S.C. State University received a lifeline Wednesday.
The financially troubled school will get a second state loan – of up to $12 million loan – that administrators say should help pay off more than $7 million in long overdue bills and keep services to students running.
Last spring, S.C. State received a $6 million loan from the state that was used to pay bills, salaries and bond debt.
S.C. State president Thomas Elzey declined to say the new state loan, approved Wednesday, rescues his 3,330-student college, which is under probation from accreditors because of its financial woes and facing threats from its food service provider to cut off the school.
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“The big picture is that the state and the Legislature are willing to step forward and provide the university with some support so that we can get back on a sound footing,” Elzey said.
A state legislative panel that reviews large expenditures by state agencies agreed by a 6-2 vote to grant the new $12 million loan over three years. That amount was recommended by a committee of college presidents appointed by the General Assembly this year.
Lawmakers repeatedly said they want to save the state’s only historically black public college. But, they added, they are frustrated about the school’s ongoing financial troubles. Those problems were caused, in large part, by S.C. State failing to cut its budgets to reflect its shrinking enrollment.
Senate President Pro Tempore Hugh Leatherman, the Florence Republican who leads the Joint Bond Review Board that approved the new loan, said he would not recommend any more money for S.C. State if the Orangeburg school fails to follow through with planned budget reforms.
“You’ve got one chance,” Leatherman told S.C. State leaders sitting in the committee room.
Leatherman, who has spearheaded efforts to aid the ailing school, said he backed loaning more money to the college because he had confidence in the committee of college presidents that recommended the loan. That committee included University of South Carolina president Harris Pastides.
“Can we absolutely guarantee this thing?” Leatherman said. “No.”
S.C. State reported a $10.8 million deficit, almost all of it from unpaid bills, at the end of its June 30 fiscal year. Elzey said Wednesday the school has more than $7 million in overdue bills.
House Ways and Means chairman Brian White, R-Anderson, and Rep. Chip Limehouse, a Charleston Republican who heads the House higher education budget panel, said they had reservations the $12 million loan, spread over three years, would solve S.C. State’s debt woes. They voted against the loan.
“I don’t have a comfort level yet that S.C. State is making some of those (budget) changes,” said White, who voted in favor of the first $6 million loan, which was approved by a different state board. “Our comfort level needs to be higher than where it is.”
Under the agreement, S.C. State could receive up to $12 million – $6 million in 2014-15, followed by $4 million and then $2 million in the final year. Loan terms, including deadlines to repay the money, have not been determined. S.C. State already has asked for an extension on repaying the initial $6 million loan, issued last spring.
The new $6 million loan will be disbursed to S.C. State in four quarterly $1.5 million payments. The first could come before year’s end, legislative officials said.
Future loans – an additional $6 million – require the school to not run a deficit on its current-year budget. The bills that S.C. State owes vendors, some of which date back a year, will not be counted in the deficit calculation, legislative officials said.
The state Executive Budget Office did include those unpaid bills when it determined that S.C. State was running a deficit, early in its fiscal year that started July 1. The office required the school to submit a budget-cutting plan this week on how it will deal with the deficit.
In its plan, S.C. State said it has a hiring freeze on non-revenue and non-essential jobs, has cut travel and cellphones, and has trimmed staff. The school also is conducting a profitability study of its academic programs, and plans to boost its fundraising and enrollment, which has dropped by a third since 2007.