March 8, 2014

How the state, leaders failed SC State

There is lots of blame to go around for South Carolina State University’s $13.6 million cash shortfall, top state lawmakers and alumni say.

There is lots of blame to go around for South Carolina State University’s $13.6 million cash shortfall, top state lawmakers and alumni say.

Blame legislators and S.C governors. The state has not provided enough money to the state’s only historically black public college, critics say. Also, legislators and Gov. Nikki Haley say they that even today – after a decade of rumblings about problems – they are not sure what is going on or how to help the troubled Orangeburg school. In part, one legislator said, that ignorance stems from the state’s white political leaders’ fear of being “considered racist” if they crack down on the state’s only historically black public university.

Blame the school’s leadership. Meddling trustees led to near-constant turnover in the president’s office. School leaders also papered over years of accumulated debt.

Blame the federal government. Financial aid cuts have helped slice S.C. State’s student body to just more than 3,000 from close to 5,000 in just six years.

That combination has left S.C. State with unpaid bills, dating back to October. Now, some vendors are threatening to cut off services next month, including food for students, if the Orangeburg school does not get money from the State House, university president Thomas Elzey said last week.

Elzey asked for a direct infusion of $13.6 million, $1.1 million more than all of the state money that the school received in this year’s budget.

State leaders say they want S.C. State to succeed and give Elzey, who only arrived in Orangeburg in June from The Citadel, time to fix the school’s problems. But they did not give the school money last week with some officials citing years of financial woes.

“I have to be convinced that whatever we do down there will be a good investment for taxpayers,” said Senate Finance chairman Hugh Leatherman, R-Florence.

Legislators clearly do not trust what they are being told about S.C. State.

Asked about Elzey’s report of impending interruptions to campus services, Leatherman said, “I don’t know if that’s correct or not. That’s what they say.”

The school is under scrutiny from two reviews by the state’s budget division and inspector general. Meanwhile, the S.C. House has proposed a deficit-reduction panel, which has support from Senate leaders, to look into the school’s finances.

While Elzey was praised for facing tough questions at budget meetings last week, the ranking Democrat on the House budget committee said it was she, not the university president, who sounded the first alarms to state budget officials about the school’s deficit.

“It all bubbled up from the bottom,” said state Rep. Gilda Cobb-Hunter, who represents S.C. State’s hometown in the House.

What’s the problem?

The state has failed S.C. State, several observers said.

Start with state funding. This fiscal year, the state gave S.C. State $11 million less than in 2007-08 – roughly half of what the school had received. To offset that revenue cut, S.C. State has made cuts – but not enough.

Some education officials say S.C. State never has received its fair share of state funding.

“S.C. State is a second thought,” said Cleveland Sellers, president of Voorhees College in Denmark, who was jailed after a 1968 civil rights clash police on the Orangeburg campus. “S.C. State is not looked at as a full partner in the state.”

Sellers said state leaders did not always answer calls for help from S.C. State because of race issues.

“You don’t just say, ‘They can figure it out,’ ” Sellers said. “You have to engage and help them.”

The school also suffers from a small fundraising base and endowment compared to the much larger University of South Carolina and Clemson University. That forces S.C. State to rely on tuition, said state Sen. John Matthews, an Orangeburg Democrat and S.C. State alumnus.

“It’s a real Catch-22,” he said.

S.C. State has been hurt by its falling enrollment.

President Elzey, who did comment for this story, told a state Senate budget committee that each student that S.C. State has lost, as its enrollment has plummeted, has cost the school $14,000. That means that S.C. State’s falling enrollment over the past six years has cost the school nearly $25 million.

But problems also came from the school’s board room.

U.S. Rep. Jim Clyburn, a Columbia Democrat who has a $2 million endowment at S.C. State, links S.C. State’s current woes to the 2007 firing of president Andrew Hugine in a dispute with trustees. The removal of Hugine, a longtime S.C. State employee, began a period of unrest in the president’s office that led to a series of six new interim and permanent leaders.

Cobb-Hunter said legislators also have failed, not vetting trustees for S.C. State. Instead, legislators deferred to fellow lawmakers who were S.C. State alumni, from the school’s home county of Orangeburg or black caucus members, she said.

“(Trustees) could be described as nice but not having the kind of skill set that the university needs to move it forward,” she said. “There is a tendency in the General Assembly not to have level of scrutiny there because of a fear of being considered racist. ... We’ve enabled incompetence on some levels because of our lack of attention.”

In some cases, the result was worse than incompetence, prosecutors and others allege.

A former trustees chairman is facing federal corruption charges. The school’s accreditation agency also cited over-reaching by micromanaging trustees to issue a yearlong warning to S.C. State.

Matthews said some lawmakers tried to warn their colleagues about some of the trustees.

“They were wolves in sheep’s clothing,” he said. “Some people still supported them.”

Matthews said the interference of trustees in S.C. State’s day-to-day operations created “an environment where the parents began to lose some faith in the school and that hurts the enrollment.”

Continued news coverage of S.C. State’s woes also hurt, Matthews said. “Most parents don’t read the details, they just read the headlines.”

Clyburn said he could not blame his grandchildren from balking at going to his alma mater.

“Who wants to go with all this controversy?” he said.

Real and fiction

Lawmakers say they have been hearing about problems at the school for a decade. But only in recent years have they learned the depth of the issues.

“What they were doing was shifting funds so at the end of the year it looks like your operating in the black,” Cobb-Hunter said. “You were borrowing from Peter to pay Paul. You can only do that so long.”

Leatherman and House Ways and Means chairman Brian White, R-Anderson, say they do not know what the state could have done differently to help S.C. State avoid its cash woes.

“The issue has been going on for a long, long time,” Leatherman “I’m not really sure I understand what the issue is. Obviously, things have not been done correctly.”

Leatherman said he does not think a higher education warning system is needed, noting that other schools do not have problems like S.C. State’s. He added that other state colleges have offered help to S.C. State with personnel and expertise, but he was unaware if Elzey has accepted any assistance.

House Speaker Bobby Harrell, R-Charleston, said the General Assembly has paid attention to the problems at S.C. State, citing a bill that he co-sponsored, which passed the House last year, that would have replaced the school’s entire board.

But the agency that accredits colleges warned against the move, and the bill died in the Senate. Now, he added, news of the school’s deficit has pushed the issue to the front burner.

“It looks like things have finally come to a head enough that we can get something done,” Harrell said. “The forthrightness of the school to talk about its problems is actually refreshing and will actually help us solve the problems. In the past, it’s been hard to figure out what was real and what was fiction.”

New leadership

Elzey is part of a makeover of the school’s leadership that also has included nine new trustees on the school’s 13-member board since last year.

Elzey told state leaders last week that he knew he was heading into a hornet’s nest when he took the S.C. State job.

The former chief financial officer at The Citadel, Howard University and Drexel University, Elzey said he needed several months after arriving in Orangeburg to get a handle on the school’s finances while bringing in new staff.

Elzey said he found the school was budgeting for a larger student body than actually was enrolled and using stop-gap measures to cover deficits.

S.C. State has enough money to pay its 1,045 employees through the end of the state’s June 30 fiscal year but is not paying its bills for food service and maintenance.

“We might not like them, but he’s bringing back the answers that we needed,” said White, the S.C. House budget boss.

But Cobb-Hunter said it took her pushing for lawmakers to learn about the cash shortfall in Orangeburg.

Cobb-Hunter told the state’s budget division about reports of a deficit at S.C. State in early January, just before the legislative session started, according to a timeline provided by the budget office.

However, the budget office was not quite sure whom to contact at the school about the issue due to recent administrative turnover, Cobb-Hunter said.

She said she took the step “to bridge the gap with all this revolving door-administrations. ... As a new president, it was not clear to me that (Elzey) fully comprehended that that was a step that was necessary.”

Despite budget office warnings in September to all state agencies to report any deficits, S.C. State only told a House panel that it was suffering a cash shortfall in mid-January.

That set off a series of letters between state budget officials and the school that eventually led to orders that S.C. State develop a deficit reduction plan in late January.

The school submitted a plan that includes cutting low-performing academic and athletic programs, boosting tuition and finding ways to attract more students.

State budget staff will visit the school this week to gather more information about the severity of S.C. State’s deficit.

White and Leatherman say they want to see what the state budget division turns up before making recommendations to help with the $13.6 million shortfall.

Gov. Haley has said she wants to see the results of a report by the state inspector general before seeing how the state can help the school. That help could include a temporary loan until the school receives new state funding for its next fiscal year, which starts July 1.

"As always, the governor wants to know the full story before taking any action that potentially involves spending taxpayer dollars," Haley spokesman Doug Mayer said.

What went wrong?

S.C. State says it needs almost $14 million from the state to offset its financial shortfall. Why?

Falling enrollment. S.C. State’s enrollment has dropped by almost 2,000 students in just six years, costing the school $25 million in lower tuition payments that were not offset by cuts in spending.

Falling state support. State funding of S.C. State has fallen by roughly 50 percent since 2007-08.

Revolving-door presidents. Since the 2007 firing of president Andrew Hugine, S.C. State has had six interim and permanent leaders.

Inept oversight. Until recently S.C. State’s trustees tried to micromanage the school, sometimes to their own advantage – a former chairman will face federal fraud charges this summer. Also, legislators failed to properly vet candidates for the school’s board of trustees and get to the bottom of decade-old rumblings of problems at the school.

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