May 31, 2014

‘Sins of fathers’ threaten to sink S.C. State

Did legislative leaders who say they want to save financially struggling S.C. State University cripple the state’s only historically black public college with deep funding cuts during the Great Recession?

Did legislative leaders who say they want to save financially struggling S.C. State University cripple the state’s only historically black public college with deep funding cuts during the Great Recession?

That’s what some trustees think at the cash-strapped, 3,100-student Orangeburg school.

“The primary problem has been the unequal distribution of funds (among S.C. colleges),” trustee Carlotta Redish said during a board meeting late last month. “That’s blatantly obvious.”

But that belief does not hold water, according to an analysis of state budget data by The State.

True, lawmakers cut S.C. State’s annual state funding deeper than any other S.C. four-year public college between 2007 and 2013. But those cuts were only slightly larger than the average.

And, despite those cuts, S.C. State still spends more per student in state money than any other public school.

Meanwhile, the school also suffered the steepest drop in enrollment of any S.C. public college – losing 1,470 students – since the start of the economic downturn.

Why? The blame ranges from upheaval in S.C. State’s administration to, some S.C. State officials say, negative media reports.

“They travel together,” Senate President Pro Tempore John Courson, the Richland Republican who is head of the Senate’s Education Committee, said of the relationship between S.C. State’s falling student body and state money.

‘If you’re not around ...’

The state’s only historically black public college is working on plans to rebuild its enrollment and improve its academic programs. President Thomas Elzey estimated last month those plans would cost $50 million over a five-year period.

But S.C. State officials insist it will be money well spent.

“You can’t develop a state leaving a sizable portion of your citizens behind,” S.C. State trustee chairman William Small said after that board met late last month.

S.C. State, however, has more immediate problems, lawmakers say.

“It’s good to plan for the future,” said Senate Finance Committee chairman Hugh Leatherman, R-Florence. “But if you’re not around, then future planning isn’t much good.”

After years of running deficits, the school has run out of money.

To meet its most recent payroll, it needed to tap into a $6 million loan from the state. The school could end up using nearly all of that loan this month, for salaries and debt payments.

That would leave little to pay $13.6 million that the school owes vendors, including the company that feeds students who live on campus.

“I’m not sure anybody really knows at this point the financial condition (of S.C. State),” said Leatherman.

Withering ‘on the vine’

Legislative leaders, including Leatherman, say they want to preserve S.C. State and its unique role in the state.

But trustees chairman Small said he is not sure of everyone’s intentions in Columbia.

“There are a lot of people up there who wouldn’t want it said that they hurt S.C. State but wouldn’t mind that S.C. State withered on the vine,” he said.

Small did not identify those lawmakers but said he was not referring to Leatherman.

Excluding one-time items, S.C. State’s state funding has dropped by 49 percent since the start of the recession, the most of any state four-year college, according to an analysis of state data.

The 11 other four-year public colleges lost 42 percent of their funding on average. Funding at the state’s two largest colleges, University of South Carolina and Clemson University, dropped by 41 percent.

But S.C. State’s Small said lawmakers should change the spending formula for his school, which does not get as much corporate and alumni backing as bigger schools, and caters to students who have not been exposed to the same “enrichment and support opportunities as others.”

For example, Small said S.C. State might need more academic counselors, different curriculum and smaller classes to aid students than other public schools.

“I have an issue with one-size-fits-all,” Small said. “Although we have excellent students, our mission, in many respects, imposes on us a greater expense to take a student who’s been educationally underserved and bring that individual up to speed. ...

“Why are we the only (public historically black college or university) in the state? Because there’s special reasons for our existence. What is the value placed on those special reasons, both in terms of social value and economic need?

“I’m not interested in seeing S.C. State become a little University of South Carolina. We’ve got a special niche to serve and can do it better than anybody else.”

S.C. State already gets some extra money from the state each year.

The school is the only public college that receives a direct annual infusion of money from the state lottery’s profits, collecting $2.5 million a year, S.C. higher education officials said.

‘Sins of our fathers’

The heart of the Orangeburg school’s financial problems is its shrinking student body.

S.C. State’s enrollment has slid 30 percent since 2007, compared to an average gain of 11 percent among all other four-year S.C. colleges. Only one other public school in the state, Rock Hill’s Winthrop University, lost enrollment over the past six years.

S.C. State leaders blame the drop in enrollment on cuts in federal financial aid as well as negative media reports about the school’s finances. For years, the college has run deficits, covering them with loans from a community grants program. Also, the school’s administration has been in turmoil for years with several new presidents, a board undergoing a legislatively mandated makeover and a former trustees’ chairman indicted on public corruption charges.

“There are enough sins of our fathers to explain the condition of S.C. State,” inside and outside the school, Small said.

S.C. State’s shrinking student body has put it atop four-year schools in a couple of areas.

The school receives the most state money per student among four-year colleges, and it has the lowest ratio of students to full-time faculty members among those public schools, according to an analysis of state data.

The school received $3,597 per student this year – $210 more than USC and $975 more than the average for all four-year public colleges.

S.C. State has 17 students for each full-time faculty member compared with the state average of 21 students.

Small said those numbers simply are a result of losing students. “That, to me, is not a barometer of health.”

‘Straighten out what’s going on’

To help S.C. State, the school has received a $6 million loan from the state in recent weeks. Sen. Leatherman also has organized a panel of current and past S.C. college presidents to work with S.C. State trustees to develop long-term financial solutions.

The exact role of the presidents panel, which includes University of South Carolina president Harris Pastides and former Clemson University president Jim Barker, still is being negotiated. But an organizational meeting was held last week.

The S.C. House wants to add administrators with financial expertise to that panel.

“They need to come in and help straighten out what’s going on at S.C. State,” said House Ways and Means Committee chairman Brian White, R-Anderson.

Meanwhile, S.C. State’s accreditation remains under “warning” status from the Southern Association of Colleges and Schools because of its troubled financial and governance issues.

The college will avoid any further warnings about governance issues as long as its trustees continue to have final say on its future, Southern Association president Belle Wheelan said recently. That association will review S.C. State’s year-old warning status the week of June 16.

Lawmakers said they do not want to get involved in S.C. State’s day-to-day operations.

“Our goal is to take care of the vendors, (and) make sure the students are fed and being taught so they can get to graduation,” Rep. White said.

Small said he appreciated the expertise that Pastides and the other presidents can bring about universities. But, he added, he was unaware if they had any experience handling issues at historically black colleges.

“You have to know about the product you’re fixing,” Small said.

Exacerbating that just-below-the-surface tension, the sole African American on Leatherman’s advisory panel, former S.C. State president Ernest Finney, has stepped down, citing health reasons. (Finney will be replaced by an African American, Leatherman said.)

S.C. State also is required to receive more help as part of its $6 million loan with the state. That agreement requires the school to spend as much as $500,000 on a financial consultant.

Meanwhile, bits of that loan are going to have to help keep the school running until the state’s new budget year starts July 1, freeing S.C. State’s 2014-15 appropriation.

The school received $600,000 from the state loan to meet its payroll last week, according to state budget officials. In addition, the school requested $247,000 to help make a bond payment.

Elzey, who arrived at S.C. State about a year ago from The Citadel, also said he plans to request $700,000 to make a June debt payment and could seek help to make payroll in June, expected to be $3.5 million.

If S.C. State ends up using its $6 million loan to pay salaries this month, that would leave little to pay the $13.6 million owed vendors from this school year – the deficit that brought the school’s financial crisis into public view this year.

‘Nothing has ... been a surprise’

When the school received the loan early last month, Elzey told state officials that S.C. State had enough money to cover payroll and debt payments through June 30.

But that changed, after what Elzey called “miscalculations” in projections. A report submitted to state budget officials said S.C. State inaccurately estimated its payroll, federal reimbursements, sums due students for refunds and a $300,000 payment made to the school’s campus food-service provider.

How that happened remains unclear. Efforts to reach Elzey last week were unsuccessful.

The change in those budget projections surprised some lawmakers. While tired of its campus controversies, those legislators say they remain committed to the school.

“Frankly, nothing has transpired at S.C. State University in the past 10 years that’s been a surprise,” Senate leader Courson said. “Having said that, I have confidence in president Elzey to get this in order.”

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