The Grove School May Close : Van Nuys: The music institute needs to raise at least $300,000. An agreement to sell it to a Florida academy falls through.

An agreement to sell The Grove School of Music in Van Nuys fell through, and the school probably will close in September unless it can raise at least $300,000, school administrators said Monday.

The school has graduated many professional musicians active in the entertainment industry and the faculty includes Academy Award-winning composers Henry Mancini and Bill Conti.

Two weeks ago, executives thought that they had cured the school’s financial problems when Full Sail Center for the Recording Arts, a Florida-based arts school, had apparently agreed to purchase it. But Full Sail administrators changed their minds, and now Grove must find another investor.

“The tenor of the times means it’s probably going down,” said Allyn Ferguson, the school’s vice president.

The school has lost $1 million and more than 25% of its student body--dropping from 470 to 350 students--this year. Because of a state law that took effect in September, Grove was required to refund $200,000 to students who ended their studies in the middle of the session.

Cutting wages and advertising expenses was insufficient, administrators said. “We have to double or triple our advertising to get out of this hole”--adding advertising to draw in more students instead of cutting it--said Dick Grove, the school’s president and founder.

In June, Grove officials thought that the school was going to be purchased by the University of Dundee, Scotland, but the deal fell through when funding couldn’t be arranged.

After an unsuccessful effort to solicit donations from professional musicians, all seemed hopeless until, by coincidence, a Full Sail graduate applied for a job at Grove. Negotiations soon began between the two schools, with the only apparent stumbling block being whether Grove could raise $400,000 to pay short-term debts.

The school raised the money and assumed it had a deal.

“We think it’s extremely unfair,” said Ferguson’s son, Todd, a school administrator. “We wasted a lot of time and money. They strung us out for a month.”

Jon Phelps, Full Sail’s chief executive officer, declined to give details, saying Full Sail became uncomfortable with the deal.

Todd Ferguson said Grove plans to continue its current session, which ends Sept. 10. But a decision to go forward with the next quarter, which begins Sept. 29, must be made by the end of this month.

Meanwhile, the school is checking into other sources of funds. Allyn Ferguson said an appeal to representatives of singer Michael Jackson has failed so far, as have similar appeals to other entertainers.

Rachel Pollack, a Grove student and daughter of Academy Award-winning director Sydney Pollack, has started a fund-raising effort, but school officials conceded that it is unlikely to raise the necessary amount, and certainly not by the end of the month.

The Grove School of Music developed out of classes taught in the early 1970s by Grove, who had a successful career as a composer, arranger and jazz pianist. In 1979, the school was accredited by the National Assn. of Schools of Music as a non-degree-granting, private, post-secondary institution.

Since 1988, the school has occupied a 38,000-square-foot building that once housed the Daily News. Students pay about $8,500 a year for classes in songwriting, singing, sound engineering or various instruments.

Allyn Ferguson said 90% of the school’s full-time students graduate within a year, and 75% to 80% make a living in music.