News Column

SCSU to get $12M under state plan

August 12, 2014

By Dale Linder-Altman, The Times and Democrat, Orangeburg, S.C.

Aug. 12--South Carolina State University trustees took the first step on Monday toward having the institution bailed out of its financial difficulties by accepting a $12 million loan proposed by the state's Blue Ribbon Advisory Committee.

Trustees unanimously accepted the committee's "proposal in concept reserving to the board the right to continue appropriate discussions" with Senate President Pro Tem Hugh Leatherman and others. Trustees Katon Dawson, Erika Abraham and Carlotta Reddish were not present at the meeting.

The board authorized Leatherman, R-Florence, to move forward with locating sources of funding for the loans that will be paid to S.C. State in installments over the next three years.

The university, which has been operating on a deficit for years, called on state lawmakers for help in February after President Thomas Elzey reported that the institution was at risk of ending the fiscal year with a deficit of more than $13 million. Elzey also reported that the institution did not have the money to pay its monthly bills.

The legislature created the Blue Ribbon Advisory Committee to help put the university on solid financial footing.

Trustee Dr. Dennis Nielsen, who served on the advisory committee with three other trustees, urged the board to approve the plan.

He said that as he met with the committee, he had gotten the impression that Leatherman and the committee did not intend to make changes to the plan.

"I don't think we have alternative options," Nielsen said. "He (Leatherman) was emphatically saying no changes, period."

But trustees approved the advisory committee's plan with reservations.

They expressed concerns about the lack of details in the plan and the affect accepting it will have on the university's problems with the Southern Association of Colleges and Schools.

The accrediting agency placed the university on probation in June, citing its financial instability as one reason.

Trustee Tony Grant noted that the document did not refer to terms of repayment, such as when the debt will have to be paid or what the interest rate will be.

Grant said he wanted to make sure trustees' approval of the plan is conditional.

"I want to know the cost, terms, interest rate, use of proceeds, repayment," he said. "I want to know what I'm getting."

Grant also questioned whether the $6 million the university borrowed earlier this year through Gov. Nikki Haley's efforts with the approval of the Budget and Control Board will have to be paid with the proceeds of this year's loan.

"I think we, in good conscience, have to clarify that," he said.

Grant also noted that the funding will not be enough to meet the university's current deficit. Elzey said that the $6 million loan approved by the Budget and Control Board paid off about $4.5 million of the deficit, leaving the institution a deficit of more than $8 million.

Trustee Kathy Novinger said she wanted some assurance that the proposed plan will not further affect the university's position with SACS.

"I would like to leave this meeting with the approval that we accept this recommendation provided it does not impact our accreditation,' she said. "I think that leaves us wide open to go back and say SACS expressed concerns. Help us answer these."

Elzey reported that the university is scheduled to meet with SACS on Aug. 22.

"We will broach this issue, among other issues, at that time," he said. "We're going to have that conversation."

Under the Blue Ribbon plan, a total of $6 million will be paid out to S.C. State this year in equal quarterly payments with the qualification that the university maintains a balanced budget.

The advisory committee will appoint a working group of experts in various areas, including finance, procurement and human resources, who will monitor the university's finances. The group must certify that the university is not in deficit status at the time of the installment payments.

S.C. State will receive $4 million in the 2015-16 fiscal year and $2 million in 2016-17, providing the institution continues to maintain a balanced budget. The funds will be paid in full at the beginning of the first quarter of each fiscal year.

Contact the writer: or 803-533-5529.


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