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J.C. Smith University Tackles Discord Over Fiscal Charges

CHARLOTTE, N.C.

Eight months after the U.S. Department of Education placed Johnson C. Smith University on its “heightened cash monitoring” list of more than 550 colleges and universities, the school is grappling with a significant cash-flow problem, according to the Charlotte Observer.

The problem is JCSU President Ron Carter arrived at Johnson C. Smith University seven years ago promising change. Two of his signature projects are the new light-filled science center on campus and the colorful Mosaic Village housing development along Charlotte’s northwest corridor.

“(But) we have no reserves,” said Talmadge Fair, a board member who stepped down in August and has started an online petition to remove Carter.

“They say everything is fine. I see a big hole,” said Fair, a 1961 JCSU graduate and president of the Urban League of Greater Miami. “We have vendors who have not been paid on time. Morale is low.”

For two years, Fair said he pressed for answers and was rebuffed. After he voiced concerns for the second time in August, he was removed as a trustee, according to news reports. More than 100 supporters have signed Fair’s online petition, but he said he also has heard privately from many JCSU employees and graduates who are afraid to speak publicly. “I’m shocked at the depth of it,” he said, in the Charlotte Observer.

A former employee told The Observer, “People are scared to say stuff. They’re walking on eggshells.”

While eight of the nation’s 100 historically Black colleges and universities are on the list, JCSU’s former president who is retired and living in Atlanta, said she left a surplus at JCSU.

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Dorothy Yancy, who led JCSU from March 1994 to June 2008, said in a letter to the Charlotte Observer, “To suggest that Dr. Carter has faced financial hardships since his appointment as President is not simply misleading, it is patently false.”

According to the Observer, documents filed with the Internal Revenue Service show the school had a $7.5 million deficit for the fiscal year ending June 30, 2014, and a $10 million deficit for the year ending June 30, 2013. Contrast that with a $29 million surplus for the year ending June 30, 2012.

Yancy, JCSU’s president emeritus whose name is on the school’s new science building, said a Grant Thornton audit showed that she left JCSU with $14,776,727 in cash, which included $9,409,113 in unrestricted cash.

“Simply put, Dr. Carter inherited a successful institution that required $2.2 million per month to operate, but had a surplus operating budget with more than $9.4 million dollars in unrestricted cash to spend in any way he, with Board approval, saw fit,” she said.

Although JCSU is struggling with declining enrollment and cuts in federal aid to students, like many Historically Black Colleges and Universities, some are questioning Carter’s business savvy and leadership skills.

In any event, its name on the Department of Education’s “heightened cash monitoring” list means JCSU must undergo additional financial oversight. It is the second year in a row that JCSU made the list. In a statement posted on its website last year, JCSU said its listing resulted from filing documents late.

Meanwhile, there is a 2014 email that points to a significant cash-flow problem. “I have some cash concerns!!!!” began a 2014 email from the university’s controller to its chief financial officer. The email cited nearly $2 million in outstanding checks, but less than $1.2 million in available funds.

And a current employee said in an interview with The Observer that he regularly fields phone calls from vendors who have not been paid. “It’s really embarrassing,” said the employee, who asked not to be identified for fear of retribution. “It’s constant late-payments on everything.”

In his “State of the University” speech in August, Carter likened the university to a ship on a dangerous voyage, buffeted by “furious winds of education debt” and “dark grey waves smashing seeming paradoxes of federal and state compliance mandates upon us.”

The shore, he said, is near.

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Some people might disagree with the university’s path, he said, but he concluded: “… The time has come for me to say to them, with all due respect, if they feel they cannot read from the same vital navigational equipment with the rest of us as we draw close to land, they may need to consider disembarking now to seek another destination.”

Fair said he loves the university too much to disembark. He said the situation is “frighteningly worse” than he expected, based on information he has received about finances and Carter’s leadership since posting his petition.

“I’m going to push forward with every fiber in my body to make sure this time next year Dr. Ron Carter is not president of this institution

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