Benedict may delay paying its employees

College was more than $100 million in debt in 2005 audit

Benedict College employees’ next paychecks might be delayed by four days, until Aug. 4.

Brenda Walker, Benedict’s vice president for business and finance, announced the possible paycheck delay in a July 14 memorandum to the faculty and staff.

“We apologize for any inconvenience this potential delay may cause,” Walker wrote. “Thank you for patience and understanding.”

For the past year, Benedict has been struggling to cover a roughly $2 million operating deficit. The shortfall is mostly because of a disappointing 2005 fall enrollment of 2,552 students, which was about 150 fewer than expected.

But federal audits obtained by The State newspaper show Benedict has been experiencing cash-flow problems for three out of the past four years.

And over that time frame, Benedict’s debt has swelled to more than $100 million.

Benedict trustee William Whitney said the board met in Charleston for three days last week but wasn’t told the college might miss a payday.

“I knew we had financial difficulties,” Whitney said. “To be honest, we didn’t get any numbers. But the message was very clear that we are having financial difficulties.

“Our problem is a lot of short-term debt.”

Whitney, of Greenville, said the college has been trying to arrange a long-term refinancing package.

According to certified public accountants Cherry Bekaert and Holland in an audit dated Nov. 2, 2005, Benedict had debt and other liabilities totaling $101.2 mil-lion as of June 30, 2005, and $35.5 million in total assets.

The historically black institution has experienced cash short-ages for several years. It had operating deficits in three of the four most recent years for which audits are available. In the year ended June 30, 2005, Benedict’s expenses exceeded revenue by $2.2 million.

Benedict president David Swinton has been cutting costs to try to address that deficit.

He slashed salaries by 7.5 percent and eliminated such programs as the Benedict Academy, a partnership with Richland 1 school district that allowed rising freshmen at C.A. Johnson to spend time studying on the college campus during the summer.

Swinton said last fall he also would discontinue some contracts with outside vendors.

Audits show Benedict also has had problems making pension payments on time.

The State obtained details of Benedict’s financial reports to the U.S. Department of Education under the provisions of the U.S. Freedom of Information Act.

Federal auditors reviewing its financial performance noted the school had delayed depositing employee contributions to their pension program as long as three months.

The college is required to de-posit participants’ contributions with the plan custodian as soon as reasonably possible, but no later than the 15th business day of the month following the payday. The school eventually made the payments.

Whitney said he had never been told about the late payments to the pension plan.

“The college has had a cash-flow shortage in the year under audit and through the audit report date” of June 30, 2005, the auditors’ report states.

The federal auditors also noted that on Dec. 1, 2005, the college obtained an additional line of credit of $1 million, unconditionally guaranteed by the chairman of the college’s board of trustees, Charlie Johnson of Louisville, Ky.

Efforts to reach Swinton were unsuccessful.

Benedict College spokeswoman Kymm Hunter declined to be interviewed. She issued the following statement:

“The two-week advance notice of a possible change in the payroll date was attached to the employee’s July 15, 2006 paycheck. The memo which was dated July 14, 2006 was sent in an effort give employees an ample amount of time to make financial arrangements, if necessary, as well as to apologize for any inconvenience the potential delay may cause.”

Classes at the school resume Aug. 16