RALEIGH St. Augustine’s University – the proud, historically black campus near downtown Raleigh – is facing questions about its financial health.
A recent audit obtained by The News & Observer turned up problems with financial controls. Enrollment was down in 2013, resulting in a $3 million drop in net tuition revenue, according to a financial statement included in the auditor’s report.
A contractor on the school’s football stadium sued for breach of contract, alleging that the university stopped payments and owes nearly $675,000.
The university has eliminated 15 positions, mostly through attrition and retirements, according to a statement from President Dianne Boardley Suber. St. Aug’s will try to avoid layoffs, she said, but a one-week furlough is likely for employees.
St. Aug’s trustees will meet Monday in a special meeting to discuss the issues.
Rodney Gaddy, chairman of the Board of Trustees, said there had been challenges, including the decline in students.
“So there is some concern,” he said, “but I think any institution of higher learning – particularly the historically black colleges and universities at this point – I think we’re all having some heightened concerns about making sure that we have a stable foundation for our university.”
Across the nation and the state, historically black universities have seen a slide in enrollment. In North Carolina, four out of five public HBCUs saw their numbers fall in 2013. Schools say that changes in some key federal loan programs have created hardships for students who drop out or can’t afford go to college.
Even some of the nation’s most prestigious HBCUs, including Howard University in Washington, have had problems.
Small private colleges such as St. Aug’s are seen as more at risk because their budgets are driven by student tuition dollars.
Last year, St. Paul’s College, a historically black institution in Virginia, was on the edge of extinction. St. Aug’s considered acquiring it. But in the end, the rescue deal didn’t happen, and the financially troubled St. Paul’s closed its doors.
The problems at St. Aug’s coincide with a new era of ambition. In 2012, it reorganized its curriculum and changed its identity from a college to a university. The university hosted its first on-campus football game in 2011, after reviving the football program in 2002.
But a September audit revealed backlogged and disorganized business functions, including late accounting procedures and poor collection of student past-due accounts. There also was sloppy check authorization, with numerous checks issued under the signature of a former finance vice president months after he had left the university.
The enrollment decline affected the university’s cash flow, resulting in a poor showing late last year in tests of its operating efficiency and debt service ratios, according to the audit.
One alumnus, Brian Boulware, posted his concerns on a St. Aug’s Facebook page on Feb. 5. He asked alumni to get involved. In his post, he said that the demise of St. Paul’s serves as a “canary in the coalmine” for St. Aug’s and other struggling HBCUs.
“Remember, our limited cash flow could produce a St. Paul-type situation for SAU in just a few months,” Boulware’s post said. “Business as usual will sink us!”
Reached later, Boulware declined to comment for this story.
Suber also declined to be interviewed but issued a statement saying that many higher education institutions have been hit hard, especially HBCUs.
“As a private, tuition-driven institution, St. Aug is definitely feeling the impact,” the statement said. “We know that in times of economic challenges, the solutions are often difficult to implement. The university is mindful of the domino effect that financial decisions can have on employees and their families and regret that these kinds of adjustments in operational cost are necessary; but like any other business, we continue to stay focused on our mission and vision.”
Suber was recently named as a finalist for the presidency at Florida A&M University. She dropped out of the running, and another candidate was chosen.
Her statement said that the university is focusing on the immediate goals of supporting students, recruiting freshmen for 2014 and managing its financial resources.
Federal government reports show St. Aug’s enrollment as 1,442 in fall 2012. The full-time equivalent figure was 1,387, Suber said, but by spring 2013, enrollment had fallen by 91 students.
Last fall, full-time equivalent enrollment had slid to 1,267, Suber said. More than 200 did not return for spring, bringing the figure down to 1,064.
‘Everything we can do’
Gaddy, a Duke Energy executive in Charlotte, characterized Monday’s meeting as a “check in” to figure out how board members can shore up fundraising.
“How can we lean in to make sure that we’re doing everything we can do to help the university,” he said. “It’s important for us as board members to understand what’s going on.”
During last year’s discussion, it was clear that St. Aug’s should not acquire St. Paul’s, Gaddy said.
“We saw some challenges on the horizon for ourselves,” he said, “and so that’s one of many reasons why we opted not to continue with that transition.”
He said he doesn’t view the problems as anything apart from the “precarious situation” many HBCUs are experiencing.
Asked if the university’s future is in doubt, Gaddy said: “Oh no no no. I don’t think that we’re going down the path of a St. Paul’s at all.”
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