Money questions land Johnson C. Smith University on probation

Johnson C. Smith University was placed on probation by an accrediting agency this week based on concerns about financial stability and control.

The move comes after two years of questions about money management at the historically black university on the western edge of uptown Charlotte.

A 2015 report from the U.S. Department of Education detailed “significant areas of noncompliance.” In 2016 President Ron Carter acknowledged the school was under federal order to pay back $1.8 million in student aid that auditors said the university received in violation of government regulations.

Documents filed with the Internal Revenue Service showed a $7.5 million deficit for the fiscal year ending on June 30, 2014, and a $10 million deficit for the year ending on June 30, 2013. That stood in contrast to a $29 million surplus for the year ending on June 30, 2012.

Carter, who is retiring at the end of this year, said last year that the financial aid department made mistakes during a period of transition several years ago and changes have been made to ensure they don’t happen again.

On Wednesday, a JCSU spokeswoman says this week’s action stems from a footnote in the school’s latest audit, one that officials believe is misleading and contradicts the rest of the report.

“Johnson C. Smith University made a strong financial case and received a clean audit for the 2016-2017 fiscal year. It is important to note that JCSU is not operating with a deficit,” said Communications Director Sherri Belfield, who did not specify what the footnote said.

The Southern Association of Colleges and Schools Commission on Colleges, an Atlanta-based accrediting agency for 11 Southern states, put JCSU on probation at its semi-annual meeting in Dallas this week. The school was up for its 10-year renewal, or “reaffirmation,” of accreditation.

The agency denied that reaffirmation but stopped short of revoking accreditation. Instead, the probation means accreditors will visit the campus in fall 2018 and vote again at the end of next year.

“We are not daunted by the denial of our reaffirmation and see this as an opportunity for continuous quality improvement which will result in even greater institutional effectiveness,” JCSU said in a Tuesday news release.

The agency has not released details of the concerns that led to this week’s vote. That will be released next week, officials there said.

JCSU says its auditor insisted on adding an “additional disclosure” to a footnote. Although the university disputed that addition, it had to submit the report in order to meet the accrediting agency’s deadline.

Carter will be replaced by Clarence “Clay” Armbrister on Jan. 1. Armbrister is president of Philadelphia’s Girard College and former Philadelphia city treasurer. His experience in education and finance were cited as reasons the JCSU board hired him.

The JCSU statement said the accrediting probation will not deter the college from educating students, awarding diplomas and financial aid and serving as a leader in the redevelopment of Charlotte’s historically black west side.

“We are steadfast, and our value proposition is strong,” according to a university statement. “This university will continue providing higher education access to highly talented and motivated students today and well into the 21^st century.”

This story was originally published December 6, 2017 at 3:51 PM with the headline "Money questions land Johnson C. Smith University on probation."