S.C. State University has to do a better job of managing its money if it is going to survive. That is the bottom line of an audit presented to the university’s trustees Thursday.
The audit, for the fiscal year ending June 30, found no fraud or illegal acts. But the audit, by the BDO accounting firm, did underline S.C. State’s historical trend of spending more than it brings in.
“Each and every year, for the past five years, operating revenues have been significantly less than the university’s operating expenses,” accountant Stathis Poulous said in a 45-minute presentation.
“It’s pretty consistent year over year,” he said. “What this is really telling me is .... the university is really dependent on non-operating revenues, state appropriations, federal grants and that sort of thing.”
While the state’s only public historically black college does a good job in some areas – paying its invoices and vendors in a reasonable amount of time, for example – it exhibits critical signs of financial weakness in other areas – such as borrowing against its assets and maintaining enough cash on hand, according to the audit.
One metric in particular, used by universities to gauge their financial health, had a negative score in the most recent year. According to the widely accepted scale, a positive score of less than 1 means an institution needs to assess its viability. S.C. State had a negative score for four of the last five years.
“If this were a private institution, we would really be having a ‘going concern’ discussion at this point,” Poulous said, referring to a phrase that accountants use when they question whether an institution can survive.
The audit presentation comes on the heels of an announcement earlier this month that S.C. State has instituted a hiring freeze and an across-the-board, 7 percent budget cut in order to make up a $5.5 million deficit for this school year.
In addition to its financial woes, S.C. State has faced a number of other challenges recently, including the firing of eight high-ranking employees and the resignation of its president. The university now is looking for a new president.
“South Carolina State has always had challenges and always had financial challenges,” outgoing trustee chairman John Corbitt said. “But I think we’re on our way out of it.”
Earlier, Corbitt told trustees the school should continue to review its programs and decide if some should be discontinued.
“Downsizing. That ought to be our goal,” he said. “We can’t be all things to all people. We ought to find our niche and do it well.”
The biggest challenge S.C. State now faces, Corbitt said, is retaining and recruiting students. Enrollment steadily has declined over the last five years, dropping to 3,800 this fall from 4,933 in 2007.
“The school is enrollment driven,” dependent on student tuitions and fees, he said. “That’s our biggest challenge, that and to right-size the university. ... (W)e’re doing too much.”
Reach Lucas at (803) 771-8657.