South Carolina State is a month away from running out of money and is hoping state lawmakers will save the institution from “financial disaster,” the description used Thursday by the university’s budget committee chairman.
Katon Dawson, who heads the budget panel for the board of trustees and once was leader of the S.C. Republican Party, said S.C. State will have a $1 million shortfall next month and will not be able to meet the $2.26 million payroll for its 1,045 employees.
“I cannot tell you where the revenue stream is coming from,” Dawson told trustees Thursday, noting the money next month will “disappear very quickly. I don’t see any hidden money.”
He said the university probably would not have been able to meet payroll for the current month without a $1.3 million check written by Sodexo, the university’s dining services contractor. Initially, Sodexo said it would not pay the commission detailed in its contract because the university owes the company $2.3 million.
But Dawson said there is a real chance the university could completely run out of money and go under unless the General Assembly provides the university about $13.6 million to meet its immediate needs.
“When we need $13.6 million, it is not just the bills that have accumulated, but the bills that will accumulate for these months going forward to the end of the fiscal year,” S.C. State President Thomas Elzey said, noting it is becoming more and more difficult to pay vendors.
The school has about $6.1 million in outstanding bills since August 2013.
“They (vendors) have worked with us and so far they have,” Elzey said. “We have damaged our relationships because when you have a relationship with vendors where you are not paying them on time, there is an issue. Sometimes the responsiveness is not there.”
Elzey said one vendor, which he did not name, has threatened legal action because of unpaid bills.
“Right now these are all our problems and we are dealing with it,” Dawson said. “These are four to five years in the making. We have been warned and warned and warned. Now we are here to that point in history. I feel fairly confident that we can try to work our way of out this.”
The university is tentatively on the agenda for the April 30 State Budget and Control Board meeting, at which it will have lay out the situation.
“This is probably the most crucial 60 days in the university in the last seven or eight years,” Dawson said, noting the state’s legislative session is down to its last month. “If the university were to fail, I feel pretty sure ... that the default ... in my opinion it would be in excess of $100 million.”
This liability, he said, would fall on the shoulders of the state’s taxpayers.
“That ($100 million) is a big number for the state to have to stare down and for the county and the city of Orangeburg,” Dawson said. “I will tell you if the university would fail, that number exponentially would almost double the economic impact on Orangeburg.”
“This is hard information,” he said. “Our future is in someone else’s hands right now.”
Trustee Chairman Dr. William Small said the news is dire for the present and potentially for the future of the university.
“Who will we be at the end of this process?” Small said, wondering “what kind of erosive effect on public confidence” will the financial woes of the university have for recruitment.
Trustee Robert Waldrep offered his consolation.
“There is no desire on the part of the General Assembly to see South Carolina State University fail,” he said.
Elzey said he also is optimistic.
“I am hoping they will recognize the value of South Carolina State University that they recognize the need to support us in continuing what we are doing to educate our citizens and our students,” Elzey said. “And that they recognize the urgency because of dwindling cash.”
Elzey said the last time the university officials presented their case to the General Assembly, Gov. Nikki Haley inquired as to where S.C. State’s support resides.
“I was stunned by that,” Elzey said. “We will make sure that you know exactly what is going on when we have such meetings.”
Despite the gloomy report, Dawson said he remains optimistic.
“The state has been remarkable so far for proving the president’s office assistance and gathering information that we need,” he said.
He also noted that student applications for the coming year are up – 5,527 compared to 2,178 applications last year.
“We hope this information does not give away those decisions, but our General Assembly understands where we are,” Dawson said.
A significant driving force behind the $13.6 million deficit was a $6.67 million shortfall in last year’s athletic program.
Elzey said the university is considering eliminating its women’s golf program as well as assistant athletic coaches. Elzey said the university is seeking private donations to help support women’s golf.
“It hurts me to do that,” Elzey said. “I don’t like the idea of retreating back in an area I love dearly, which is golf.”
Elzey said the elimination of the program and staff could save the university about $500,000 next year.
The university has also cut about 90 full- and part-time staff positions, implemented hiring freezes and looked at expanding its fundraising efforts.
“The goal is to grow by attracting students and to increase fundraising,” Elzey said, challenging trustees to “look in the mirror” to make sure they are doing all they can to support the university.
The budget crisis has become more pronounced as the state’s Inspector General’s Office noted the university was mismanaging funds over the past eight years when it borrowed public service funds from the 1890 Research and Extension program to help pay operating expenses.
The university has had to pay the 1890 program back and can no longer access that money.
Dawson said the university’s financial woes have ebbed and flowed over the years.
“You see how the university inhales and exhales and then throws up,” he said. “We have survived every time.”
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