A state Senate panel has advanced a proposal that would forgive most of financially-recovering South Carolina State University’s nearly $19 million debt to state government.
The Senate’s Higher Education Finance Subcommittee voted in favor of the plan Thursday which, if approved, would only require the school to pay back about $3 million of the debt it would owe the state. The resolution combines a $12 million, three-year loan approved by the General Assembly in 2014 with a $6 million loan granted by the state’s Budget and Control Board earlier that year. The resolution also includes more than $740,000 in various costs of contracts incurred by the school prior to 2014.
Interim SC State President W. Franklin Evans says the debt forgiveness is critical as the school tries to keep its accreditation later this year. “This shows the state of South Carolina really is behind (SC State) to make sure it is financially stable and that we have the resources necessary to do the things we need to do,” he told reporters after Thursday’s meeting. “It sends a very strong message that the state is behind us.”
Lawmakers have been more favorable towards the state’s only public historically-black college since they appointed an entirely new board last year which made significant cuts and boosted enrollment to help eliminate years of deficit in the school’s budget. SC State has used the loan payments so far to pay back its overdue bills to vendors. The college this year reduced its $13 million in vendor debt down to $3.8 million, Evans said.
The agreement would require SC State pay back more than $355,000 each fiscal year and avoid a deficit in its annual budget. Fulfilling those conditions would allow the state to forgive $1 million each year of compliance. Under a best-case scenario, the school would pay back $3 million in total and get $15.9 million forgiven off its loans.
“We don’t anticipate or foresee any issues,” Evans said. “We’re being very good fiscal managers of the money. So we’re keeping a keen eye on everything, because we certainly don’t want any past practices to creep up on us.”
The proposal is more generous than what the House included in its budget plan this week. Their proposal would have only included forgiveness for the $12 million legislative loan.
Staffers with the Southern Association of Colleges (SACS) are reviewing SC State’s finances and campus as they reconsider the school’s probation this summer. Since SACS probation can last no more than two years, the accreditation group must now decide if SC State has done enough or else they would revoke the school’s accreditation entirely.
The subcommittee’s chairman State Sen. John Courson, R-Richland, said the forgiveness would show South Carolina is committed to the HBCU. He said the state also has a vested interest in making sure SC State remains open. “We will need in South Carolina roughly 71,000 additional baccalaureate degrees between now and 2030 for the workforce requirements,” he told South Carolina Radio Network. “(SC State) has the physical facilities to accommodate this. We want a state institution to work.”
South Carolina’s government also has a financial stake in ensuring SC State keep its accreditation. The loss of that status would make the school ineligible for federal monies and pell grants, with the lost revenue effectively placing the school back into a deficit. State government would then risk taking on all SC State’s liabilities and debt should that occur.
Correction: This report initially stated SC State would have up to $16.9 million of its debt forgiven under the plan. That figure is actually $15.9 million.