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COLUMBIA, S.C. (AP) — South Carolina State University would be free from $12 million in state loans but would have to repay $6 million over the next 16 years under terms approved Friday by legislators negotiating a state budget compromise.
Lawmakers hope the loan forgiveness will help the state's only public historically black university keep its accreditation.
The budget agreement also gives S.C. State a one-time payment of $4.6 million to pay off other debt.
"This compromise, I believe, puts S.C. State on a continued path to successful accreditation that gives confidence to students and future students," said Sen. Vincent Sheheen, D-Camden, a member of the budget conference committee.
The Southern Association of Colleges and Schools will decide S.C. State's fate next month. After two years of probation, the college's accreditation will either be restored or yanked. If the latter happens, the 120-year-old school would be forced to close.
The university board's chairman, Charles Way, said erasing $12 million in debt helps tremendously.
"That $12 million on the balance sheet knocked it completely out of whack," he said. "We have cut and cut and cut. We've furloughed people, terminated people. We've just done as much as humanly possible without damaging the school itself."
Way took the board's helm last year after the Legislature passed a law firing all of SC State's board members and replacing them with a temporary board appointed by lawmakers.
In December, he told legislators the board had cut $19 million from the budget and eliminated about 200 jobs.
Under the budget agreement, $12 million will be forgiven over three years as long as the college maintains its accreditation, continues improving its finances and increases enrollment. The university must make yearly payments of $355,000 until the $6 million is paid off. It's already paid the first installment.
Way said the university can afford that.
The state's financial oversight board approved the $6 million loan in April 2014 to help whittle down the school's debt. Instead, its unpaid bills continued to grow. Eight months later, the board approved a second bailout of $12 million.
S.C. State was supposed to repay the full $6 million by last July. Knowing that was impossible, the oversight board voted unanimously last summer to extend the final due date to June 2020. But the terms called for big jumps in the amounts due.
"I really appreciate what you've done here to help this cause," said Rep. Lonnie Hosey, D-Barnwell, a retired S.C. State administrator who sits on the budget conference. "It's very near and dear to my heart."
The budget agreement also gives S.C. State about $150,000 still held from that initial $6 million loan. The financial board had set aside $500,000 of it to pay for an audit of the university, but the accounting firm's contract cost less than expected. A budget clause specifies the remainder of what was set aside can be used for deferred maintenance.
The agreement will be part of the state budget package expected to be approved by the Legislature next week.
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