Too Late for a Fix?

Last December, the Southern Association of Colleges and Schools Commission on Colleges posted a disclosure statement about Saint Augustine’s University in Raleigh, N.C., outlining a tenuous situation for the university. In a year, the accreditor would either remove the university from probation or strip it of membership.

The second scenario would effectively be a death knell for the 151-year old historically black university originally founded by Episcopal clergy to educate freed slaves. Colleges and universities that lose their membership -- their accreditation -- are asked to submit teach-out plans outlining how their students will be able to complete their education after the closure of the institutions. They no longer qualify to participate in federal student financial aid programs, a critical source of revenue for tuition-dependent institutions.

Saint Augustine’s is on probation because the accreditor years ago identified wide-ranging problems at the university including with financial resources, financial stability, control of finances and processes related to the institutional effectiveness of its educational programs. Nonetheless, the university posted a positive update on its website last December, pointing to a turnaround strategy supported by alumni and the Episcopal Church. The university’s president, Everett B. Ward, was said to be prioritizing financial stability.

“I am pleased the university has been given additional time to remove the sanction status altogether and continue its ongoing turnaround strategy,” Ward said in a statement at the time. “Our recent audit reflects a debt reduction of over $1 million, which represents a significant shrinkage of our deficit. This fall we had an increase in freshman enrollment and over the last year we witnessed an increase in donor giving. Though not out of the woods, we are undoubtedly in a better position today than we were two years ago.”

But a new report this week questions whether Saint Augustine’s will in fact retain its accreditation in the midst of continuing financial hardship and disagreements among its leaders. A review of the university’s tax filings confirms that its financial condition has eroded in recent years. It also sharply reduced the number of people it employs in the last six months.

The university’s leaders say they have shored up the financial situation by cutting expenses, winning over donors, securing debt relief and installing new financial processes. They insist they will keep the doors open.

“Our university is not closing,” Ward said in an interview Tuesday. “Saint Augustine’s is alive and well, and we are working to deal with the issues regarding SACS.”

Ward pushed back after HBCU Digest reported Monday that staff members, consultants and executives connected to the university are increasingly worried it will not pass its upcoming accreditation site visit. The publication received anonymously sourced documents and detailed reports showing issues with enrollment, finances, personnel turnover and disagreements about Ward.

“I am formally informing you and the Board of Trustees that in my expert opinion, I do not feel that St. Augustine’s University is ready or prepared for the upcoming accreditation site visit, and unless drastic measures are taken immediately, the institution will lose its accreditation and be closed,” a consultant wrote in a July 2018 letter to Ward, HBCU Digest reported.

The publication posted a new student admission report dated July 20 showing that 218 admitted students confirmed that they would be attending Saint Augustine’s this fall, and 122 had confirmed and paid deposits. The admission report lists the university’s target as 600 students.

Also posted were proposed budget documents and Ward’s performance evaluation from trustees, dated July 2018. Trustees gave Ward a score of 70 percent, and comments listed on the evaluation range from supportive to harshly critical.

One comment says that Ward “has no clue on the university’s finances” and provides no financial reports as mandated by bylaws. The next comment says the president “does well” on finances.

Other critical comments on the sheet reference Ward’s perceived lack of experience in higher education, an allegation that he runs the university like a dictatorship, a complaint that he does not follow bylaws and procedures, and concern about another role he holds as the general president of a national fraternity, Alpha Phi Alpha.

Ward declined to comment on the contents of his performance review. The fact that his personnel records were leaked raises “general governance” questions, he said.

He did, however, defend his Alpha Phi Alpha presidency, which pays for travel and other expenses when he is doing business for the organization but does not pay him a salary. Saint Augustine’s trustees knew about his involvement with the fraternity and approved of it when they hired him as university president, Ward said. The fraternity has its own staff to handle day-to-day operations, he added.

“That is a volunteer position,” Ward said of his fraternity leadership. “The Board of Trustees accepted that as one of the commitments that I had made and said they saw that as a benefit.”

Ward was hired as Saint Augustine’s interim president in 2014 and became its permanent president in 2015, making him the third alumnus to lead the university. He had previously served as the university’s board chair from 2009 to 2011.

The chairman of the university’s Board of Trustees, Hilton O. Smith, issued a statement supporting Ward and calling the future bright.

“On behalf of the Saint Augustine’s University Board of Trustees, we are excited about the start of a new academic year,” it said. “We continue to support the direction the university’s administrators are taking to prepare for the university’s removal from probationary status with the regional accreditation agency.”

Saint Augustine’s expects to enroll between 975 and 1,000 students in the upcoming fall semester, with about 400 freshmen, Ward said. That would be consistent with 974 undergraduates listed as enrolled at the university in the fall of 2017 by the U.S. Education Department’s College Navigator site -- although it would be down from 2010 and 2011, when the university enrolled about 1,500 students. The expected number of freshmen would be a substantial uptick from the 122 student deposits on the leaked July report.

The university’s enrollment picture is changing fast, according to Ward. Many students work until the last minute to line up enough funding to attend, and internal documents are updated frequently.

“That is not a document that should be judged as an affirmative number at all,” Ward said. “Even if you have a document dated July 20, that document could have been circulated at 8 a.m. on July 20, and by 5 o’clock it could be a totally different set of numbers.”

Saint Augustine’s has drawn up a budget that will break even at 865 full-time-equivalent students for the new fiscal year, Ward said. Although finances for the most recent fiscal year that ended in June have not been audited yet, the college should post a “positive position” breaking even, according to Ward.

That would again be a considerable departure from recent years. For the fiscal year ending in June 2017, the university’s expenses totaled $33.5 million, exceeding revenues by $1.66 million, according to Internal Revenue Service filings. It posted deficits of nearly $724,000 and $3.4 million in the two preceding years. Total revenue dropped from $43.8 million for the year ending in June 2014 to $31.9 million for the year ending in June 2017.

Ward said in order to improve the university’s finances, administrators have focused on fund-raising and cost-containment strategies such as merging academic programs and changing faculty and staff levels based on demand and staffing needs.

Ward did not say how many employees have been laid off in recent years. He said Saint Augustine’s generally had about 250 employees, including 118 faculty members, plus another 75 or so adjuncts, depending on the semester.

A university spokesman later provided a clarification, saying the numbers cited by Ward were not current and did not include staff changes, retirements, resignations and a "small number of layoffs." The university now has 61 faculty members and 136 staff members, plus about 75 adjuncts, the spokesman said. The university is currently filling 10 to 15 positions, including critical positions in fiscal affairs, he said.

Saint Augustine’s is receiving some financial relief on a federal loan. It was one of several HBCUs to receive a loan deferment from the U.S. Department of Education earlier this year. The deferment will last six years, freeing about $1 million per year, Ward said.

The university has improved processes in order to keep its accreditation, according to Ward. It put in place new software and improved its business and finance administration.

The university must submit a report to the accreditation commission in September. SACSCOC has authorized a special committee to visit campus.

The accreditor will determine Saint Augustine’s fate -- and whether its assessment matches that of the university's leaders. Their statements have differed in the past.

In January 2018, about a month after Saint Augustine’s posted the statement from Ward saying the university was “undoubtedly in a better position today” than it was two years ago, SACSCOC president Belle S. Wheelan wrote to university administrators about several deteriorating financial indicators. Her letter was among the documents posted by HBCU Digest.

“Findings from the management letter, financial statement findings and federal awards findings, all create concern for control of finances, and in particular a material weakness related to year-end accounting closeouts,” she wrote in part. “Unresolved prior year findings in addition to new findings in FY 2017 indicate a lack of control.”

Asked why he is confident of Saint Augustine’s continued survival under the circumstances, Ward reiterated that the university has taken steps to meet accreditation standards.

“I feel very confident that we have a compelling and truly documented position that will speak to the university’s position around each of the standards that have been cited,” he said.