A top state financial panel has tapped into reserve funds to give South Carolina State University a three-year, $12 million loan that the school says would allow it to pay more than $7 million in overdue bills.
The move by the five-member Budget and Control Board on Monday would use surplus tax collections that come in higher than predicted (known as the Contingency Reserve Fund).
But the 3-1 vote did not come without some controversy. Gov. Nikki Haley abstained, saying she was “refusing to be a part of this.” In explaining why, Haley noted the lack of a repayment plan for the loan and the uncertainty of what is required from the state’s only public historically-black university.
Normally, the Budget and Control Board must be the final approval for an loans, but language in the state budget this year exempted SC State loans from the normal process. Instead a legislative committee last week approved a budgetary plan crafted by a blue ribbon study panel. That blue-ribbon panel, made up of other college presidents who had looked into S.C. State’s finances, recommended the additional loan earlier this year.
Haley insisted on waiting for an audit of the school to be complete before acting. “As an accountant, the one thing I know is numbers tell a story,” she said during Monday’s meeting. “We don’t know how big this story is yet, and so I really just think it would be completely irresponsible for us to do this at this time.”
But Senate Finance Chairman State Sen. Hugh Leatherman responded that Monday’s vote was not about the loan itself (which he noted was finalized with a vote by legislative committee last week), but which fund to use. He noted the board was required to find a funding source within 15 days of the legislature giving its approval.
“The discussion that you’re talking about, I agree with most of it,” Leatherman told the governor. “That’s not what’s before us today. You can’t stick your finger in the General Assembly’s eye.”
College president Thomas Elzey has said the school is getting its budget under control, but needs to pay vendors from previous years. The budgetary plan approved last week would give SC State $6 million over the next 12 months in quarterly payments, with the remainder of the loan paid out in the following two years. The payments would be suspended if the college goes into a deficit at any point.
The other board members who voted “yes,” gave their support unwillingly. Both House budget chair State Rep. Brian White and State Treasurer Curtis Loftis said they were uncomfortable with the open-ended nature of the loan, but recognized it had already been approved. White voted against the new round of loans last week.
Loftis noted the budget proviso the legislature used to authorize the money did not treat it as a loan, but as an appropriation, since the language only requires repayment “if required by the budgetary plan.” But the budgetary plan approved last week does not reference a repayment schedule. Leatherman said the school is not required to set such a schedule until January 2016.
Comptroller General Richard Eckstrom voted against the move, saying he doubted the school has the funds available to eventually repay the loan.