S.C. State University cannot escape its financial troubles.
South Carolina’s only historically black public college could get word as early as Wednesday about a new $12 million state loan that could help spur a turnaround. But the Orangeburg school is having to answer new questions about its ongoing deficit.
S.C. State owes $10.8 million, primarily to vendors, even after receiving a $6 million state loan in the spring. Because of its financial and governance issues, the school was placed on probation by its accreditors in June.
“We cannot move forward with all this talk about paying bills and fighting with vendors,” S.C. State president Thomas Elzey said Tuesday.
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However, the school’s challenges led a state lawmaker to suggest Tuesday that the time has come to consider alternate plans for S.C. State.
State Rep. Chip Limehouse, a Charleston Republican who chairs the House higher education budget panel, said he could see S.C. State becoming part of the University of South Carolina system if its financial problems persist.
If lawmakers were dealing with any school other than a historically black college, conversations about its future would be different, Limehouse added.
“If Lander (University) were conducting their business affairs in this manner, we’d be talking (about): ‘How do we close the doors?’ ” he said. “S.C. State is in a unique situation. ... But, at some point, reality has got to enter into the picture here.”
‘Hole in the bottom of the boat’
Lawmakers, including Limehouse, have stressed they want to keep S.C. State open and independent.
But frustration is mounting over the school’s festering financial problems caused when it did not cut its budgets to offset its shrinking enrollment.
“We cannot continue to bail water out of the boat, while the hole in the bottom of the boat has not been fixed,” Limehouse said.
In a response to state budget officials, S.C. State said this week that it planned a balanced budget for this year.
But that spending plan does not include repaying vendors, some owed money for a year, or a $6 million loan from the state, due in June.
Instead, the Orangeburg school is seeking more help.
It has asked for up to five years to repay the state loan and has warned its deficit will grow to $13 million by June without any additional state aid.
Having to repay vendors and the state loan by June would hurt S.C. State’s ability “to provide a quality education,” the school said in its response to state officials.
Can’t ‘cut its way out of this hole’
A legislative panel that meets Wednesday could decide whether S.C. State gets another $12 million loan. That loan was suggested by a committee of state college presidents appointed by lawmakers.
If the loan wins approval Wednesday, the State Budget and Control Board, led by Gov. Nikki Haley, could discuss the loan at its Monday meeting.
Two members of the legislative panel weighing the $12 million loan proposal Wednesday — Limehouse and state Rep. Gilda Cobb-Hunter, D-Orangeburg — said Tuesday they need to know more about how S.C. State has worked with vendors on its unpaid bills before sending more money to the school.
S.C. State officials have said they have negotiated for months with the school’s two largest vendors, which handle food service and maintenance.
Cobb-Hunter said she does not expect S.C. State to become part of the USC system, citing the Orangeburg school’s 118-year history as a historically black college. Instead, S.C. State’s leadership needs to make changes, and the state needs to help, she said.
“The university is not going to be able to cut its way out of this hole, period,” Cobb-Hunter said.
But state officials have asked for a deficit-cutting plan now.
Last month, the S.C. Executive Budget Office told the school that, since it was operating with a deficit, administrators needed to submit a plan to reduce or eliminate that shortfall. That is the legal requirement for any state agency reporting a deficit.
S.C. State submitted a 12-page plan Monday that included proposals to boost its enrollment and fundraising, and conduct a profitability study of its academic departments. The school also detailed cuts to administrative staff and campus police as well as other cost-saving measures, including a hiring freeze and reducing cellphones.
The university also has asked employees to take voluntary furloughs. Elzey said the school needs the General Assembly’s approval to make the furloughs mandatory.
‘I have faith’
Elzey said state budget officials should take a longer view of S.C. State’s finances, rather than focusing on the three-month period that triggered their request for a budget-cutting plan.
The Executive Budget Office took a snapshot of the school’s financial books in the fall when students still were paying their tuition bills, he said.
“No university is current on all its bills. It doesn’t work that way,” said Elzey, a former Citadel executive who has led S.C. State for a little more than a year. “Some issues are a matter of timing.”
For example, Elzey said S.C. State is awaiting tuition payments from more than 15 percent of its 3,331 students, which is typical for the school.
In recent years, S.C. State has struggled to deal with cuts in its state and federal funding.
At the same time, the school’s enrollment was shrinking, falling by a third since 2007. However, the school’s budget was not cut to match the decline in its student body. Instead, deficits were covered for years with temporary loans from an university community group.
The continued attention on the school’s finances puts S.C. State at a disadvantage, Elzey said.
“It’s a very difficult position we’re in,” the school president said. “(But) I have faith that the university will get through this.”