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Paine facing millions in revenue shortfall, documents say

Saturday, May 5, 2012 10:59 PM
Last updated Sunday, May 6, 2012 1:53 AM
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Paine College is facing millions in revenue shortfall through the summer, months after students complained of financial aid checks bouncing and an independent audit highlighted mismanagement of federal money by administrators, according to documents obtained by The Augusta Chronicle.

The private school had a $3.6 million shortfall as of March, which President George Bradley blamed on a drop to 800 full-time students – 50 below normal, state the minutes of a March 12 board of trustees executive committee meeting.

Board Chairman Eddie Cheeks said at the meeting that the board had to make some decision as to how to remedy the situation.

To meet payroll and projections through July, the school needs $4.8 million, the minutes indicate, but Paine also is looking at a cash deficit of almost $2 million as expenses surpass revenue through the same period.

The executive committee voted to let Bradley use Paine’s donation fund, or endowment, as collateral for a $3 million credit to cover the shortfall – despite restrictions prohibiting the use of most of the endowment funds. Though the vote passed 6-3 with one abstention, Paine officials later decided to drop the request and planned to seek an increase in an existing line of credit from $750,000 to $2 million, says a recent audit completed by the Augusta certified public accounting firm Cherry, Bekaert and Holland.

The audit, dated March 22, found that Paine lost eligibility for one federal loan program and was at risk of losing others for inaccurately reporting enrollment numbers and financial data to the government in 2010-11.

Bradley told board members that he discovered the budget problems in October. He requested a game plan from the chief finance officer and controller and fired them when he saw no growth, the minutes state.

Former Paine Controller Kelly Kindell said that he, Vice President for Administrative and Fiscal Affairs Leroy Summers and Student Financial Services Manager Nancy Summers were fired in February without explanation. A month later, dozens of students protested in front of the Paine administration building, saying financial aid checks had bounced or had not been delivered.

ALTHOUGH THE IDEA of using the endowment as collateral was later dropped, the meeting’s minutes reveal a contentious discussion among committee members.

Trustee Wayne Kendall questioned the legality of using the endowment as collateral because some donors have restrictions on how their gifts can be used.

In the recent audit, Cherry, Bekaert and Holland found that the school did not have policies in place to make sure money was spent as donors intended. The school also did not “maintain information related to restricted contributions, nor reconciles donor information to the amounts recorded in the general ledger,” the audit stated.

A message left on Bradley’s cellphone seeking comment was not returned. Brandon Brown, Paine’s vice president for institutional advancement, said the school would not comment on budgetary issues and instead released a statement Wednesday.

“Since becoming aware of these budget issues, Paine has moved swiftly to identify the necessary steps to ensure financial continuity,” the statement said. “The school promptly put in place financial responsibility measures, including the termination of relevant personnel and a complete review of College fiscal policies and procedures.”

The audit says Paine has $4.1 million in temporarily restricted money, which can be used only for specific, predetermined purposes, and $4.9 million in restricted money, which is required to be invested and maintained forever. Paine has only $34,000 in unrestricted funds that can be spent how the board chooses, the audit says.

IN THE MARCH MEETING, Kendall argued that because of restrictions on how donations can be spent, “there is no $3 million available” for the collateral that Bradley was requesting.

Kendall also asked whether donors gave the college permission to use their donations as collateral on a loan.

Brown replied that he had a spreadsheet showing endowment money and intent and that some donors did not specify how their gifts be used. Brown would not share the document with the committee because of donor confidentiality, the minutes say.

Kendall said a draft audit found that Paine had already spent $1.1 million in endowment reserved for investments last year. Bradley said the money was for construction and was “perfectly legal and normal,” but Kendall said the draft audit says something different, according to the minutes.

Kendall refused repeated requests for an interview with The Chronicle to explain the financial situation and uses of endowment money.

After a motion was made to approve Bradley’s request for the loan, Kendall asked the committee to seek other ways to raise money so the endowment would not be touched.

Bradley had said earlier in the meeting, however, that if the request for the loan was denied Paine would go into “financial exigency and look at major layoffs and furloughs until the cash flow improves in August.”

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FriedFacts
61
Points
FriedFacts 05/06/12 - 07:42 am
0
0
I predict the city of Augusta
Unpublished

I predict the city of Augusta will become involved in making up the shortcoming.

404Law
212
Points
404Law 05/06/12 - 10:12 am
0
2
Too many coincidences. Recent

Too many coincidences. Recent breakin at the Paine College's President's office. GHSU and ASU need more real estate and Paine is
situated in the perfect place for the "campus merger." Now this release of privileged information about thr financial ills of another private institution; another HBCU. Why bicker with African American commisioners about expanding the GHSU-ASU merger campus into black neighborhoods when you can just take over a black private institution with academic classrooms; dorms; facilities; etc. Im just saying.

avidreader
2952
Points
avidreader 05/06/12 - 10:22 am
3
0
Ms. McManus -- please remain

Ms. McManus -- please remain stalwart in reporting the on-going events at Paine. I smell a big, dead rat in the eaves of this institution, and someone has to force their hands. Trickery and deceit should be fully exposed, and if anyone suffers from these shenanigans, it should NOT be the teachers and students. I'm wondering if the upper echelon of management is considering a furlough for themselves? Will George Bradley stand up and take responsibility?

wondersnevercease
9216
Points
wondersnevercease 05/06/12 - 10:41 am
0
0
"Creative " Book Keeping
Unpublished

"Creative " Book Keeping always come back to haunt you.......................

wondersnevercease
9216
Points
wondersnevercease 05/06/12 - 10:47 am
0
0
LOL...yes 404law.. just
Unpublished

LOL...yes 404law.. just trying to keep the black man down...

it couldn't possibly be the Problems Paine is having is their own fault?

mike1sc
197
Points
mike1sc 05/06/12 - 12:12 pm
1
0
People can say what they

People can say what they want...but this has nothing to do with whether it is a black college, while college, or whatever. Obviously it is a financial mess and if someone or something doesn't hurry in and rescue this institution, those in charge will ultimately commit crimes in trying to keep it afloat, if they haven't already. This isn't new news, everyone has been reading about this ongoing problem. Someone needs to step in. There are very many bright college students who put their faith and money into Paine and these kids need to be protected at all costs. Where are the money people in this community who could step up and rescue this institution. Now is the time to do that.

shakwita
0
Points
shakwita 05/06/12 - 12:48 pm
1
0
Each student generates about

Each student generates about $20,000. A loss of 50 students adds up to a $1 mill deficit, not $3mill. Do the math. And what about current unpaid bills being reflected in the summer expenses. I don't see that, and I know all their bills aren't up to date. Hello!

Bizkit
29123
Points
Bizkit 05/06/12 - 12:59 pm
1
0
The question I have is how do

The question I have is how do all the students retain federal loans when the majority of the students are failing-I have from a reliable source. I know the faculty are failing the students yet somehow they still maintain eligibility-seems odd. I also have heard the faculty morale is low with the present administration, unreasonable expectations, apparently have asked the faculty not to talk about any financial issues with the public (which is illegal), hasn't even told the faculty anything about finances, and I forsee most will likely hire labor lawyers with concerns of not being paid during the summer months because they chose a 12 month pay rather than 9 month pay period. The President apparently told the faculty there were no concerns but what fool would believe that now after reading this article. They could save their lawyer costs by a group lawsuit. I understand that a number of faculty have evidence of breaking labor laws-documents requesting faculty to complete a list of tasks or they won't receive their check-which from what I understand you can fire them or write them up but you still have to pay them (that's federal law). The Board needs to act quickly because the administration has fired a huge number of faculty and staff and problems still persists (and a lot of lawsuits)-obviously the problem is with the administration.

showboat
302
Points
showboat 05/06/12 - 05:17 pm
0
0
PAINE COLLEGE IS IN A
Unpublished

PAINE COLLEGE IS IN A MESS!!!!!!

Sweet son
9654
Points
Sweet son 05/06/12 - 06:46 pm
0
0
We all want Paine to survive

We all want Paine to survive but the Federal Government needs to audit all of the federal money being sent to Paine. They also need to figure a legal angle on how to audit all of the finances of the institution. But you know I have lost so much confidence in my federal government and of course our President I don't know if they are capable of something as trivial as this! It's a sad situation and you need to write this down: if the Democrats prevail in November the USA will continue down the path of no return never to recover.

Little Lamb
43803
Points
Little Lamb 05/09/12 - 08:51 am
0
0
Dead Wood

Paine College has a lot of emeritus faculty, semi-retired faculty, and part-time faculty all drawing salaries for little, if any, instructional quality. It is time to cut the cord and reduce faculty expenses.

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