HALIFAX - A financially troubled fine arts college in Nova Scotia has been given a second chance after the provincial government announced a rescue plan today.

The Nova Scotia College of Art and Design will receive a $2.4-million-dollar injection to cover the school's deficit.

The announcement follows a report that was released today by former deputy minister, and special advisor, Howard Windsor.

"Over the past months, I consulted with NSCAD's students, faculty and staff, and with leaders in the province's arts and university communities," Windsor in a statement released today. "I believe these recommendations are vital to ensuring NSCAD's future."

Windsor made eight recommendations which aim to make the university sustainable, and included a recommendation the province provide up to $2.4-million 2011-12 with conditions.

"NSCAD and the government understand the importance of the creative sector to Nova Scotia's economy and to its cultural fabric," said Labour and Advanced Education Minister Marilyn More in a statement released by the province. "We all want fine arts education to thrive in this province."

In his report Windsor also suggests that NSCAD begin collaborative talks with other post-secondary institutions, but he is not recommending an outright merger.

The school's financial plan must be submitted to More by March 31 and NSCAD must also work with a provincial facilitator to ensure it is making progress on the options for collaboration.

The province says that in return it will cover NSCAD with a one-time investment, which will cover the school's $2.4-million deficit.

"NSCAD's board of governors and administration now have a better understanding of how serious their financial situation is and how committed the province is to finding a solution," said More.

According to Windsor's report, the school's financial problems are not new nor are they a surprise. He adds that NSCAD is operating at a loss equal to more than 10 per cent of its annual budget, and that it owes roughly $19-million.

The province gave NSCAD $1.4-million to address in deficit in 2010, in addition to an $8.5-million provincial operating grant. NSCAD also received the second largest percentage funding increase – 86 per cent – of all Nova Scotia universities.

The report suggests the school's financial peril began when it decided to open its waterfront campus before all the funding was confirmed for the location.

NSCAD proceeded with $16-million in renovations to an old waterfront warehouse it rents from the Halifax Port Authority with the hope it would receive financial help from the federal government.

The province provided $4.75-million for the Port Campus in 2006, and NSCAD expected to match that amount through federal funding and fundraising, but the federal government never committed to providing financial assistance and NSCAD only managed to raise roughly $2.5-million privately.

Additional financial pressures include payroll increases and operating costs, which turned out to be roughly $600,000 more per year than was originally anticipated.

NSCAD also operates out of two additional downtown locations. Just over 1,000 students are enrolled in the university, which makes NSCAD the smallest of Canada's four regional art schools.

Read Howard Windsor's report here