackleton had the overwhelming majority of the community against her with the earlier sale of a site at Withens Lane, Wallasey. And her answer to mounting debts was the threatened closure of another site, Carlett Park, that united Labour and Conservative councillors by 55-7 against her plans.
"There are no remaining rational arguments against the sale of Carlett Park," she had said, even as it became clear that ministers were distancing themselves from a potential embarrassment and making it quietly known that the Wirral was to be the first victim of their zero tolerance crackdown on failing colleges.
Following her departure, Conlan moved swiftly to win over the community. The Carlett Park sale was dropped, three neighbourhood colleges were given expansion programmes, reversing Shackleton's centralisation plans, and key players in the local council and TECs were invited on to the college's board. Under Shackleton, these councils had refused to get involved. "I was appalled at the virulent attitude to us," says Conlan. "No one would support a building expansion programme. We had to move fast. The secret of how to do it is to have the people with you and behind you."
Jared Allen, head of facilities, echoes this point in relation to any future community expansion. "We had to cut our accommodation from 54,000 square metres to 28,000, so we are looking to expand our outreach provision in the Wallasey area." He says that means using community accommodation - schools and social centres.
With the skills audit complete and community representatives back on the board, the next step of the recovery plan was to offer immediate prospects for expansion. With an appallingly low post-16 stay-on rate of 10.6 per cent in the Wirral, the college had the lion's share of students.
Sue Higginson, head of marketing, says: "The first thing we needed was the effective marketing of a curriculum-led culture. It had to be planned not only to recruit but to retain otherwise socially and economically excluded students, through to higher education if possible."
It is the hardest of acts to perform when the debtors are at your door.
"It costs money to make changes, but if you spend the money well you get it back through recruitment," says Allen.
The college's management structure has been radically altered, with teams working under considerable delegated powers and reporting directly to Dowd, who holds regular staff surgeries for ideas as well as complaints.
The structure of the governing body also has been radically overhauled. The specialist sub-committee structure was abolished. Now all governors are expected to attend 12 meetings a year. The pressures have not deterred volunteers: there were 200 applicants this spring.
A senior manager used to act as clerk, but Wirral has recruited a professional clerk, Ian James, who also services the boards of Cricklade and Hadlow, having gained an inspection grade 1 for governance after eight years at Sparsholt College. As an independent clerk, he is the college legal watchdog, troubleshooter and, if necessary, whistleblower.
Such reforms minimise the chance of secrecy when things go wrong and maximise good communications on behalf of students, Dowd says. "The governors are here to make sure the students get good quality education, not to be on my side."