Central State University placed on fiscal watch for multiple financial issues
Sheridan Hendrix, Columbus Dispatch
4 min read
Central State University has been placed on fiscal watch by the Ohio Department of Higher Education for multiple reported financial discrepancies, the department announced.
The designation requires Central State to develop a recovery plan that outlines the university's path to financial stability within three years, according to ODHE Chancellor Mike Duffey.
It also requires other measures designed to stabilize and improve the financial outlook of the university, including increased financial reporting requirements, engagement with its board of trustees and evaluation by the state auditor.
“Central State University has a distinguished history, fulfilling a unique role in federal research and extension that is critically important to our state,” Duffey said in a prepared release. “Post-pandemic, institutions of higher education nationally are facing constrained finances. With today’s fiscal watch declaration, Central State University will receive assistance in adapting and positioning itself to become an even stronger and more competitive institution.”
Central State President Morakinyo A.O. Kuti told The Dispatch that he first noticed the university's finances were amiss after officially starting his tenure in July.
Kuti said that Central State's previous chief financial officer gave him answers that left him "uncomfortable," and that he heard from others that financial reports the CFO was giving didn't accurately reflect the university's true situation. Central State had not been paying vendors on time, for instance, and the university’s last audit hadn't yet been completed.
Kuti went to the state shortly after discovering the issues.
The main entrance of Central State University in a 2023 Dispatch file photo.
Under Ohio law, there are eight different criteria that an institution can meet to place it on fiscal watch. Central State met five of the criteria, ODHE spokesman Jeff Robinson said, including:
Requesting an advance of state subsidy money during the quarter covered by the report;
Failing to pay vendors as a result of a cash deficiency or a substantial deficiency in the payment processing system;
Revising its original budget for the fiscal year and the revision will result in a substantially reduced ending fund balance or larger deficit;
Projecting a significant negative variance between its most recently adopted annual budget and actual revenues or expenses at the end of the fiscal year; and
Being identified by the federal government or a regional accrediting organization as subject to heightened reporting standards or special monitoring status.
Central State, Ohio's only public historically Black university, is also under Heightened Cash Monitoring by the U.S. Department of Education, which is a payment method to provide additional oversight of cash management.
Heightened Cash Monitoring, according to the department, is a step that Federal Student Aid takes to provide additional oversight for a range of financial or federal compliance issues. Robinson said the federal designation is separate from the state's fiscal watch and was not announced in conjunction.
Gov. Mike DeWine said in a release that he, Duffey, Kuti and Board of Trustees Chair Jacqueline Gamblin agreed there was "sufficient cause" for the designation.
"As the only public HBCU and one of only two land-grant universities in the state, Central State and its students are a unique and important piece of the higher education landscape in Ohio," DeWine said. "We will continue to work closely with Dr. Kuti, his team at CSU, the Board of Trustees, Chancellor Duffey and the Ohio Department of Higher Education, and the Auditor of State to stabilize the finances of the institution through the fiscal watch process."
Morakinyo A.O. Kuti is the 10th president of Central State, Ohio's only public historically Black university.
University officials have meetings scheduled with stakeholders throughout the week to inform everyone about what the designation means for Central State. The fiscal watch designation, however, is not expected to affect students or learning time in the classroom, Kuti said.
"Classes will go on. Faculty will continue to teach," Kuti said. "Nothing is going to happen to students and faculty in terms of learning."
Kuti said he is grateful to state officials and university stakeholders for their support thus far. His goal is to end this upcoming fiscal year in surplus and be taken off fiscal watch within 18 to 24 months.
"The future is bright at Central State," he said. "The challenges is with finances, not with our educational opportunities."
This is not the first time Central State has been placed on fiscal watch. In 2015, the university was placed on fiscal watch. Leaders at the time citing declining student enrollment and students experiencing difficulty qualifying for federal financial aid. Central State was removed from fiscal watch in 2017 after large-scale budget cuts.
Earlier this year, Central State University announced it would need to take immediate action to balance their budget as the 2024 fiscal year closed. The university projected a $4 million shortfall, about 6% of their total operating budget, due to overspending for several years using Higher Education Emergency Relief Funds for recurring expenses.
The university merged two of its largest colleges — the College of Education and College of Humanities, Arts, and Social Sciences — over the summer as a cost-saving measure. University officials said the merger avoided layoffs.
Central State saw a 21% decrease in overall enrollment this fall, from 3,454 to 2,719 total students. In a statement, university officials said the year-over-year decline is a result of a decrease in online student enrollment.
Sheridan Hendrix is a higher education reporter for The Columbus Dispatch. Sign up for Extra Credit, her education newsletter, here.
