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Paine working to resolve financial woes

Misuse of funds led to scrutiny at small college

Thursday, Dec. 27, 2012 9:28 PM
Last updated Friday, Dec. 28, 2012 2:08 AM
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EDITOR’S NOTE: This is the seventh installment of a 10-part series on the top stories of 2012.

Paine College faced scrutiny for misuse of student aid funds.  FILE/STAFF
Paine College faced scrutiny for misuse of student aid funds.
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The year 2012 was a time of readjustments and scrutiny for Paine College.

In March a financial audit showed that school administrators mismanaged student financial aid and incorrectly reported enrollment numbers to the federal government. Throughout the year, dozens of students complained that financial aid checks had bounced, and documents from Board of Trustee meetings showed the school was facing millions in revenue shortfall through the summer.

President George Bradley responded in April by saying Paine officials “promptly put in place financial responsibility measures” and terminated the personnel responsible for the mismanagement as soon as the school became aware of problems in September 2011.

However, as the year continued, more financial problems were revealed.

In an April memo to the Paine Board of Trustees, former trustee Wayne Kendall stated that federal money intended for students was used instead to pay the school’s payroll and past-due bills in December and January.

The school received an $800,000 payment from the U.S. Department of Educa­tion in December 2011, a portion of which was to be refunded to students, but the funds “were used entirely to pay payroll,” according to Kendall’s memo.

By the end of 2011, the memo states, Paine owed students about $1.2 million in student aid that had not been given out.

The school received another federal drawdown of $1 million in January, but instead of giving refunds to students, as required by federal regulations, officials used most of it to pay bills that were 60 days past due, according to the memo.

In June the accrediting body for colleges in the Southeast, the Southern Association of Colleges and Schools’ Commission on Colleges, placed Paine on warning and gave the school 12 months to correct the financial mismanagement.

Paine was in violation of six compliance standards related to financial resources, the quality of administrative and academic officers, financial stability, control of finances, sponsored research and external funds, and the control of financial aid programs, said Belle Wheelan, the president of the accrediting organization.

Bradley said at the time that he did not view the warning as a punishment, but an opportunity to improve.

Paine has until June to comply with the accrediting body, and officials closed the year with an announcement that hinted at growth and hope.

In October, Paine announced plans to revive a football team after a 50-year absence.

The start-up cost for a similar football venture at LeMoyne-Owen, a private school and one of Paine’s division rivals, was reported to be $1.5 million with operating costs of $500,000 a year.

However, officials at the historic black college said the program will be possible with increased enrollment and community support.

In 2013, the school will also unveil the completed Health Education Activities Learning Complex with a 2,100-seat arena as part of one of several planned advancements.

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barbara1 12/28/12 - 08:31 pm
Paine College

I do not agree with all the negative articles that seem to appear from such a small group and I do question the motives. What exactly is the reason for this latest article, to keep us questioning our school or is it to get us going into the new year against Pres Bradley? You never once mentioned whether things are better.... just kinda of left it as a "poor ole Paine" thought.

Tracey McManus
Tracey McManus 12/28/12 - 09:05 pm

Hey Barbara1,
You asked the reason for this latest article. This is the seventh story in a 10-part series where the Chronicle recaps the top stories of 2012. We tried to explain that to readers in the "Editor's Note" at the top of the article.
You also questioned the motive - there is no motive. We just compiled the top stories of the past year based on newsworthiness.
At the time the stories were written (roughly March - June), the intention was to get information out to the public about an institution that is important to the community and to make stakeholders aware of mismanagement that was identified.
Thanks for reading,
Tracey McManus

thauch12 12/28/12 - 10:30 pm
What a pathetic institution.

Paine College is the definition of what a joke higher education is turning into. The place should be closed and all the students should be refunded their tuition. The only thing keeping the place afloat is the fact that it is a HBCU. The academics are a joke. The athletics are a joke (whoever thought it would be a good idea to throw money into a football team when the "college" can't even afford to pay its debts). Good riddance to this rubbish!

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