Central State placed on fiscal watch

Central State University has been placed on fiscal watch by the Ohio Board of Regents because its financial health score has dropped below state requirements for two years in a row.

Central State and Owens Community College in Toledo were both put on fiscal watch this week — the first state schools to receive that warning in the 15 years since the health score measurement began, Regents spokesman Jeff Robinson confirmed.

Central State President Cynthia Jackson-Hammond said in a statement Thursday that declining student enrollment and students’ difficulty in qualifying for federal financial aid remain major challenges for the historically-black university in Wilberforce, just northeast of Xenia.

According to the regents, CSU’s fall enrollment was 1,751, which represented a 15.3 percent decline from the 2,068 students enrolled in the fall of 2013. The 2012 number was 2,152 students.

“Although the university receives on average 5,500 applications a year, many of these high-potential students are plagued by their limited ability to meet the parental/family contributions required by the Federal Pell Grant program,” the university said in its statement.

Jackson-Hammond said CSU’s two most recent audits “indicate that this institution is fiscally sound and implements quality standards of its fiscal operations.”

In a Tuesday letter to Central State’s board of trustees, Ohio Chancellor John Carey said CSU’s “composite scores” on financial health were 1.3 in 2012-13 and 1.0 in 2013-14. State law says any school with back-to-back scores under 1.75 is placed on fiscal watch.

The scores are the result of a complex equation involving university assets, debts, revenues and expenses. Robinson said CSU’s low scores were a result of “a combination of factors,” but added that CSU “has started to address the issues and is working hard to improve its score.”

Fiscal watch status means that within the next 90 days, Central State must approve a detailed “financial recovery plan” that aims to pull the school out of fiscal watch within three years. CSU also must consult with the state Auditor’s office, and must file quarterly financial reports, according to Carey’s letter.

Dave Cannon, vice chancellor of finance and data management for the Board of Regents, said the board will work closely with CSU.

“Central State has long been an important piece of the fabric of Ohio’s higher education system, and fiscal stability will help the university continue its tradition,” Cannon said.

The first step to getting out of fiscal watch is posting a composite score of 2.4 or better for a fiscal year, meaning CSU would have to more than double last year’s score. If in three years CSU does not get out of fiscal watch on its own, and state officials determine the school has a “serious failure of financial administration,” the state can appoint a conservator to run the school’s finances.

State Sen. Chris Widener, R-Springfield, who has advocated for CSU in the past, said the fiscal watch designation is a surprise given the progress the school has made from its past.

CSU’s financial issues in the 1990s — at one point facing millions in debt and concern that it might close — actually triggered the state fiscal rating system that put the school in fiscal watch this week. University reforms and a state assistance package helped the school survive at that time.

Widener said “everyone from the governor on down” is positive about the future for Central State now. He said Hammond has made tough changes, ensuring that CSU has college-ready students who are prepared to go to a four-year university.

“That obviously drops enrollment in the short term. They’ve been dealing with making ends meet since that decision, but I think it’s all for the better,” Widener said. “The (other) major issue is some energy efficiency debt and loans they took out several years ago to cut operating expenses. … I think this is a short-term situation. I think the leadership there has fully embraced what it takes to get back to where they want to be.”

The university’s statement said CSU has cut operating expenses by 21 percent, or $10.3 million, and cut its workforce by 24 percent over the past two years.

“Central State is not alone with its decline in enrollment, as many schools across Ohio and the nation are facing this challenge,” said Sean Joseph Creighton, president of the Southwestern Ohio Council for Higher Education. “The complexity of financial aid for students and families, and the rebounding of the economy appears to have made this situation worse.”

Central State is unique in Ohio for its student body. The university enrolls the highest rate of students from Ohio’s urban, high-poverty high schools of any public institution in the state. Many students are the first in their family to go to college, and the majority qualify for the federal Pell Grant, financial aid given to low-income students.

On Tuesday, the U.S. Department of Education issued a new study examining the changes in financial aid and student enrollment at historically black college and universities (HBCUs). The study noted the number of federal Parent Loans for Undergraduate Students (PLUS) program — which provides loans to parents of dependent undergraduate students from low-income families to help pay for education expenses — decreased by 45.7 percent at HBCUs, compared to 28.7 percent at non-HBCUs.

Staff writer Lauren Clark contributed to this report.

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