State forgives $12M loan for S.C. State University

by Ashley Heffernan

Gov. Nikki Haley signed a bill into law on Tuesday that forgives $12 million worth of loans for S.C. State University and creates a repayment plan for an additional $6 million in loans.

The state allocated $12 million in loans over a three-year period: $6 million last year, $4 million this year and $2 million next year. The university also received a $6 million loan from the S.C. Budget and Control Board in April 2014.

The state has agreed to forgive $12 million worth of loans for S.C. State University and allow the school to repay a separate $6 million loan at a rate of $355,036 annually. (Photo/Provided)

The state has agreed to forgive $12 million worth of loans for S.C. State University and allow the school to repay a separate $6 million loan at a rate of $355,036 annually. (Photo/Provided)

Under the new law, the State Fiscal Accountability Authority will forgive $8 million of the $12 million debt in fiscal year 2016-17 and $2 million during fiscal 2017-18 and fiscal 2018-19, with three conditions. The university must maintain accreditation with the Southern Association of Colleges and Schools, increase its net financial position each year and grow full-time student enrollment by 1% annually.

“We certainly would have not been able to pay back all that money in a short amount of time,” Interim President W. Franklin Evans said. “It’s very good news for us.”

The SACS board of trustees will decide on June 15 to either restore the institution to full accreditation or remove its accreditation, which would likely force the school to close. S.C. State has been on probation (.pdf) with the association for two years.

Evans said he expects the decrease in debt to have a “significant impact” on the accreditation decision, because the compliance issues that were raised by the board were mainly focused on the university’s financial struggles.

The university will be required to provide a quarterly report on its fiscal affairs and enrollment growth to a House Ways and Means subcommittee and the Senate Finance Committee.

The law also creates a repayment schedule for the $6 million loan from April 2014, which was taken out to meet payroll, debt service obligations and pay a portion of delinquent vendor invoices. The university will repay that loan back at a rate of $355,036 annually.

Additionally, the law allows the university to institute mandatory employee furloughs up to 20 working days in each fiscal year.

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Ashley Heffernan

Staff Writer
Ashley Heffernan covers residential real estate, higher education, health care, hospitality, tourism, retail, financial services and the city of North Charleston for the Charleston Regional Business Journal. Reach her at 843-849-3144 or via email.