JCSU: The university’s finances are sound

Responding to recent news stories, Johnson C. Smith University asserted that although it has faced occasional cash-flow problems, its finances are fundamentally sound.

In a statement posted on the university’s website this week, JCSU President Ron Carter said the U.S. Department of Education has given the university high marks for its financial audits. The university says that in fiscal year 2014, it got the highest possible composite financial score.

“Although financial stability is not easy in this difficult and highly competitive era, JCSU is building the financial foundation to support its future growth,” Carter’s statement reads.

The school received a score of 2.5 out of 3.0 for the fiscal year ending June 30, 2013, the education department said.

The university has declined the Observer’s requests for a copy of its latest audited financial statement. JCSU also has turned down the newspaper’s requests to interview Carter.

A Nov. 20 story in the Observer noted that the federal education department placed the university on its “heightened cash monitoring” list of more than 550 colleges and universities. It is the second year in a row that JCSU made the list. That means JCSU must undergo additional financial oversight.

Carter’s statement said the education department has not questioned JCSU’s finances, but it placed it on the watch list because it was late filing an audit report. The education department’s monitoring list does indicate that JCSU had a late auditing report.

The Observer’s story also noted that the university had a $7.5 million deficit for the fiscal year ending June 30, 2014, after reporting a $29 million surplus two years earlier.

Carter’s statement called that a “misunderstanding,” saying that gifts for construction projects affected those results. In 2012, the Duke Endowment pledged a $35 million gift, which on paper improved the university’s bottom line that year. But the university had to pay the actual construction costs over the following three years, the university’s statement said.

JCSU also said:

▪ It has developed a balanced budget for the current academic year.

▪ It now has 62 more students than had been projected for the fall semester, thanks in part to new online and social work programs. About 1,450 students are enrolled in the school.

▪ It has “settled all outstanding audit issues” related to prior financial audits.

Cash-flow challenges

Talmadge Fair says he is not impressed with the university’s latest statement. Concerned about JCSU’s financial problems, the former university trustee has petitioned to have Carter removed as president.

Fair contends that Carter’s recent statement fails to answer fundamental questions, such as why the university is having trouble paying some of its bills when for years it had money in the bank. Under Carter’s leadership, Fair says, the university appears to have increased its expenses but not its income.

“Clearly something is broke at JCSU,” says Fair, a 1961 JCSU graduate and president of the Urban League of Greater Miami. “And the sooner we can find out what this is, we can fix it.”

The Observer’s Nov. 20 story quoted a current employee who said he regularly fields phone calls from vendors who have not been paid.

JCSU acknowledged it sometimes experiences cash-flow problems. Most of its cash receipts happen at the beginning of each semester, the university’s statement said, and unexpected expenses late in the semester – such as a major maintenance problem – can pose “a challenge to the University’s normal cash flows.”

At the end of last year, the university stopped outsourcing its business operations to a third party and brought the work back in-house.

“The transition was not as smooth as we would have liked,” Carter’s statement said. “The Chief Financial Officer … challenged disputed invoices even if it led to late payment. This issue has since been resolved.”

This story was originally published November 26, 2015 at 7:01 AM with the headline "JCSU: The university’s finances are sound."