OAKLAND CITY — Frustration and financial desperation have boiled over at Oakland City University (OCU), where a group of employees announced initiating a class-action lawsuit against the institution after going more than a month without receiving their paychecks.
The legal action follows weeks of compounding financial emergencies at the private Christian university in Gibson County, which recently announced a total suspension of its undergraduate degree programs and a wave of imminent staff layoffs.
According to university faculty and staff, multiple consecutive pay periods have passed completely empty. Tensions spiked late last week when OCU President Dr. Ron Dempsey explicitly promised workers that their two missed paychecks would finally hit their bank accounts via direct deposit.
When the mandated Wednesday deadline passed with no funds transferred, Dr. Dempsey issued an update to the campus community, stating he had been “misled” by external entities regarding the immediate availability and transfer status of the funds.
University representatives have since indicated that the capital required to fulfill the backlogged payroll was reportedly secured through private donors, but administrative and processing delays have left the money gridlocked. To permanently clear the debt, university officials revealed that their final, emergency contingency plan involves liquidating the Deaconess building located on the campus grounds.
For the university’s front-line workforce, the administrative apologies offer little relief. Dozens of affected employees report they are actively struggling to cover basic, non-negotiable living expenses—including rent, mortgages, utility bills, and groceries. Many have expressed intense anger over what they describe as a pattern of shifting timelines and deeply opaque communication from the university’s executive leadership.
The payroll freeze is the latest symptom of a severe, systemic financial crisis gripping the university, which reported consecutive operating deficits over the last two fiscal years.
Just days prior to the lawsuit’s filing, the university sent a shockwave through the region by announcing it would completely suspend all undergraduate academic programming for the upcoming 2026-2027 school year.
In an official letter sent to the student body detailing the suspension, Dr. Dempsey stated the drastic measure followed “much prayer, thoughtful consideration, and careful evaluation of the current financial realities facing our institution.”
As part of the operational freeze, OCU spokesperson Todd Mosby confirmed that the university is moving forward with severe workforce reductions, with widespread employee layoffs scheduled to officially take effect on May 31. The school had previously filed a federal WARN (Worker Adjustment and Retraining Notification) notice indicating that its entire 167-member staff could ultimately face layoffs if catastrophic fiscal conditions persist.
While its undergraduate programs are paused, OCU administrators insist the university is not permanently shutting down. The school plans to continue operating its graduate-level programs through the crisis, with the stated long-term goal of stabilizing its finances and safely resuming undergraduate enrollment by the 2027-2028 academic year.
For current undergraduate students stranded mid-degree, OCU has established a formal teach-out and transfer partnership with the University of Southern Indiana (USI) to ensure academic credits seamlessly migrate. Accommodations are also being carved out for seniors who are within 25 credit hours of graduation to complete their degrees locally.
Administrators are reportedly banking the long-term survival of the university on two fluid negotiations: an ongoing “strategic partnership” with an undisclosed secondary company, and a letter of intent from an investor group seeking to purchase a proprietary carbon capture patent currently owned by the university.
Through the class-action lawsuit, university employees are hoping to use judicial leverage to force the immediate release of their withheld wages and exact greater transparency from the administration.
Presumption of Innocence & Legal Status: All civil complaints and allegations within a lawsuit represent claims by the plaintiffs and have not yet been adjudicated or proven in a court of law.
