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Comptroller's memo urges focus on TBR's 'truly weak financial institutions'

Rick Wagner • Apr 25, 2018 at 8:30 PM

NASHVILLE — Northeast State Community College and other Tennessee Board of Regents institutions will be well-served by current TBR financial policy started in 2014, according to the Tennessee comptroller of the treasury’s office.

However, a memorandum from comptroller audit manager Robert Hunter recommends a modification in policy to reflect current practices and a focus on “truly weak financial institutions.” The four-page memo, dated April 19, was the result of a request from the area’s state lawmakers in November for the comptroller’s office to look into NSCC’s financial issues.

It addresses financial woes at the school that, among other things, prompted a February faculty vote of no confidence in President Janice Gilliam that culminated in her retirement in mid-2017; the appointment of interim President James King from the TBR; and the implementation of what King called “right-sizing” the school budget that included layoffs, not filling vacant positions and delaying construction of an Emerging Technologies building. The school cut $5 million from its budget, including $2 million in personnel.

The memo recommended two things:

1. “A continuance of its (TBR’s) plans to enhance its review of annual budgets of colleges with known financial problems, and

2. “Modification of TBR Policy 4:01:00:02 to ensure its requirements provide a focus on truly weak financial institutions and to bring the policy in alignment with the current practice followed by the system office.”

TBR Chancellor Flora W. Tydings, in a statement provide by TBR Communications Director Rick Locker, concurred with the recommendations. NSCC referred questions to the TBR.

“We appreciate the thorough review conducted by the comptroller’s office and we concur with the report. As the letter indicates, the comptroller reviewed the processes put in place by the Tennessee Board of Regents to help prevent similar financial issues at other TBR colleges,” Tydings wrote.

“While the comptroller’s office concluded that the procedures now required by TBR policy are substantively in place, we will ensure compliance with the comptroller’s recommendation to continue our efforts to enhance the review of annual budgets. We will also ask the board (TBR) to consider the comptroller’s recommendation to modify our existing policy to bring it in line with our current process, to provide a focus on institutions exhibiting financial weaknesses. The reviews currently in place consider an institution’s financial position and trajectory over periods of time.”

The memo said: “It appears that much of the responsibility for monitoring the financial well-being of the institutions is delegated to the college president. In our opinion, this delegation is necessary and appropriate. There does, however, need to be some monitoring by TBR to recognize when an institution is on a downward trajectory over time.”

The policy in question, instituted Sept. 26, 2014, calls for a Composite Financial Index of four financial ratios to be used in determining which colleges, if any, are put on a watch list, which NSCC, Cleveland State and Dyerburg State made. TBR oversees 13 community college and 27 Tennessee Colleges of Applied Technology (TCATs) statewide.

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