SC State leader: Debt could force college to close

S.C. State University’s finances have improved since lawmakers replaced its trustees this spring, but the state’s only public historically black college needs additional state money to keep its accreditation and stay open, the school’s board chairman said Tuesday.

S.C. State trustees chairman Charlie Way stopped short of asking a legislative panel to forgive $18 million in state loans to the college. But he said a portion of the loans — $12 million — was viewed as a financial drag on the Orangeburg school by accreditors.

The loans, made in 2014, were needed to keep open the 119-year-old college after its leaders failed to cut its budget to match its falling enrollment.

S.C. State is on its final year of probation with accreditors, who have cited problems with the school’s finances and accountability. The Southern Association of Colleges and Schools Commission on Colleges will decide in June if S.C. State will keep that key certification.

Students at unaccredited colleges cannot receive federal financial aid. Loss of that financial aid, which a majority of S.C. State students receive, would doom the university.

“Without SACS accreditation, we will have to close down the school,” Way told the Joint Bond Review Committee in an update about the school’s finances.

S.C. State has worked aggressively in recent months to lower its costs.

Trustees approved a balanced budget this summer after cutting $19 million in spending, including declaring a financial emergency, a move that allowed the school to cut veteran staff. Lawmakers also approved 12 days of unpaid furloughs for S.C. State’s 627 employees.

The school has been able to lower the amount it owes vendors by $3 million to $7.2 million, Way said.

“We can’t cut much more,” said Way, a Charleston real estate developer and former state Commerce Department secretary. “There’s no way on God’s green Earth that we can handle the debt from previous administration.”

In addition to the loans, the school needs $33 million for building and road maintenance that could help attract more students, Way said. Enrollment at S.C. State is about 2,800 this fall — 200 more than budgeted but the lowest in recent memory.

S.C. State has received two loans from the state — one for $6 million from the State Fiscal Accountability Authority and another for $12 million from the Joint Bond Review Committee.

The $6 million loan must be repaid by 2020. The $12 million loan from the bond review committee has no payback terms, which is a problem because accreditors classify that money as a debt that hurts the school’s ability to operate, Way said.

Senate President Pro Tempore Hugh Leatherman, a Florence Republican who chairs the Joint Bond Review Committee, told Way that he is convinced the new trustees, who include former business and academic leaders, will turn around the school.

After the meeting, Leatherman, who heads the Senate’s budget-writing committee, said he would work with S.C. State to keep its accreditation. But, he added, the state will need to balance the college’s requests with other needs, including paying for damage from October flooding.

State Rep. Brian White, an Anderson Republican who leads the House budget panel, praised S.C. State for its progress and pledged to help the school if it has met benchmarks.

This story was originally published December 8, 2015 at 11:48 AM with the headline "SC State leader: Debt could force college to close."