DOVER, Del.- A state panel has approved up to $3 million in taxpayer money for Wesley College, which has been dealing with financial issues as it seeks a merger with another institution.

The Higher Education Economic Development Investment Committee approved the directing the public funds to the small liberal arts college so long as it complies with a number of stipulations laid out in a memorandum of understanding, according to a statement released on Wednesday.

The same committee last year approved $2 million being directed to the school to help it remain eligible for federal aid. State lawmakers in 2019 also gave the college permission to use more than $1 million previously given to the school for renovations at the Old Dover Library on "unrestricted operations."

"The decision to approve these additional funds proved difficult for the Committee," said Robert Scogletti, a spokesman for Delaware's Office of Management and Budget. "However, the Committee understands that should the College cease operations the economic impact to the state’s capital – the loss of over 200 jobs and vacancy of 19 buildings in downtown Dover – would be significant. In addition, hundreds of Delawareans would have their education disrupted without a clear path to continue their education."

Among the conditions listed in the agreement is that the money can only be drawn on as-needed basis and requires weekly reporting from the school to state officials. The college must also enter into a definitive agreement with another institution, something school leaders said they were seeking in a request for funding last year.

Wesley will be under significant scrutiny, through the terms of the agreement. A copy of the MOU obtained by WBOC through the Freedom of Information Act said the college will only receive money if it provides state officials with written weekly updates on progress toward signing a merger agreement with another institution of higher education planning to operate in Delaware.

"The written weekly update shall include a date certain on the signing of such Definitive Agreement and shall be submitted by no later than the close of business Friday of each week, upon the signing of this Agreement," the MOU stated.

Should Wesley fail to reach a merger agreement, the MOU states that Wesley must agree to transfer the Old Dover Library to the state. The building was purchased by the college for $1 in 2017 from the City of Dover, which agreed to sell the building in exchange for $1 million in state transportation funds pledged by state lawmakers

However, city officials have said there are deed restrictions that allow the city to reacquire the property should Wesley no longer decide to use it for educational purposes.

As part of its MOU with the state, Wesley must ensure that Dover will not exercise that provision. Scogletti noted that the a letter of intent from the City of Dover would suffice.

Dover Council President Bill Hare on Wednesday said he was amenable to the idea of waiving the claw-back provision, noting that the city had already been "paid" for the building through the original deal.

"I don't have a problem with it, because that building is a wreck anyhow," he said.

Wesley also must provide state officials with a "Teach-Out Plan" for graduating the roughly 200 students on track to graduate this spring, about half of whom are Delaware residents.

Officials also made it explicitly clear in the MOU that Wesley is prohibited from requesting any more funding from the state.