Paine will appeal recommendation to discontinue accreditation, say school officials

Even though its accrediting agency recommended against continuing accreditation, Paine College officials said they will mount a vigorous appeal that will contain new evidence of its fiscal solvency even as it seeks more donations to help.

 

And while that appeal is pending, which could be months, it will remain accredited, officials said.

See photos from the press conference

The Southern Association of Colleges and Schools Commission on Colleges recommended Thursday that Paine be dropped from its membership after two years on probation because it did not meet three financial standards: financial resources and stability; financial stability; and control of sponsored research/external funds. But Paine President Samuel Sullivan and Board of Trustee member Michael Thurmond said as part of its appeal that it will be able to present evidence of improved fiscal health it could not provide during a presentation to the commission Wednesday.

For instance, a special committee came to Paine in the spring to review its finances and in April the school was projected to end the year with a $3.5 million deficit, he said. But based on new fundraising and improved management, “I am extremely confident that on the last day of this fiscal year, Paine will end this year not with a $3.5 million deficit but with a surplus,” Thurmond said.

He said it was the first balanced budget Paine has had in 14 years. Paine has brought in a record $3.1 million this fiscal year and the SACS appeal rules allow an institution removed solely for financial reasons to present “new and verifiable financial evidence that has become available since the adverse action was taken” as evidence it should be restored.

Sullivan earlier this week made a plea for $1 million by the end of the fiscal year on June 30 and said the school could actually use more than that.

“We need obviously as much money as we can get,” he said, and the school is also taking cost-cutting measures, such as eliminating some vacant positions and evaluating whether newly vacant positions should be filled.

Paine was first placed on probation in 2014 when the accrediting agency found it had not met standards in 10 areas and that probation was continued in 2015 when the agency found the college was still lacking in four areas. Under the commission’s rules, no school may continue on probation for more than two years.

Paine has been told of the decision but has not yet received anything in writing, said Dr. Pamela Cravey, the commission’s coordinator of communications and external affairs. Once it receives written notification, the school has 10 days to decide whether to appeal and while that appeal is pending it maintains its same status as accredited and on probation, she said.

Sullivan said he expects to receive something in writing within a couple of weeks that will help guide Paine in how it pursues its appeal. An appeal can take months to decide, Cravey said.

In the meantime, Paine is assuring current and prospective students that it is accredited and “we’ve been preaching this forever but Paine is going to be here,” Sullivan said. He expected the school to have around 550 students next year, about what it had this year but Thurmond said Paine had actually received a “record number” of 3,900 applications for the incoming freshman class.

“When you are raising more money and attracting more students, I tell you that is not the characteristics of a college that is dying, is it?” Thurmond said. “Paine College is moving in the right direction. We have challenges but we don’t have as many as we had last year at this time.

Rising junior Deonté Moses said he and other students are ready to get behind the school and do what it takes to help Paine keep its accreditation.

“Paine College saved my life,” he said, after graduating last in his high school class in Baltimore, Md.

If it loses accreditation, Paine would no longer qualify for the U.S. Department of Education’s federal Title IX program and for other federal funding, according to the commission. More than 95 percent of Paine’s students receive financial aid, according to Paine’s Web site, and Thurmond said they can continue to do so while the appeal is pending.

The Augusta Chronicle reported last year that by the end of 2014 Paine lost $2.9 million in assets, the fourth consecutive year it had lost assets, and the amount owed on a line of credit went from $3.8 million to $5.4 million. But under Sullivan, the school had embarked on an aggressive fundraising campaign over the last several months.

The school held a press conference last month to celebrate having reached its $3.5 million fundraising goal. Sullivan said there are more than $2 million in outstanding pledges and the school will work with those to see if they can be paid sooner, including a $1 million pledge from the Christian Methodist Episcopal Church. Paine has received support from a number of churches in Augusta and will continue to reach out to them and to the community in general, he said.

“If you are part of the Augusta community, this institution belongs to you,” Sullivan said.

The college has privately received support from members of the Augusta Commission, including $10,000 from Mayor Hardie Davis’ church, and the school plans to talk with the commissioners about possible support going forward, Sullivan said.

“Paine College is an enterprise in Augusta that needs to stay here,” he said.

Former Augusta Commissioner and Paine alumnus Betty Beard said she is “hopeful” the school can prove it deserves to continue its accreditation.

“I know we have made progress,” she said. “It would be a shame because the school has been here as long as it has. It is something we want to keep here in the community.”

Augusta University President Brooks Keel issued a statement of support for Paine “during this very challenging time. Paine’s roots run deep in our community and today our hearts are with their students, faculty, staff and alumni. Augusta University and Paine College aren’t only neighbors, but partners in a common goal to create a community of scholars invested in the success of Augusta.”

 

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PAINE’S WOES

MARCH 2012 -- About 30 Paine College students protest outside the school’s administration building Wednesday, asking officials to fix alleged financial and operational problems on campus.

The protest, students said, was a last resort after several attempts to reach administrators in person and through letters went unanswered.

The administration has not responded to dormitories in need of repair and financial aid checks that have bounced or not been delivered, according to Lindsey Scoggins, a Paine history major who organized the demonstration. This month, more than 50 financial aid checks bounced when students attempted to cash them, she said. More were never awarded the checks.

Students said dorms are filled with mold and leaks and cafeteria food is subpar. During the protest, in which some stated concerns about how their tuition is spent, students dressed in black and held signs asserting that grilled cheese does not count as dinner and that dorm conditions must change.

 

APRIL 2012 -- The Augusta Chronicle reports that Paine College lost eligibility to one federal loan program for students and is at risk of losing more funding for mismanaging student financial aid and inaccurately reporting enrollment and financial data to the government, according to a recent financial audit.

Along with other bookkeeping failures, the school did not change enrollment statuses or return unused aid to the government after some students withdrew in the 2010-11 fiscal year, according to a financial audit of the 2009-10 and 2010-11 fiscal years by Augusta certified public accounting firm Cherry, Bekaert & Holland. The audit was certified March 22.

The audit obtained by The Chron­icle details the school’s lack of resources and knowledgeable personnel dedicated to preparing financial statements and managing federal money. In the fiscal year ending June 30, 2011, the college spent $500,000 more than it had in income and ended with $343,000 in available cash, compared with $1.1 million in the same account the year before.

 

MAY 2012 -- Documents obtained by The Chronicle show that 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.

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 & 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.

 

MAY 2012 -- A Paine College trustee said federal money intended for students was used instead to pay the school’s payroll and past-due bills in December and January, according to documents obtained by The Augusta Chronicle.

The school received an $800,000 payment from the U.S. Department of Educa­tion in December, a portion of which was to be refunded to students, but the funds “were used entirely to pay payroll,” according to a memo written to the Board of Trustees on April 20 by Wayne Kendall.

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

The school received another federal drawdown of $1 million in January, but instead of making 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.

 

JUNE 2012 -- The accrediting body for colleges in the Southeast on gives Paine College 12 months to correct financial mismanagement to keep its accreditation.

The warning period was given to Paine by the Southern Association of Colleges and Schools’ Commission on Colleges, an organization recognized by the U.S. Department of Education that is responsible for overseeing the operations of educational institutions.

Paine is 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.

 

JUNE 2012 -- The president of Paine College’s accreditation association said the school could have an additional year to get its financial house in order if it does not come into compliance with its accrediting body by the end of its 12-month warning period.

 

OCTOBER 2012 – Paine announces the return of its football program after a 50-year absence.

 

JUNE 2013 -- The Southern Association of Colleges and Schools Commission on Colleges votesto keep Paine on a warning sanction for another 12 months, finding that it is out of compliance with most of the same six standards for which it was initially placed on notice in June 2012.

Paine is in violation of standards related to managing financial resources, employing qualified staffers, being able to demonstrate financial stability, exercising control over finances, having control over sponsored research/external funding, and handling federal student financial aid, according to Belle Wheelan, the commission’s president.

 

MAY 2014 -- The Augusta Chronicle reports that a U.S. Department of Ed­u­cation review the previous year at Paine College – prompted by allegations of financial mismanagement – found the school had violated a dozen areas of federal student financial aid regulations ranging from withholding refund checks from students to inadequate bookkeeping.

The department submitted these findings regarding the 2011-12 and 2012-13 years to Paine in June after an on-site visit in November 2012 and required corrective actions to be taken by the college.

 

MAY 2014 -- Paine College issues a statement that it will implement summer furloughs for administrators, faculty and staff but keep tuition rates unchanged for the 2014-15 academic year.

Paine Police Department employees and hourly workers are exempted.

The furloughs, the number of which were not specified, are needed because of the federal government’s cuts in Parent Plus Loans and Pell Grants, which have negatively impacted Paine and institutions throughout the nation, according to the statement.

 

JUNE 2014 -- Paine College is placed on probation by its accrediting body, the most severe and final sanction possible before accreditation is revoked.

The Southern Association of Colleges and Schools Commission on Colleges implemented the sanction after Paine failed to correct the same problems for two years on the less-severe warning status.

Compared to the six violations Paine faced in 2012 and 2013, the private college this year is in violation of nine standards relating to fiscal stability, institutional policy, qualified officers, control of finances, control of sponsored research, institutional environment, and federal student financial aid programs, according to commission spokeswoman Pamela Cravey.

 

JUNE 2014 -- As of June 30, Paine was operating at a loss, with expenditures exceeding revenues by almost $300,000. Revenue fell by more than $2 million from the previous year ,and Paine maxed out its nearly $4 million line of credit with Morgan Stanley Smith Barney LLC.

The BDO audit on the year ending last June 30 also found some of the same bookkeeping failures identified in the fiscal 2011 by independent auditor Cherry Bekaert and Holland.

 

AUGUST 2014 -- Paine College President George C. Bradley on Friday announces the college will implement furlough days, salary reductions and layoffs to save $2.4 million over the next fiscal year.

The changes are part of Paine’s efforts to resolve various accreditation violations and to ensure expenses do not exceed revenues, according to a news release.

Bradley also announced the formation of an advisory committee that will monitor the progress the college is making toward resolving its accreditation issues with South­ern Association of Colleges and Schools Commission on Colleges.

 

SEPTEMBER 2014 -- Bradley resigns after six years as president, which a strong segment of the Paine community had been seeking. An online petition calling for his resignation launched in June and garnered more than 400 signatures.

 

OCTOBER 2014 -- Interim Paine president Samuel Sullivan confirms that Brandon Brown, the school’s senior vice president of institutional advancement, is no longer employed by the school.

 

OCTOBER 2014 -- Brown files a wrongful termination lawsuit against the school and former acting President Samuel Sullivan on Monday seeking $430,000 in lost wages and other damages.

 

JANUARY 2015 – Paine suspends football program due to financial reasons. Paine interim president Samuel Sullivan said the school’s Board of Trustees unanimously voted to suspend the program for two years, leaving open the option to bring football back in the future.

 

APRIL 2015 -- A review team with Paine College’s accreditation body finds that the school has resolved six of its 10 accreditation violations during a three-day site visit that concluded Wednesday, according to a statement released by Paine. The Southern Association of Colleges and Schools Commission on Colleges’ special committee interviewed administrators, faculty, staff and students and gave recommendations on the remaining four standards that need to be addressed, according to the college’s statement.

The college did not disclose which four accreditation standards are still in violation.

 

JUNE 2015 -- Paine College’s accrediting body votes to keep the school on probation for a second year while it continues to resolve violations of financial and operational standards.

 

OCTOBER 2015 -- According to an announcement on the college’s Web site, the school was unable to meet its scheduled payroll, but no explanation is given as to why. Interim President Samuel Sullivan told faculty and staff about the shortfall during a meeting at Gilbert-Lambuth Memorial Chapel earlier this week, according to the release. Salaried employees who are paid by institutional funds were affected.

Interim Controller Sherrell Flournoy said hourly employees paid by grants received a paycheck.

The college issued letters to creditors stipulating that employees would be paid no later than Jan. 8, 2016, according to the release.

 

NOVEMBER 2015 – Paine holds fundraiser called Paine College’s Build it Back Rally and raised over $260,000, according to school officials, exceeding a $250,000 goal.

 

MAY -- Paine College announces a number of changes coming out of its recent spring meeting, including restructuring the membership of its board of trustees and the board’s accepting “ultimate responsibility” for correcting fiscal and managerial problems that have plagued the college since 2013.

 

MAY -- Paine College announces that the college has received pledges totaling more than $1.3 million, successfully meeting the school’s $3.5 million fundraising goal set last year.

 

JUNE – In a June 12 guest column in The Chronicle, Paine President Samuel Sullivan acknowledges that “our struggle is not over yet” and that pledges “have gotten us closer to our fund¬raising goal of $3.5 million.” But the school must raise an additional $1 million by June 30 “to satisfy immediate financial needs,” Sullivan wrote.

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VIDEO: Paine College Press Conference
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