March 5, 2014

SC State says it needs cash by April to avoid campus disruptions

S.C. State University says it needs money by next month to avoid interruption of some campus services. But how the cash-strapped school will get that help remained unclear Wednesday.

S.C. State University says it needs money by next month to avoid interruption of some campus services. But how the cash-strapped school will get that help remained unclear Wednesday.

The school is $13.6 million behind on its bills with some unpaid since October, president Thomas Elzey told state budget leaders Wednesday.

A dozen vendors have told the school they could cut off services, including those who provide food to students, washing machine maintenance in dorms and materials for the school bookstore, Elzey said.

“We’re getting calls,” he said.

Elzey, whose school is undergoing two separate state financial reviews, went before the S.C. Budget and Control Board asking for direct aid to make the state’s only historically black public college whole going into a new fiscal year that starts July 1.

The Orangeburg university, alternately, could take a loan to pay bills but that would add to its debt load, he said.

The budget board, led by Gov. Nikki Haley, took no action, suggesting Elzey try to get the money from state lawmakers, who set the state’s budget.

But no definitive solutions were offered by General Assembly leaders Wednesday, though they said they want the school to succeed.

Going through the budget process would not get S.C. State money in time, officials said. Senate President Pro Tempore John Courson, R-Richland, who handed Elzey a $1,000 personal check for the school on Wednesday, suggested the school might need to make more cuts.

A loan, approved by the budget board, would give the college money more quickly than the state’s budget process. But Republican Haley wants to see the results of a state inspector general’s report on the school’s finances, which is expected in a few weeks.

The state should “not just find a Band-Aid patch, but say what went wrong in the first place, and what do we do to make it a strong university again?” Haley said.

House Ways and Means chairman Brian White, an Anderson Republican who sits on the budget board, said he wants more details about how much S.C. State owes and the dates when vendors will cut off services.

The state budget office is reviewing the school’s finances after Elzey alerted officials about the cash shortfall last month. That review, expected to take a few more weeks, would give lawmakers a more clear picture of how to react before services are interrupted, White said.

“The kids down there need to know, with the time and money they have invested in S.C. State, that they are going to be able to graduate and get a degree,” he said.

S.C. State has enough money to pay its 1,045 employees through the end of the state’s fiscal year on June 30. White suggested Elzey consider taking some of the employee pay to cover unpaid bills, which would buy the school more time while lawmakers decide how to help with the shortfall.

Without help from the state, Elzey said he would negotiate with vendors to keep services going but did reveal any more specifics.

Meanwhile, S.C. State also says it needs money to remain academically competitive. The college requested $2.5 million for its nuclear engineering program and maintenance from a Senate panel Wednesday. S.C. State plans seek $2 million to $4 million a year in new money for upkeep and new programs.

S.C. State has been hurt by shrinking enrollment, budgets devised in anticipation of a larger student body that failed to enroll, and cuts in state funding and federal student financial aid, Elzey said.

S.C. State’s enrollment was nearly 4,900 in the fall of 2007 but shrank to 3,100 this spring. Each student lost costs the school $14,000, Elzey said. That translates into $25 million of lost revenue.

In the past, the college’s shortfall was covered over by shifting money around, said Elzey, who arrived at the school from The Citadel in June. Elzey said he needed months, after arriving, to unearth the depth of the school’s financial woes.

“We knew we were walking into a hornet’s nest,” he said.

The school remains under warning from the Southern Association of Colleges and Schools that its accreditation is in jeopardy. That group is concerned about the school’s financial health and governance — issues that date back before Elzey’s arrival. All but a few of S.C. State’s trustees also are new, many elected last year by legislators upset with the school’s direction.

Despite new leadership, the school’s struggles over the past decade still sting. Rep. White expressed reservations about giving the S.C. State more money without assurances about spending.

Elzey promised a quarterly update on the college’s progress and to account for how it spends any money lawmakers give the school. He also promised to balance the school’s budget next year if it can get help with the shortfall.

The S.C. House’s main budget committee already has approved a deficit-monitoring team to help the school reach financial stability by July 2015.

S.C. State has worked to fix its money problems, including cutting staff, Elzey said. More cuts, including eliminating $1 million in spending on low-performing academic and athletic programs, are planned. The school also has raised its tuition.

Some efforts are working. S.C. State has attracted more applications to attend and increased its fundraising. Elzey said he and his wife have attended college fairs, where he reassures students about the school’s future.

“We are going to be up and running, and offering the kind of quality education that S.C. State has always provided,” Elzey said.

University of South Carolina president Harris Pastides, who sat through Elzey’s presentation Wednesday, pledged the state’s flagship university’s support for S.C. State. “Unfortunately, he can’t just turn the page,” Pastides said. “He asked for and deserves some time.”

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