Despite publicly holding its hand out for more money, the University of South Carolina has been sitting on a mountain of financial reserves, which have nearly tripled over the past 10 fiscal years, a review by The Nerve has found.
At its regular meeting last month, the USC Board of Trustees was informed by school officials that the state’s flagship university needs to find new revenue sources by 2017 to keep growing, or face tuition hikes or budget cuts.Without the extra money, USC cannot become a “higher-tiered” school, university officials said, citing the universities of North Carolina and Virginia as examples of better schools, according to a story in The State newspaper.
But what USC officials haven’t talked about publicly is the $361.1 million in “unrestricted net assets” that the university recorded for the fiscal year that ended June 30.
That amount is nearly triple the $126.4 million that the school recorded in fiscal 2003, according to The Nerve’s review of annual financial statements filed by the university with the Office of the State Auditor.
To put it in some perspective, the $361.1 million represented more than 35 percent of the approximately $1 billion spent on university operations last fiscal year, records show.
The university’s reserves are larger than the budgets of most state agencies.The $361.1 million, for example, was more than the entire ratified state appropriation last fiscal year for the S.C. Department of Corrections, which operates the state’s prison system.
A government accounting term, unrestricted net assets are net assets – the difference between assets and liabilities – that can be used for any purpose, as opposed to restricted net assets, which are earmarked for specific purposes.The university in its annual financial statements said its unrestricted net assets derive from “state appropriations, student fees, institutional revenue and auxiliary operations.”
The Nerve last week asked USC spokesman Wes Hickman why the university couldn’t tap its reserves instead of raising tuition to help it achieve the goal of becoming a “higher-tiered” school, but he did not respond by publication of this story.
Since fiscal 2004, tuition and fees for full-time, undergraduate students at USC’s main Columbia campus have jumped nearly 82 percent to $10,488, according to S.C Commission on Higher Education records.The university’s full- and part-time enrollment at its eight campuses totaled 45,774 as of November 2011, an increase of nearly 22 percent from the fall of 2003; full-time enrollment at the Columbia campus jumped by 28 percent to 28,084 during the same period, the school’s official enrollment reports show.
The Nerve’s review of USC’s annual financial statements found that the spike in the university’s unrestricted net assets over the past 10 fiscal years coincided with increases in the amount of collected tuition and fees.
The financial statements show that tuition and fees totaled $581.5 million last fiscal year, a hike of more than $371 million, or 176 percent, from fiscal 2003. Over the same period, total salaries and benefits jumped by about $233.5 million, or 53 percent, to nearly $675 million.
Contacted initially in October about the purpose of USC’s unrestricted net assets, Hickman in a written response said the university has a “goal to maintain approximately 90 days of operating liquidity as a best practice.”
“Drawing our accounts to zero as of June 30 each year would not allow for emergency or contingency funds should the need arise, nor does such a practice allow for systematic long-term strategic planning,” he said.
Hickman also said the unrestricted net assets have “commitments against them including such things as faculty recruitment and hiring to better serve our students, technology enhancements to support a growing student population, student activities, scholarships and accounts payable.”
Hickman did not respond to follow-up questions last week seeking more specifics on those commitments.
University officials have said they sought tuition increases in recent years in large part because the S.C. General Assembly slashed state funding to the university. Annual financial statements reviewed by The Nerve show that state funding dropped by nearly $86 million, or 42 percent, over the past 10 fiscal years, from $204.2 million to $118.3 million, though it had reached a high of $230.5 million in fiscal 2008 before the Great Recession took full effect.
The Nerve’s analysis found that the drop in state appropriations was more than offset during the 10-fiscal-year period by tuition and fee collections ($371.1 million, or 176 percent, increase), grants and contracts ($74.4 million, or 41 percent, increase), and sales and services of “auxiliary enterprises,” which are tied to athletics income, including trademark and licensing revenue ($60.9 million, or 88 percent, increase).
In its most recent annual financial statement, the university said fundraising has increased by more than 50 percent over the past five years.The university in 2011 announced a $1 billion fundraising campaign, noting then that it had reached more than half of its goal in gifts and pledges.
USC has requested that the General Assembly approve a total budget (general funds; other funds, comprised of tuition and fees; and federal funds) for next fiscal year, which starts July 1, of $1.36 billion for its eight campuses, an increase of $181.3 million, or more than 15 percent, over “actual” appropriations for this fiscal year, according to university documents filed with the Office of State Budget.
If USC gets what it asked for, its financial reserves likely will grow even larger, which would give the university yet another “Money Bowl” win. But it’s questionable whether students, their parents or state taxpayers in general would benefit from that outcome.
Reach Brundrett at (803) 254-4411 or firstname.lastname@example.org.