HBCU DIGEST: Here's proof of how lawmakers and trustees at Kentucky State are misleading about the school's financial status

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Two years ago, the University of Kentucky faced a $70 million budget shortfall, which school leaders attributed to enrollment declines and increased operational costs. Around the same time, the University of Louisville projected that it would be $39 million in the red for similar reasons

Less than a year later, the Commonwealth of Kentucky reported a $1.1 billion surplus in its general fund, thanks in part to federal aid for covid recovery that helped to boost business and commerce. Around the same time, Kentucky State University was reporting a positive audit report and a modest $2 million surplus from its 2019-2020 financial activity

So how does a state that a year ago had billions in the bank, with its two largest predominantly white institutions crying broke the year before, pass legislation this year to ‘bail out’ its only public historically Black institution to the tune of $23 million

The answer is that it is not a bailout loan, or even a new issue facing KSU. As a rule, governments don’t bail out state agencies and services, especially in Kentucky where, were it not for covid and federal relief funding, the commonwealth itself would’ve been billions in debt. The government may cut costs in personnel and operations, but you’ve never seen a state shut down departments of motor vehicles, transportation, health and human services, or education for budget deficits. 

Tax-payer-supported agencies don’t go out of business, nor do tax-payer-supported colleges and universities. The government is advancing a narrative to make those same taxpayers believe that there is a legitimate threat to shut down an HBCU in its capital city, and the narrative is an outright lie. 

Worst of all, officials at KSU are enabling the lie. Every step of the way, KSU’s board of trustees has misled the public about their knowledge of the budget activity. For every year they allege overspending and secrecy about finances, they approved expenditures, retained and accepted outside consult on budget matters, and even rewarded its former president with a contract extension in June 2021 before forcing his resignation a month later. 

Here’s what one lawmaker cited as the heart of the finance problem

“The legislation sets accountability, responsibility, and transparency that deals with our institution in the Capital City,” Tipton told his colleagues on the House floor. “It directs the CPE to go in with a maintenance plan and provide oversight. They would work with KSU to try and get to a point where they can move forward.”

He also said CPE told the schools regents that they must cut the budget for the fiscal year starting July 1 by $7 million and recommended a plan to implement reduction.

Tipton said the problem did not happen overnight. In FY 2019, the personnel budget was $21.4 million, but they spent $28.7 million. In FY 2020, it was 24.4 million, but the actual expense was $29.5 million. In FY 2021, the budgeted personnel amount was $20.8 million, but spent 29.2 million.

“it primarily occurred by a combination of adding personnel to the university, and by increasing salaries.,” he said. “That was outside the financial ability of KSU at that time.”

If this were absolutely true, those numbers add up to $20.1 million in overspending. But to get there, we would have to assume that KSU had clearance to override an electronic financial management system for the state that tracks and blocks expenditures at every agency from budgets where money doesn’t reside.

But even if KSU had that magic power, where was the same outrage for the University of Kentucky and the University of Louisville going over budget in the same ways? Where is the bailout loan for these schools and every other that blamed covid and enrollment losses for their millions in debt?

But go a step further. When you search general operational spending at KSU between 2018 and 2021, it would appear that spending at the institution dropped from $57.7 million in 2018 to $27.5 million in 2021. But the school is $27 million in debt from spending over the same three years? 

Let’s go even further. In 2014, KSU faced budget concerns when former president Raymond Burse dropped nearly a fourth of the student population for non-payment, resulting in a near $7 million budget shortfall. He warned a year later that state budget cuts would potentially ‘close the school,’ only to resign in 2016. 

Former KSU interim president and current Kentucky Council on Postsecondary Education President Aaron Thompson issued a report that year on how to solve the university’s financial issues

A headcount enrollment of 2,100 students will provide sufficient resources for the University to reach long-term financial stability. A financially stable budget will provide for deferred maintenance, as well as, a budgeted contingency fund each fiscal year. Consistent state funding is critical to the long term stability of the University, as is continued full funding of the Land Grant match. Financial projections incorporated into this management plan do not assume additional state funding other than for projected increases in the required Land Grant Program match, but they do assume that the FY 2017-18 base operating appropriation will be maintained going forward.

The overall planning process for the University includes an enrollment management strategy with clear enrollment targets for the next four years: 

Semester Headcount 

  • Fall 2017 1,800 

  • Fall 2018 1,950 

  • Fall 2019 2,100 

  • Fall 2020 2,100

So how did KSU fare during those years? According to federal statistics, not too badly:

Kentucky State has to play by different rules than every other college and every other state agency in the government of the commonwealth. Only KSU deficits are viewed as corruption or mismanagement, while every other agency’s financial struggles are operational casualties of changing times.

Lawmakers only make an issue of KSU budget management when it is politically convenient, but wouldn’t dare make the same mockery of U of Kentucky or U of Louisville. Trustees at KSU play loose with data, but would never be allowed to do so at any other PWI or state agency because they would never be allowed anywhere near the boardrooms of these organizations.

By every indicator, from executive oversight to budget activity to reporting to legislative oversight, Kentucky has one simple objective: make its HBCU look like a bad public investment by playing on the fact that no one will read between the headlines or question the lies of people in charge or those who really want to be in charge.

Everyone is in on it, and now you are too.

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