College failure to follow VA regulations is the reason for huge loss; what kind of management does this suggest?

Vice President Clint Ewell announced at the January 12, 2016 Governing Board meeting that the College was suffering a net loss of income (profit) of $1 million dollars in the coming year in its aviation program.   This is the result of the failure of the College to comply with Federal Regulations regarding the ratio of Veterans to nonveterans that must be in the program.

The formula is simple:  A college offering an aviation program for veterans must show that 15% of the enrollees in the program are non-veterans.  For a few years the College was dodging this requirement.  However, in March, 2015 the VA caught up with it and suspended the program.

The VA program is lucrative.  In fact, so lucrative that without it, Ewell announced a net loss of $1 million dollars.  

What does this say about the present College management?