Gov. Nikki Haley is upset after state budget leaders agreed Monday to use extra state tax collections for a $12 million bailout of S.C. State University.
Haley said a small panel of lawmakers handed the cash-strapped school millions without knowing the results of a state-ordered audit. The $12 million has been called a loan, but the governor along with S.C. State and political leaders said the General Assembly could convert the money into grants from the state that don’t require repayment.
“They just gave the money away because they know it can’t be paid back,” Haley said outside her office Monday. “They did it without knowing anything about the school – where it’s going, where it’s come from and how we’re going to fix it. ... You’ve got leadership at the school that’s just wanting to throw money at a situation that is still bad.”
S.C. State already is asking lawmakers for $6 million next year to repay a separate loan due in July.
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The state’s only historically black public college still has more than $7 million in unpaid bills to vendors that date back about a year. S.C. State financial crisis, due in part by not reducing budgets while enrollment shrank and state funding cuts, led to accreditors to place the school on probation this year.
Haley, who has pledged to help the school remain open, said some inconsistencies have been reported in the audit that started in October. The final report could come as early as next month.
“Numbers tell the story, and we don’t know the story,” the Lexington Republican told fellow members of the the S.C. Budget and Control Board on Monday.
But the budget passed by the General Assembly this spring tied her hands.
The budget board had 15 days after the legislative Joint Bond Review Committee approved funding for S.C. State to figure out how to pay for it. That committee backed the $12 million bailout Wednesday.
Senate President Pro Tempore Hugh Leatherman, who heads the legislative bond committee and sits on the budget board, told Haley that holding up the $12 million was no longer up for debate. Leatherman,, a Florence Republican, is the state Senate’s chief budget writer and main backer of the latest plan to help S.C. State.
The handout amount was decided by a panel of college leaders assembled by Leatherman and backed by the General Assembly. Loaning the $12 million to the school was approved by eight legislators on Joint Bond Review Committee by a 6-2 vote last week.
Asked why she did not veto the budget provision that allowed the new cash infusion for S.C. State, Haley said, “I didn‘t think they would handle it so irresponsibly.”
The governor said at the meeting Monday that she is wiping her hands of the new $12 million funding.
“I get it: The General Assembly rules all,” she said exasperatedly.
Haley abstained in voting Monday to obtain the money for S.C. State from a $31 million fund of leftover cash from the previous budget year.
Leatherman, State Treasurer Curtis Loftis and House Ways and Means Committee Chairman Brian White, R-Anderson, voted for using excess money. State Comptroller General Richard Eckstrom voted against it.
Eckstrom said he opposes S.C. State receiving $12 million from lawmakers without going through the scrutiny of the House and Senate budget-making committees. He does not expect lawmakers to require S.C. State pay back the money.
“Why go through the charade we are going through?” Eckstrom said after the meeting.
S.C. State president Thomas Elzey said he believes the money could be granted to the 3,300-student college in Orangeburg.
“S.C. State has received the kind of support it needs and will move forward,” he said. “And we will be victorious.”
Efforts to reach Leatherman after the board meeting Monday were unsuccessful.
But two members of the Joint Bond Review Committee said they could see the $12 million become a direct grant to S.C. State with some requirements for the school to maintain financial stability.
Rep. Kenny Bingham, R-Lexington, said state government is responsible for the bills S.C. State owes vendors: “One way or another we have to pay off the debt.”
Rep. Gilda Cobb-Hunter, D-Orangeburg, said more loans would set up the school for failure because the S.C. State cannot repay them.
She said she would have preferred for the $12 million request go through the legislative budget process where lawmakers could ask more questions. That could happen if the General Assembly decides to try and convert the loan into a grant.
Still, S.C. State is not guaranteed the entire $12 million.
The school is slated to receive the first $6 million by July paid quarterly in $1.5 million increments.
The first $1.5 million is expected soon for submitting a balanced budget to the panel of college presidents. The last three $1.5 million payments are contingent on the school not having a deficit in its current year budget. A deficit will halt payments.
S.C. State would receive another $4 million in 2015-16 and the final $2 million in 2016-17.