A report by the Council on Postsecondary Education (CPE) assessing the current financial status of Kentucky State University (KSU) paints a grim picture of the management of the institution’s finances that resulted in a terrific reduction in cash on hand and operating deficits of $35 million over the years 2016-2020.
The report by CPE highlights poor financial management by university leadership in recent years that resulted in significant operating deficits.
The assessment also notes that KSU’s productivity has declined compared with peer institutions.
CPE offers 14 recommendations to remedy the issues outlined in the report. Key among them is that KSU must cultivate a culture of accountability, transparency and compliance.
Key points in the report:
• Cash on hand declined significantly over several years, from $19.9m in 2016 to about $2m in 2020; operating deficits totaled $35m in that same period;
• Failure to pay vendors or collect student receivables since 2019;
• Significant drawdowns of reserves;
• Decline in awarding bachelor’s degrees;
• Insufficient controls over budget and failure to follow fiscal policies.
The report recommends requesting $23 million from the Kentucky General Assembly to cover 2021-22 cash shortfall, plus $1 million annually for “strategic initiatives.”
Its conclusions include:
• The current structured budget is unsustainable due to poor leadership;
• KSU compares favorably with its peers in terms of state appropriations, government grants and contracts, tuition and fees. But moving forward must craft a budget and manage it to meet the strategic goals of the institution.
In July, after members of the KSU Board of Regents and CPE voiced concerns about the university’s financial status, Gov. Beshear requested and authorized the assessment from CPE.
KSU’s president, Dr. N. Christopher Brown II resigned in the wake of the turmoil. He was the 18th president of KSU and has served since May 2017.
“When I heard about KSU’s financial situation, I asked for a full, independent and transparent accounting of the university’s finances, and today we are releasing the findings of that assessment,” said Beshear. “We are committed to KSU and, as one of two Historically Black Colleges and Universities in Kentucky, KSU must be put on a path to stability so it is able to continue providing a high-quality education for generations to come.”