University funnels state funds into its own foundations
- Foundations are typically used to manage private donors and endowments and operate with no legislative or public oversight.
- The S.C. inspector general says the practice is "inappropriate and needs to cease."
South Carolina State University (SCSU) funneled state funds into two foundations it is affiliated with, a practice that “is inappropriate and needs to cease” according to the state’s inspector general.
SCSU has been facing a variety of administrative issues, including debt—a $13.6 million deficit that resulted in a $6 million loan from the state—and the danger of losing its accreditation.
However, university trustees just granted President Thomas Elzey a $50,000 bonus—a contractual obligation since Elzey, who was appointed in April 2013 amid some controversy, received a satisfactory evaluation.
S.C. Inspector General Patrick Maley’s investigation, states that from 2010-2013, SCSU’s five major vendors provided rebates of over $11 million, which were funneled into two foundations: the S.C. State University Advancement Foundation and the S.C. State University Foundation.
Additionally, almost $2.3 million of this refund was placed in the SCSU foundations and used for travel, flowers, awards, entertainment, country club memberships, and other expenses.
The report also warned that the practice could give the appearance of corruption.
“What image goes through most people’s minds, particularly taxpayers, when a contract term states, ‘a $200,000 unrestricted partnership gift on the first day of the contract?’” it asks.
The South Carolina State University Foundation claims that its mission is to, “support and build the academic, research and public service programs of the University through faculty and student aid programs.” The only oversight is a voluntary Board of Directors that operate with no third party supervision.
Maley’s report says more transparency and simplicity is needed when it comes to SCSU’s funding.
“The practice of vendor rebates to foundations was not only inappropriate, it was poorly controlled,” the report stated.
SCSU students annually pay an extra $343 for meal cost to support this vendor rebate back to the university, according to the report.
Campus Reform previously reported that SCSU has cut staff by 180 employees but still spends more state-funded money per student than any other public school in South Carolina.
Sonja Bennett, a spokesperson for the university, said SCSU agreed with the inspector general’s report.
"We concur with the IG that such practices at statewide institutions of higher learning may create a perception that total transparency is lacking. Moving forward the university will apply best practices to enhance transparency and accountability," Bennett said.
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