An attorney for South Carolina State University’s property manager, DTZ Inc., said Wednesday the state is shirking its responsibility to pay the public school’s debt.
The financially troubled university has acknowledged it owes DTZ more than $5 million. But a legal panel ruled Wednesday it can’t force the state – and therefore taxpayers – to be responsible for S.C. State’s debt.
DTZ attorney John Schmidt said granting the state’s request to be dismissed from the contract dispute throws S.C. State “under the bus without money to pay it.” It’s unclear whether DTZ will appeal in circuit court.
“Rather than supporting its historically black university, the state of South Carolina is trying to sidestep its responsibility,” Schmidt told the S.C. Procurement Review Panel.
He noted DTZ continues to manage the university’s buildings and grounds under a 2010 contract, despite not being paid for years.
“But the state of South Carolina is seeking to abandon S.C. State, and that’s wrong,” Schmidt said.
The review panel’s vote upheld a decision in June to let the state off the hook.
Officials expected S.C. State’s debt to reach $23.5 million by the end of that month, which included state loans not paid back. The Legislature provided $4 million in the current state budget to pay down debt – rejecting a request by S.C. State’s acting president to erase it entirely.
As of Aug. 31, the school still owed vendors $12 million. DTZ is among six companies that account for 90 percent of the college’s debt. S.C. State’s dining hall provider, Sodexo, is owed the most, at $6 million, according to a spreadsheet provided by the state Department of Administration.
Schmidt called it unconscionable for the state to expect vendors to work for free on state-awarded contracts.
Contract disputes from two other vendors, Sodexo and computer provider Ontario Investments, are pending. No hearing has been scheduled, said Delbert Singleton, director of state procurement.
“We owe them, so we’re going to pay them,” S.C. State board of trustees chairman Charles Way told The Associated Press. “We’re negotiating with them right now.”
Way took the board’s helm after the Legislature passed a law in May firing all of S.C. State’s board members and replacing them with a temporary board appointed by lawmakers. Way hopes most of the debt will be paid by year’s end.
“We’re trying to be very, very prudent. That’s very, very different than it has been in the past,” he said.
S.C. State’s fiscal woes stem from years of declining enrollment – down from nearly 5,000 in 2007 – coupled with school officials’ unwillingness to cut spending. Many students who did attend weren’t paying, according to a report by an accounting firm the state hired to review S.C. State’s finances.
University officials hope the enrollment trend is reversing.
More than 2,800 students are attending S.C. State this fall. That is 170 more students than S.C. State depended on in its 2015-16 budget, providing $1.1 million in unexpected revenue, a spokeswoman said Wednesday.
Wednesday’s vote aligned with arguments by the attorney general’s office that the procurement office lacks authority over the state.
Only the Legislature can allocate the state’s money, said deputy solicitor general Emory Smith.
The chief procurement officer did all he legally could when he issued his June ruling that S.C. State owes DTZ $5.4 million, said Dixon Robertson, attorney for the state’s fiscal oversight agency.
“Nowhere in this process can the chief procurement officer order payment,” he said. And “nobody has the authority to write that check.”