COLUMBIA, S.C. — South Carolina State University will get a five-year reprieve from repaying a $6 million state loan, under a plan approved Tuesday by the state’s financial oversight board.
The Budget and Control Board voted unanimously to extend the final due date to June 2020, with a first payment of $355,036 required next summer. South Carolina’s only public historically black university was supposed to repay the full amount by month’s end but can’t.
An accounting firm’s analysis shows SC State’s fiscal woes are partially due to deficient accounting practices by untrained staff and allowing students to attend without paying tuition. That’s in addition to two previously cited main factors: enrollment declines and officials’ unwillingness to cut costs, according to a report presented by Tom McNeish of Elliott Davis Decosimo, which the board hired last year to review SC State’s finances. The firm recommended, among other things, withholding diplomas or transcripts until balances are paid off, requiring students to pay before they’re enrolled in the next semester and getting collection agencies involved sooner.
“They were very generous in the fact they were letting a lot of students come to the school and not getting paid for it,” Gov. Nikki Haley said after the meeting. “No college or university can afford to educate for free. Now they’re going to have to rein it in. We want students to go to SC State, but they’ve got to pay to go there.” Haley chairs the five-member financial board.
Enrollment may continue to shrink, she said, but SC State will emerge stronger.
The school’s 2015-16 budget depends on 2,650 students, though projections already are lower. That’s down from nearly 5,000 students in 2007.
The loan extension comes days after the Southern Association of Colleges and Schools voted to keep S.C. State’s accreditation on probation for another year, as a newly appointed board tries to bring it to fiscal solvency. The vote removed the immediate threat of a forced closure, had accreditation been revoked.
Haley said the report gives the new trustees information needed to move forward.
They will meet Wednesday, their third meeting since the former trustees were fired last month and replaced with a temporary fix-it board appointed by lawmakers.
The Budget and Control Board approved the $6 million loan in April 2014 to help whittle down the school’s debt. Instead, its unpaid bills continued to grow. The board approved a second bailout in December of $12 million over several years, and the school received an initial installment of $1.5 million.
With the new trustees in place, SC State is expected to soon receive a second installment of $3 million.
Charles Way, SC State’s new board chairman, said the loan extension will help address the debt.
“We have to have a good supply of cash. I want to pay down debt as fast as humanly possible,” he said.
In March, SC State’s acting president, Franklin Evans, asked senators to make the school “whole” by erasing the school’s entire $23.5 million debt to vendors and the state, which included the $7.5 million in state loans received so far. The request never stood a chance with lawmakers.
Haley said forgiving even $6 million was not acceptable.
“That’s taxpayer money. You can’t forgive money that belongs to the taxpayer,” she said. “It’s a loan they took out with the promise of paying it back, and we intend to have them pay it back.”