A top financial panel delayed a vote Wednesday on whether to extend a $6 million loan for South Carolina State University as the school struggles with a gradually expanding deficit.
Members of the Budget and Control Board said an audit of the school released Wednesday was even worse than they feared.
“This really is about the survival of the school,” Gov. Nikki Haley said after a briefing by auditors from the Columbia firm Elliott Davis Decosimo, LLC. “I’ve never felt as uncomfortable as I do right now on how we actually get this school to survive. It’s going to have to be a lot of things none of us want, a lot of changes that are not comfortable.”
The audit found South Carolina State owes roughly $14 million to vendors on top of a $6 million loan that the Budget and Control Board granted last year. That total debt is forecasted to rise to $23.5 million by the end of the school year in June.
The same audit presented three budget scenarios for SC State moving forward — none of which would get the school back on solid financial footing without serious budget cuts and state help, according to lead presenter Tom McNeish.
The best-case scenario for reducing the debt owed to vendors would require a seven-day mandatory furlough (saving the school an estimated $750,000, according to the audit), give SC State a reprieve on repaying the state loan in June, and offer an additional $4.5 million in state reserve funds already pledged with conditions by a state legislative panel. However, while that option would reduce money owed to vendors, McNeish said the school’s overall debt would remain the same as the money would instead be owed to the state.
Senate Finance Chairman Hugh Leatherman, R-Florence, questioned McNeish what would happen if SC State balanced its budget this year and received the state money. “In your opinion, can it survive?”
“It’ll take more than that,” McNeish answered. However, he said any specific suggestions for budget cuts or additional revenue were outside the scope of his audit.
Haley had asked the committee to consider delaying the June deadline for the $6 million loan, saying it would help the school pay vendors. “(If) the $6 million were called in this year, vendors would not get paid,” she said. “I just want everybody to understand that we’re talking about vendors not getting paid.”
But other board members said they needed more time to figure out the next course of action. The top House budget-writer Rep. Brian White, R-Anderson, noted the House and Senate are close to replacing the SC State Board of Trustees with an entirely new panel. He also said he had concerns about extending the loan without any terms and conditions attached. He urged the board to craft terms with the school before possibly voting to extend the deadline next month.
The Elliott Davis audit was one of the conditions for SC State to receive the initial Budget & Control Board loan.
The House on Wednesday voted unanimously in favor of a plan that would replace the trustees with a five-member panel chosen by the Budget and Control Board. A competing Senate plan would have the replacement board chosen by the legislature. Similar language was included in the House budget plan that advanced to the Senate last week.
The trustees voted to fire college president Thomas Elzey on Monday. Acting president Franklin Evans said he agreed with the audit’s findings and noted that budget cuts alone would not get the school through its current crisis.