- Associated Press - Monday, December 8, 2014

COLUMBIA, S.C. (AP) - The state’s financial oversight board agreed Monday to dip into reserves and give South Carolina State University $12 million over three years, though questions remain about the school’s solvency and whether any of the money must be repaid.

The Budget and Control Board voted 3-1 to get the money from tax collections that are coming in above advisers’ expectations. Gov. Nikki Haley, the board’s chairwoman, refused to vote, calling the decision irresponsible to both the university and taxpayers.

“There were no terms put with it, no accountability put with it, no responsibility,” she said after the meeting. “I wiped my hands of it.”

University President Thomas Elzey said the money represents the support needed to pay bills and move forward.

Whether the funding for the state’s only public historically black college represents a loan or a bailout becomes part of legislators’ budget debate in the upcoming session. Haley said it clearly looks like a no-strings-attached gift.

“They just gave the money away because they know it can’t be paid back,” she said. “If they thought it was a Band-Aid, it wasn’t even that.”

Last week, a legislative panel approved the $12 million plan, as recommended by a group of former and current college presidents assembled by Senate President Pro Tem Hugh Leatherman. The plan calls for the school to receive $6 million this fiscal year to pay long-overdue bills, then $4 million in 2015-16 and $2 million in 2016-17.

Normally, the budget board must approve loans and their conditions. But a clause in the 2014-15 budget - which Haley did not veto - removed that final step in this case. It specified the budget board’s only role would be to identify the funding source within 15 days of a decision by the Joint Bond Review Committee, which Leatherman chairs.

“I didn’t think they’d handle it so irresponsibly,” Haley said about not vetoing the clause.

Haley suggested delaying action until an accounting firm hired by the budget board completes its review of South Carolina State’s finances. That could be as early as next month, depending on how quickly the university responds to outstanding questions. The firm is being paid from a $6 million loan to SC State the board approved last spring at Haley’s urging. The school is seeking an extension on paying that money back.

Leatherman, one of the board’s five members, said the budget clause put such debate out of the board’s purview.

To delay a vote would “stick your fingers in the General Assembly’s eyes,” said Leatherman, R-Florence, who’s also Senate Finance chairman.

Board director Marcia Adams said it appears the university’s projections for being financially stable rely on collecting money from students faster than it normally does. The accountants are seeking current enrollment data, as well as how long students have owed money. It appears the school is relying on tuition money owed for previous semesters, she said.

“We can’t give a report on the financial condition and validity of South Carolina State’s forecast” until the accountants get the information, Adams said.

Haley, Comptroller General Richard Eckstrom and Treasurer Curtis Loftis also questioned who would determine whether the school is solvent. Under the plan adopted last week, installments would be made after a group to be appointed by the college presidents determines whether SC State’s budget is balanced without a deficit.

Again, Leatherman said such questions are out of the board’s authority.

“When they have a balanced budget is not up to us,” he said.

House Ways and Means Chairman Brian White noted he voted against the $12 million plan at last week’s Joint Bond Review Committee, as he doubts the $12 million will fix the school’s problems. But he voted with Leatherman on Monday, saying he already lost that battle. Loftis hesitantly voted yes after saying he wasn’t sure what to do.

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