Kentucky State University is still figuring out what all went wrong during the years of former president M. Christopher Brown II’s tenure.
But it has a clearer picture now — including several improvements made under Brown — according to a presentation from Chief Financial Officer Greg Rush, Acting President Clara Ross Stamps and Council on Postsecondary Education President Aaron Thompson. The trio presented on the current financial situation at the beleaguered university as well as the benefits it has provided the state in its 135 years to the Budget Review Subcommittee on Education on Wednesday.
All legislators who spoke were decidedly less harsh on the university than the Interim Joint Committee on Appropriations & Revenue the week prior.
Rush noted that while the school’s cash shortfall as a result of prior year items like unpaid invoices and state construction accounts amounted to $15.7 million, its total projected cash shortfall for the current fiscal year would be around $21 to $23 million.
Previously, Rush stated that the school would need a bailout by April in order for the school to stay open.
Stamps kicked off the presentation with a brief overview of events leading up to Brown’s resignation. She said that staff informed the board of the scope of the school’s massive shortfall, then the board informed CPE and the office of Gov. Andy Beshear.
The board’s “response” to the issue, she indicated, resulted in the leadership transition.
She later highlighted KSU’s history as a land grant institution and a Historically Black College or University (HBCU), as well as its service to those students from low income or first-generation backgrounds. She said that 76% of the school’s 2020 graduates fit in either or both of those categories. Additionally, 82% of undergraduates are Pell Grant recipients, meaning that they get assistance from the federal government based on their financial need.
Stamps also said that of the school’s 2,279 students, 57% were Kentucky residents. Nearly 55% of KSU graduates are employed in Kentucky within three years of graduation, she said.
Rep. Derrick Graham, D-Frankfort, said that KSU had been a vital institution for people of color in leadership positions. He said that when he arrived at the statehouse in 2003, there were five legislators of color; all of them, including himself, were graduates of KSU.
He also highlighted the school’s world-renowned aquaculture program as a source of pride.
Rep. James Tipton, R-Taylorsville, remarked on what he called a “substantially” improved six-year graduation rate. The school’s latest mark was 37%; five or 10 years ago, Thompson estimated that mark to be 13%.
Under Brown, both total enrollment and graduation rates went up.
Tipton also commended Stamps for taking on the role in the midst of a “very challenging situation.”
One challenge noted by the school’s CFO was getting CARES money to students on time.
Rush said that the school is still working to distribute all of its CARES funding, of which it received about $25 million. The CFO said that $15 million remained unspent and that the school planned to disburse around $4 million directly to students — some of those who receive the funds, he said, will be students who recently left the university.
In response to the financial woes, the school administrators pointed out various measures taken to stop the bleeding.
They referenced the advance of its $5.4 million fourth quarter allotment from the state as well as freezes on hiring, nonessential travel and procurement cards.
Rush confirmed earlier to The State Journal following a report on Brown’s credit card statements during his last two years in office that the school immediately froze most university purchasing cards. All that remain active are those for the purchasing and accounts payable department, one for university events and one for the president’s office, he said.
Also of note, the school reduced about $800,000 to date in personnel expense following a wave of terminations.
Rush identified the school’s “cash problem” as beginning in 2019.
“In late 2019, the university began to have a cash problem and began to take some actions to manage that problem which pushed it forward into future fiscal years,” Rush said.
A major source of the issue was underselling the school’s expenses in the budget, an issue that he has identified this year thus far.
“On the revenue side, the budget was reasonable,” Rush said. “But the payroll that was in place, and the contracts and level of expenditures that were predicted for the year, those were well in excess of the budget numbers that were presented to the board in my opinion.”
Rep. Graham asked if the board of regents was presented with detailed information on the school’s finances, to which Rush responded that it wasn’t. He said that going forward, his office will work to present the board with a more delineated, discrete budget.
Thompson, in an interview with Kentucky Educational Television last week, said that he thought the board was asking “the right questions” of the administration, but that “all the information wasn’t fully given.”
“We know that the board had some indication that there was some financial issues and they asked the president and CFO at the time and CFO to give them some information on that and information was provided. The information that was provided said they were not in financial trouble.
In that interview, Thompson also noted that KSU’s bookkeeping was part of the problem.
“What we know is that there was not great bookkeeping,” Thompson said.
He also said that CPE asked questions of KSU administration about its finances that were “not fully disclosed answers.”
Thompson said that the board and public would likely know more come the board’s planned Oct. 19 meeting.
Going forward, Thompson emphasized, as he has previously, that KSU needs to identify more areas in which it can carve out a niche in the educational landscape of Kentucky. He identified education, public administration and adult education, among others as possibilities.