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Monday, February 12, 2007

Benedict reverses skid with $1 million surplus

Benedict College, halfway through its financial year, has a $1 million surplus, reversing a three-year trend in which the college lost $8.9 million.

“They are doing an admirable job of living within their means,” said interim chief financial officer Leonard Williams.

Benedict’s trustees hired Williams to manage the college’s finances at the insistence of the college’s bankers, who are negotiating with the college to refinance its debt.

In the financial year that ended June 30, the college posted a $4.7 million loss, Benedict’s external auditor said. The college spent $52.7 million; its revenues were $48 million.

Despite the $4.7 million loss, Benedict officials said the college made progress in adjusting to fewer students and lower revenues.

A major challenge for the college will be to find revenue-producing uses for its new $13.6 million stadium, said Williams, a financial consultant with Atlanta-based Tatum LLC.

Trustee Steve Morrison said challenges remain for the college, which has struggled with more than $100 million in debt and other liabilities.

For the past three months, the Columbia lawyer has worked on a special board committee to negotiate the refinancing package. He said an agreement is at least six weeks away.

“This process has not gone as fast as some of us would have liked, but it is going in a positive direction,” Morrison told the board Friday.

Benedict’s external auditing firm, Cherry Bekaert & Holland, reported to the trustees that Benedict has seen some of its assets shrink for two consecutive years, by $5 million last year and by $4 million a year earlier.

Auditor Jim Ratchford described that trend as “troubling.” “You can’t sustain that,” he told the board’s finance committee.

Williams said he does not expect any further erosion.

In a statement issued with the auditors’ report, Benedict officials said that if certain one-time, non-cash expenses required by accounting rules are taken out of the report, the college would have had a $1.2 million surplus last year.

Swinton said paying off a bond issue triggered a $1 million charge; some assets were devalued by $3.5 million; and the conversion of a loan program to grants caused a $1.6 million increase in tuition and fees.

One major factor in Benedict’s declining revenue is the increase in tuition discounts.

In the year ended June 30, discounts from the “sticker price” of $12,956 per year per student totaled $8.2 million compared with $4.3 million in discounts a year earlier.

Swinton told trustees the tuition discount program was part of the college’s recruitment effort .

He said the college has “stabilized” after several years of declining enrollment. Last fall, 2,532 students enrolled, Swinton said, and he expects final enrollment for the spring to be about 2,310.

He would like to see average enrollment grow to about 2,600 in the next few years.

“We’re fine financially at about 2,300, but we like to have a little cushion,” Swinton said.

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