SC State gets $6 million -- to ‘tread water’
04/30/2014 8:49 PM
04/30/2014 9:03 PM
S.C. State University got a promise of a $6 million state loan to help stabilize its finances Wednesday, but the college still needs additional help to cover the rest of its $13.6 million deficit.
Gov. Nikki Haley said that help could come from the Legislature, now considering a state budget for next year. But one of the Legislature’s chief budget writers said the odds of that happening are “slim and none.”
The state’s only historically black public college has $1.5 million in the bank, less than half of what it needs to pay its 1,045 employees, utility bills and bond debt in May, according to reports reviewed at a S.C. State trustee meeting last week.
S.C. State president Thomas Elzey said Wednesday he does not know when the school can start drawing money from the loan approved by the State Budget and Control Board. He said the $6 million will help the school “tread water.”
“We want to get to shore ... and get out of the water,” said Elzey, who came to S.C. State less than a year ago from The Citadel.
With dozens of S.C. State trustees, administrators and supporters filling a meeting room Wednesday, the Budget and Control Board voted 3-1, with one abstention, to approve the loan.
Haley, House Ways and Means chairman Brian White, R-Anderson, and state Treasurer Curtis Loftis, R-Lexington, backed the loan. Senate Finance Committee chairman Hugh Leatherman, R-Florence, voted against it. State Comptroller General Richard Eckstrom, R-Lexington, abstained, saying he did not support the loan but did not want to vote against aiding the college.
“We can’t leave the school alone to figure this out,” said Haley, a Lexington Republican. “We have to be part of the solution.”
The loan will come with strings.
S.C. State must provide three years of audited financial statements for the Orangeburg school and its foundations, and show that its vendor contracts are valid. The college also must use the loan, first, to pay its bond debt and, then, payroll and other bills.
The school has more than $8 million in unpaid bills dating back to August, the governor’s office said. No services have been cut. However, the school made its payroll this month only because its food-service vendor released $1.3 million in commissions, which it had withheld because of unpaid bills. The company is owed $4.8 million, the governor’s office said.
The rest of the shortfall comes from an estimated $4 million in bills that need to be paid during the final three months of the state’s fiscal year that ends June 30, according to an analysis from the governor’s office.
S.C. State’s finances have been thrown out of whack by a series of problems.
The school’s enrollment has dropped by more than 25 percent in recent years, but related expenses were not cut. Meanwhile, the school had to repay more than $6 million this year that it had diverted from a foundation to help poor communities. S.C. State had used that money to cover its deficits.
Haley, who heads the budget board, said she was hopeful the General Assembly would come up with the rest of the money that S.C. State needs.
But Leatherman called chances of that happening in the final five weeks of the legislative session, which ends in early June, “slim and none,” especially on such an “extremely explosive” issue.
Leatherman voted against the loan, calling it a bandage for “an institution that’s bleeding to death.”
Leatherman said he wanted to get more information about the school’s finances from a panel of advisers that he has created. That panel is made up of University of South Carolina president Harris Pastides, former Clemson University president Jim Barker, former College of Charleston president Alex Sanders, Francis Marion University president Fred Carter and former S.C. Supreme Court Chief Justice Ernest Finney.
The panel has held a couple of discussions and sent 26 questions to S.C. State, asking for information, Leatherman said. The panel will work with a group of S.C. State trustees to develop a financial plan for the college.
In the interim, Leatherman said, S.C. State’s vendors would wait for payments and, he added, its accreditors, who have the school under a warning status, will not act until June.
Another recommendation for S.C. State will come from a financial consultant that school must hire as part of the loan approved Wednesday. The school can spend up to $500,000 for the consultant.
Leatherman said he expects proposals to fix S.C. State’s finances from his panel and the consultant to come to the budget board for review.
But waiting, as Leatherman suggested, could further hurt S.C. State’s enrollment, Haley said. “What parent would send their child to a school that the state won’t give them money to pay their bills?”
The $6 million loan could help the school’s accreditation with the Southern Association of Colleges and Schools, association president Belle Wheelan said. But, she added, “It’s not going to get them out of the hole.”
The loan would have to be repaid within a year, according to the resolution approved Wednesday. But Haley’s office said the school could look for other options that might extend the due date.
Most vendors – including Sodexo, which feeds 3,100 S.C. State students on campus – have agreed to keep providing services with the promise that state aid is coming, Elzey said.
To save money, the school also has cut 90 positions, ended non-essential mobile phone use and started a hiring freeze. Faculty cuts are possible. The college also plans to trim $500,000 from its athletics budget, including cutting its women’s golf program and reducing the number of assistant coaches in some sports.
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