Now that some more info has been gathered from the University. It would be a good time to come up with a direct action that involves the press. I would suggest that people flood their local papers with letters about this, as well as the local TV. The school at this point should see the "left coast" reaction to this event. It would also helped if it made more national headlines. Here in New England this hasn't made the news yet. It could.
Perhaps a march from the school to the state capital building to ask the legislature to stop the school's state aid would also be good. It appears their is support enough to make that kind of big. It would be good to notify the school first and give them a chance to negotiate, but if they refuse, I would suggest marching in protest. Then present the facts to the legislature and ask for action from them.