Ohio’s Central State University placed under fiscal watch

Dive Brief:

State regulators have placed Central State University on fiscal watch, Mike Duffey, chancellor of the Ohio Department of Higher Education, announced late last week.
The move comes after Central State “recently made ODHE aware of financial challenges at the university,” according to the state agency. Earlier this year, the historically Black public university forecasted a significant budget shortfall.
Under fiscal watch, state financial reporting requirements will ramp up for the university. The designation also requires a state auditor evaluation, as well as other measures “designed to stabilize and improve the financial outlook of the university,” ODHE said in a Friday press release.

Dive Insight:

In a statement, Ohio Gov. Mike DeWine said he met with Central State President Morakinyo Kuti and Board Chair Jacqueline Gamblin, who agreed with Duffey on the need for a state fiscal watch.

“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.

Central State’s expenses ballooned by almost 31% between 2020 and 2022, according to its latest financial report. They reached $96.9 million in fiscal 2022, more than twice the university’s operating revenue that year.

In March, university leadership told employees that Central State faced a $4 million budget shortfall — amounting to 6% of its budget — and was considering layoffs to help close its financial gap, according to media reports from the time.

Alex Johnson, then-interim president of Central State, attributed the deficit to overspending when the university received federal funds for COVID-19 relief.

In fiscal 2022, Central State logged $28.4 million in revenue from federal funds tied to the pandemic. A number of colleges around the country have been struggling financially as that funding has run out.

But unlike many colleges facing budget shortfalls, Central State’s enrollment has increased in recent years. In fall 2022, the university enrolled 5,434 students, up by more than 1,400 from 2020, according to federal data. At the same time, net tuition revenue jumped by $4.7 million, to $12.1 million, between fiscal years 2020 and 2021 though it then dropped to $10.5 million in 2022.

While on fiscal watch, Central State will be required to share quarterly financial reports with its board of trustees and ODHE. It will also develop a financial recovery plan meant to “outline a path toward financial stabilization with a goal of ending the fiscal watch within three years,” according to Friday's announcement.

Along with an evaluation, the state auditor’s office will provide support to the university, including technical expertise and strategic guidance to help with budgeting, financial accounting and reporting.

“We are continuing to take action to ensure we manage our way through this fiscal watch period and address what’s necessary to ensure a bright future for our students, faculty, and staff,” Kuti said in a statement.