Editorial: Diverted rebates latest escapade at S.C. State

July 14, 2014 

S.C. State University

ANOTHER DAY, another incredibly disappointing revelation about S.C. State University: Even as the college has struggled to keep the lights on, it has funneled rebates from contracts with vendors into foundations — to pay for discretionary expenditures.

According to a state inspector general report, over three years, S.C. State diverted $2.3 million in rebates from contracts to two school foundations, which have no legislative and public oversight. In other words, school officials have been using public money as they please, without public scrutiny.

This is a totally unacceptable practice that, as the inspector general recommends, should end. S.C. State should return all vendor money to the school, where its use would be open to public scrutiny.

Frankly, S.C. State isn’t alone in accepting rebates from vendors, and we’re wary of the general practice of public institutions participating in such arrangements.

There’s plenty of reason to be concerned. An S.C. State food service contract required that a $200,000 gift be made to the school on the first day of the pact. Given the competitive nature of such contracts, this creates an environment ripe for graft and corruption. What constitutes a “rebate” or “gift” today, given the right set of circumstances, can too easily wander into the territory of a “bribe” tomorrow.

While S.C. State officials might have viewed the rebates from the food-service contract as a windfall, students had to pay an extra $343 a year on their meal plans due to the arrangement. If students didn’t know they were paying for the rebates, we question the integrity of university leaders who would indulge in such deception.

If a rebate was to be included in the contract — and we’re not convinced it should have been — it should have been used to meet basic needs at S.C. State. While the food-service agreement includes $5 million to go toward a wellness center, the inspector general report notes that this year the college asked the Legislature for $5 million to repair a boiler system.

This is the second time this year the inspector general has revealed a questionable diversion of funds at S.C. State. An April report revealed that the college had borrowed $6.5 million from a community program to cover deficits in previous years.

It’s incredibly disappointing to see such revelations continue to be unearthed at S.C. State. Yet, it’s incredibly necessary. S.C. State is in a fight for its life. The college is dealing with a $13.6 million deficit; it received a $6 million loan from the state, but that wasn’t enough. Although school officials have cut 180 positions and made other trims, the board and president are considering still more reductions.

It’s critical that S.C. State undergo a complete and thorough examination of its affairs — from its fiscal house to its management and organizational practices to its academic programs. Any waste or questionable accounting and management practices must be addressed to ensure the university’s solvency going forward.

While much of the blame for S.C. State’s poor condition rests with the boards and administrations that have led — or failed to lead — the college over the years, this state’s governors and legislators have done far too little to provide the school with needed resources, support and oversight.

Leaders across the board must close ranks and work together to put S.C. State back on track. It won’t be a pretty or pleasant process. But with S.C. State’s long-term health and even its accreditation hanging in the balance, there is no time to dither.

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