SCSU building plans hinge on state OK
By LEE HENDREN, T&D Staff WriterSaturday, June 11, 2005South Carolina State University is poised to invest nearly $100 million into its campus, pending state approval that could come as early as Tuesday morning.
That's when the State Budget and Control Board is scheduled to consider giving its blessing to a $42 million federally backed loan that will allow the Orangeburg institution to build housing units for more than 700 students and retire the debt on another dormitory.
Also, the board is set to consider increasing the budget for the James E. Clyburn Transportation Research and Conference Center to $27 million.
University officials have received assurances they will get that money, John Smalls, senior vice president for financial affairs, told the university's Board of Trustees during its annual retreat in Charleston last week.
When fully built, the transportation complex will be a nearly $70 million project encompassing 475,550 square feet.
It will include a lab wing, a library wing, a research building, a conference center, an administrative wing, executive guest suites, a utility plant, a water tower and two three-story parking decks with a capacity of 365 vehicles each.
H. Gene Knight, PE, CEM, associate director for facilities planning and construction for Sodexho Campus Services, presented site plans, cost estimates and proposed schedules.
The $1.6 million, 500,000-gallon water tower will provide higher flow rates and pressure than the municipal water system alone can provide fire suppression systems for the transportation complex, student housing units and other buildings throughout the campus, Knight said.
The rest of the complex will be built along Russell Street, on three sides of the proposed new main entrance to campus. "We're still nailing down the land acquisition," Knight said.
On Tuesday, the university will ask the Budget and Control Board for permission to purchase certain properties along Russell Street. Further details were not available.
A document from the S.C. Commission on Higher Education shows that the university is interested in acquiring 1935 Russell St., 1949 Russell St., 1955 Russell St., 1981 Russell St., 1136 Cooper Court, 132 Oakland St., 237 Parker St. and two vacant lots along Chestnut Street.
In March, the university purchased six properties near the intersection of Chestnut and Goff streets for a total of $130,600, according to county property transaction records.
Other construction projects in the works
Smalls said the university has tens of millions of dollars in hand, from various sources, for the following initiatives:
Smalls said a lot has been going on — essential steps, like lining up the money, getting the engineering drawings done and obtaining state approval — that is unseen by the casual observer.
Later this year, these projects should become very visible, he said, as the actual construction and renovation work gets under way, pending the state board's approval.
Audit report raises worries
A potential stumbling block: S.C. State's latest financial report, which reveals that many previous findings have not been corrected and many new problems have been discovered, including several instances of violations of state law.
"The report indicates that there are very, very serious deficiencies on how they're operating," State Comptroller General Richard Eckstrom said when the document became public last month.
"The audit must be cleaned up," or "I'm pretty sure the General Assembly will not be too anxious to continue funding whatever their funding requests are," said Senate Finance Committee Chairman Hugh Leatherman, R-Florence.
Gov. Mark Sanford said the state agency should be treated like a business in the real world. "There should always be consequences," he said.
House Ways and Means Chairman Bobby Harrell, R-Charleston, also expressed the need for improving the university's fiscal accountability.
Eckstrom, Leatherman, Sanford and Harrell were quoted by The Associated Press. All are all members of the Budget and Control Board, which has balked before at approving SCSU projects for financial reasons.
SCSU corrects many problems
The problem with audits, Dr. Andrew Hugine Jr., president, explained last week, is that many of their findings are outdated by the time they come out.
"The university has made considerable progress in improving and eliminating audit findings," he said.
Smalls gave some examples. Auxiliary enterprises, which were cited for operating at a deficit, have been outsourced.
Also, two leases for which the university had not obtained required state approval — one for The STATE Room at the Columbia Municipal Airport and the other for a student parking lot — "are no longer in place," Smalls said.
The university has moved decisively to address many findings:
Still other findings are going to take a while to address, such as the backlog of more than 4,000 individual grant-money accounts going back 20 years.
And the staff strenuously objected to one particular finding by the auditor. "It's a virtual impossibility for us to do what he wants us to do," said Joseph M. Pearman Jr., assistant vice president for fiscal affairs.
An occasional honest disagreement between a financial team and an independent auditor is troubling but generally isn't a major cause for alarm. Next year's independent auditor might side with the university.
Rogers & Laban PA has performed the last couple of audits of S.C. State's books, but trustee board Chairman Maurice Washington said the governor signed into law Tuesday a bill that gives them the option to hire a new independent auditor. The board will exercise that option, he said, adding, "The decision to go to a new external auditor is cost-driven."
A ‘clean' audit — for the most part
What really matters the most, university officials said at the retreat — and with considerable justification — is that the university got a "clean" audit.
The auditors wrote, on page 2: "In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of the university as of June 30, 2004 ...."
University officials proudly emphasized that the auditors issued an "unqualified" opinion on S.C. State's financial statements.
But they did not mention that the auditors issued a "qualified" opinion on the university's handling of federal funds (page 39), which comprise about 20 percent of the total operating budget.
And they were incensed when The T&D's original article on the audit quoted this passage from page 44 of the document:
"The financial records of the university do not accurately reflect its financial position or results of operations and the university does not have adequate safeguards in place to prevent the loss of assets."
Those statements are not as contradictory or mutually exclusive as they might appear. A closer examination of the document suggests that, although there are problems with the records, the university's overall financial position is fundamentally sound.
And it's improving: Total assets grew nearly 3 percent in the year that ended June 30, 2004. Total net assets were up 10 percent. Total liabilities were down 12 percent. Operating revenues were up 13 percent, but total operating expenses were up just 6 percent.
"We're going in the right direction," Smalls said.
He said many of the findings stem from a financial management staff that was both short-handed and "had not received proper training."
The university is moving to provide more training to the staff as well as hire more staff — including an internal auditor who, it is expected, will catch and remedy problems as they occur, rather than relying on an independent auditor to discover them at the end of the year.
"We're advertising for the position of internal auditor right now," Washington said.
Employee turnover in the finance office reached 90 percent in the past two years, Smalls said. "During a year we were in transition, we accomplished a 34 percent reduction" in findings, he said.
"We do have the folks in place who have the technical training and expertise" to address every single finding in the audit, Smalls said, and "over the next three years, we will eliminate these audit findings."
"I feel much better about where we are," trustee Neville Lorick said.
Hugine thanked Smalls and his staff for "a job well done. ... We have all the confidence in the world" in Smalls and his staff. "This team is going to take us to where we need to be, very soon."
Recalling The T&D's front-page headline over the story about the 2003 audit report — "Fiscal nightmare" — Washington said, "I don't think we'll ever again get a headline like this coming out in The T&D."
$118 million budget focuses on priorities
Trustees increased spending for financial management by $150,000 in the $118,589,189 operating budget for 2005-06 that the board approved unanimously by voice vote Wednesday.
"A budget proposal is a reflection of the goals and priorities of the university," Hugine said.
This year's budget places emphasis on strengthening academic programs, erasing deferred maintenance issues, enhancing marketing efforts and holding the line on tuition increases.
This year's tuition and fee increase was an average of 5 percent — the lowest in the state, Hugine said.
The budget includes:
However, the university anticipates getting $75,000 less from the state in the coming year. The state provides a little over 21 percent of the university's operating funds.
So, how does the university plan to make ends meet? Well, the tuition and fee increases, along with anticipated increased enrollment, are predicted to bring in an additional $3.5 million.
Allocations
And the amount allocated for operating expenses is reduced by $850,000 — about 5 percent, on the heels of a 10 percent reduction the previous year.
Too, the university expects an improvement in its bottom line with the outsourcing of all auxiliary services — food, housing and now the bookstore.
It will be formally announced at the next trustee board meeting that Follett Higher Education Group has been selected to operate the bookstore, effective July 1.
"We get 8 percent of the gross sales," Smalls told the trustees.
Sales will be higher than before, he continued, because Follett will have a wider selection of merchandise and intends to create an exterior "storefront" to greatly increase the visibility of the bookstore that's tucked inside the Crawford-Zimmerman building.
Summer renovations ahead of schedule
Meanwhile, summer renovations and improvements are proceeding ahead of schedule, said Dr. Kevin Rolle, vice president for student affairs.
The work involves a half-dozen roofs, an elevator, a trash chute, new lobby furniture, canopies, new bathtubs, new pool tables and power washing at selected locations, Rolle said.
Football players will return Aug. 3. All students will be back by Aug. 12. However, Washington Dining Hall is being renovated and won't be ready for students until September, so the 250-seat cafeteria in Truth Hall will be reopened temporarily, Rolle said.
Washington Dining Hall will get new flooring over the Christmas break, Rolle said. When the work is complete, the Truth Hall cafeteria will be remodeled into a cyber cafe.
Strategic planning
Howard Walls, executive consultant to the president, facilitated a session he called "Strategy 101." He began with an overview of advantages and flaws of various popular strategic approaches.
He discussed the difference between strategic thinking — which is where the organization wants to go — and strategic planning — which is how the organization will get there.
He reminded board members they are obligated to act on behalf of the public, provide effective oversight, ensure fulfillment of the university's mission and enable and support the university in pursuing its vision.
Board members should be ambassadors for the university, he said. They should exercise their influence in appropriate, ethical ways. They should draw upon their experiences, expertise and resources.
The university's vision, mission and goals must be "plain, succinct and embraced by everybody," or else "you will dilute your resources and you will flounder," Walls said.
"A strategic plan isn't worth the paper it's written on if you don't do anything with it," Walls said.
Walls quoted Michel Robert: "Organizations will hold together and their people will follow those leaders who can clearly state where they are leading the company."
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