April 24, 2014

State trying to get S.C. State funds for employees, bills, debt

State government leaders are working to get South Carolina State University money before the school runs out of cash next month, including a plan to have other college presidents advise the school about how to deal with its financial problems.

State government leaders are working to get South Carolina State University money before the school runs out of cash next month, including a plan to have other college presidents advise the school about how to deal with its financial problems.

S.C. State has $1.5 million on hand – less than half of what the school needs to pay its 1,045 employees, utility bills and bond debt next month, university president Thomas Elzey said Thursday. The school has requested a $13.6 million bailout from the state after years of borrowing money to cover deficits caused by declining enrollment and overspending.

“Our situation is urgent,” Elzey told S.C. State trustees Thursday.

Some money might be coming from the federal government next month, Elzey said. But S.C. State also is looking for help from the State Budget and Control Board. That group, chaired by Gov. Nikki Haley and including S.C. legislative budget leaders, meets Wednesday.

“I cannot tell you where the revenue stream is coming from,” said Katon Dawson, a S.C. State trustee who chairs the Orangeburg school’s budget committee. “We have no hidden money.”

The school made its payroll this month only because its food-service vendor released $1.3 million in commissions withheld because of unpaid bills, officials said.

The state would be on the hook for about $90 million in defaulted bonds and outstanding bills if the school fails, Dawson said. State leaders have said they do not want the state’s only historically black public college to close.

Haley’s office told The State on Thursday that it has floated a proposal with budget board members that would allow S.C. State to borrow up to $6 million.

The rest of the money sought by the school could come from the Legislature, which still is deliberating the state budget that takes effect July 1, the governor’s office said.

To get the loan, S.C. State would need to provide three years of audited financial statements for the school and its foundations, Haley’s office said. S.C. State would need to use the loan, first, to pay its bond debt and, then, payroll and other bills.

“The crisis at S.C. State University has reached a critical stage, and Gov. Haley’s proposal is a way for this important institution to get back on its feet,” Haley spokesman Doug Mayer said.

The university owes vendors $8.8 million as of March 31 with bills dating back to last fall, the governor’s office said. S.C. State trustees were told Thursday that the school owed vendors $6.1 million as of April 15.

Meanwhile, four S.C. State trustees will meet with a group recruited by Senate Finance chairman Hugh Leatherman, R-Florence, to help advise the school on its financial plan.

The group reportedly will include University of South Carolina president Harris Pastides, former Clemson president Jim Barker, Francis Marion University president Fred Carter and former S.C. State president Ernest Finney, the state’s first African-American Supreme Court justice.

S.C. State trustees chairman William Small said, while no one has told him directly, he understands the school must participate in the financial review with Leatherman’s group to get state aid. Leatherman declined comment Thursday.

Small said any solution needs to be sensitive of the school’s reputation, already damaged by its budget woes, adding, “Everyone has helped kill Santa Claus at S.C. State University.”

The school’s accreditation status also remains under warning from the Southern Association of Colleges and Schools.

“That’s why I’m so concerned with how this process is managed so it doesn’t contribute unnecessarily to the erosion of the confidence in S.C. State,” Small said. “This institution has served this state well. It has a very important role to continue to play in the future development of the state.”

S.C. State has been waiting for help since news of its cash shortfall became widespread at the end of January. State leaders said they were awaiting results of a S.C. inspector general’s report, which did not arrive until two weeks ago, to act.

One unnamed major vendor has threatened legal action soon if its bills remain unpaid, Elzey said. Most vendors – including Sodexo, which feeds 3,100 students on campus – have agreed to keep providing services with the promise of state aid arriving, Elzey said.

S.C. State can no longer access state money given to a program that aids poorer communities that the school has used to pay bills in recent years.

The state inspector general’s report, issued this month, found the university owed $6.5 million to the school’s 1890 Research & Extension Program, which the school had diverted to cover previous deficits. The program money was used as recently as January but has been repaid.

To save money, the school has cut 90 positions and could trim more part-time jobs, Elzey said Thursday. S.C. State also has ended non-essential mobile phone use.

The university has a hiring freeze though the school is adding staff who could bring in revenue, such as a director for online academic programs.

Elzey said the school’s faculty numbers have remained steady during a period when enrollment has dropped by more than 25 percent.

The school also plans to trim $500,000 from its athletics budget. Proposals include cutting the women’s golf program and reducing the number of assistant coaches in some sports, Elzey said.

“We don’t want the cuts,” faculty Senate president Thomas Cassidy said at the board meeting. “But we know likely they will come.”

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