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USC’s Fair Funding Plan not so fair to taxpayers

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Rick Brundrett

To University of South Carolina President Harris Pastides, his offer to the S.C. General Assembly is too good to pass up:

Give the state’s flagship university an additional $10.13 million in general funds in fiscal 2014-15 for its eight campuses statewide, plus cover any pay hikes mandated by lawmakers and any health-care benefit and utility rate increases, and in-state students won’t pay higher tuition next fiscal year, which starts July 1.

Pastides dubbed his proposal the “Fair Funding Initiative.” But state budget and USC financial documents reviewed by The Nerve show that USC in recent years has been sitting on a mountain of money, raising questions about whether the university needs any additional taxpayer support.

Consider the following:

u For the 2013 fiscal year that ended June 30, the university had $347.8 million in “unrestricted net assets,” which represent “resources available to the institution for any lawful purpose of the institution,” according to its annual financial statements filed recently with the Office of State Auditor. Assuming that an additional $10.13 million is requested for each subsequent fiscal year, the current amount of unrestricted reserves could cover the request for more than 34 years.

u The university typically accumulates tens of millions in unrestricted funds every year. At the end of fiscal 2012, for example, USC recorded $361.1 million in “unrestricted net assets,” according to its financial statements.

u As of June 30 of this year, USC had $361 million in cash and “cash equivalents,” defined in its financial statements as “highly liquid investments with an original maturity of three months or less.”

u On top of that, the most recently available financial statements for six affiliated foundations and an alumni association show that those groups collectively had $88.6 million in “unrestricted net assets.”

u USC typically carries over tens of millions in “other” funds, made up of mainly of student tuition and fees, every year. Office of State Budget (OSB) records show, for example, that the university carried over $257.3 million, $262.4 million and $248.85 million in “other” funds into fiscal 2011, 2012 and 2013, respectively.

The university’s total ratified budget for its eight campuses and student population of about 48,000 for this fiscal year is more than $1.2 billion, which includes general, federal and “other” funds, according to OSB records. The total ratified budget increased by about 10.5 percent from fiscal 2012 to this fiscal year, records show.

“Other” funds make up nearly $882 million, or about 72 percent, of USC’s current total budget for its eight campuses. That part of the budget has mirrored the growth of the university’s overall budget in recent years.

General funds for the USC system increased by about 6.5 percent from fiscal 2012 to $134.6 million this fiscal year, OSB records show. USC has proposed adding $125 million in general funds in next fiscal year’s budget, as first reported by The Nerve last week, for the renovation of the Carolina Coliseum in Columbia, which, if approved, would more than double the general fund budget for the main Columbia campus.

In his Fair Funding Initiative, Pastides said the budget request for next fiscal year would “enable the university to maintain quality while relaxing the financial burden on our students and their families, thereby ensuring access to a postsecondary education.”

But the USC board of trustees hasn’t given much relief to students in recent years. Tuition and required fees from fiscal 2010 to this fiscal year have shot up by more than 18 percent and 20 percent for full-time, in-state and out-of-state undergraduate students, respectively, at the university’s main Columbia campus, according to state Commission on Higher Education (CHE) records. In-state undergraduate tuition and required fees at the Columbia campus this fiscal year total $10,816, CHE records show.

Other colleges and universities, including the state’s two other public research institutions – Clemson University and the Medical University of South Carolina – also imposed double-digit tuition increases on resident undergraduate students during the period, CHE records show. In a reversal of that trend, however, Converse College, a small, private women’s college in Spartanburg, announced in September that it would cut its tuition by 43 percent.

Even if the Fair Funding Initiative becomes reality next fiscal year and resident USC students see no tuition hike, the university is seeking to raise other types of revenue, budget documents show.

The university wants a $58.3 million increase in “other” funds for fiscal 2015, noting, among other things, in its budget request that 550 beds “offline” will be “back in use next fiscal year at a higher rate,” and that the athletics department revenue will be “impacted positively from higher ticket prices and additional SEC revenue,” though no specifics were given about the proposed increases.

The Nerve recently sent written questions to Wes Hickman, USC’s main spokesman, about the “Fair Funding Initiative,” other aspects of the proposed fiscal 2015 budget, and the university’s large, unrestricted reserves. No response was received by publication of this story.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.