Posted 1:50 am Tuesday, December 13, 2011
College’s Cash Problems Continue
By KELLY GOOCH
Staff Writer
Administrators and several faculty and staff at Lon Morris College have deferred paychecks so their colleagues can receive the money they are owed.
Staff Writer
Administrators and several faculty and staff at Lon Morris College have deferred paychecks so their colleagues can receive the money they are owed.
Within the last year, employees have received paychecks late about four times because of cash flow issues. This time, employees who wanted to defer payments did so individually and privately, Hospitality Administration Program director Breezy Lake said Monday.
“I know some of them offered (to defer their paychecks for) up to four months,” Ms. Lake said. “There wasn't a set standard made. It was offered privately between them and payroll. It's just like a donor.”
Employees now will be paid based on their agreement with payroll, which could mean deferring payment until later this week or early next year.
“I know some of them offered (to defer their paychecks for) up to four months,” Ms. Lake said. “There wasn't a set standard made. It was offered privately between them and payroll. It's just like a donor.”
Employees now will be paid based on their agreement with payroll, which could mean deferring payment until later this week or early next year.
Although this is not the first time for paychecks to be delayed, it is the first time for administrators and faculty and staff to defer payments.
Ms. Lake said while she does not want to speak for others, she thinks employees who deferred their paychecks see the positive direction the college is headed in and want to help.
Ms. Lake said while she does not want to speak for others, she thinks employees who deferred their paychecks see the positive direction the college is headed in and want to help.
“Last year was a whole different world … I think we're finally getting things right again,” she said. “The past few months, we have had some great things going on. I think we have a great group of students on campus, and I think people see the vision …
“It's all about the students at the end of the day. Anything anybody can do at end of the day they're going to do it.”
“It's all about the students at the end of the day. Anything anybody can do at end of the day they're going to do it.”
The deferring of paychecks is the latest indication of cash flow issues that continue to plague the institution, resulting in a financial struggle.
That struggle also can be seen in Lon Morris' recently released score of 0.6 on the U.S. Department of Education's financial responsibility test for 2009-10, meaning it is considered “not financially responsible.”
That struggle also can be seen in Lon Morris' recently released score of 0.6 on the U.S. Department of Education's financial responsibility test for 2009-10, meaning it is considered “not financially responsible.”
The test, which is used to assess the financial health of colleges participating in Title IV programs, requires schools to send audits to the department each year, according to the department website. Officials then calculate the composite of three ratios from the financial statements — a primary reserve ratio, an equity ratio and a net income ratio, the website states.
The composite score scale goes from - 1.0 to 3.0. Schools with a score of 1.5 or higher are deemed financially responsible as are schools with a score less than 1.5 but greater than or equal to 1.0, although they require additional oversight, according to the department website. Schools with a score of less than 1.0 are considered not financially responsible.
The U.S. Department of Education and the National Association of Independent Colleges and Universities make it clear that the composite financial score is not representative of the quality of education at a school.
In fact, Maureen Budetti, the association’s director of student aid policy, said the list has been placed under scrutiny by accounting experts, and a task force has been formed to look into the issue.
“We were concerned about schools (that) were financially responsible and stable getting a failing score in large part just because of the decline of value in endowments …,” she said. “It seems that they are counting the decline in the value of the endowment as an operating loss.”
She said it’s also a problem for schools if they are unfairly classified because students could be reluctant to attend and it may make borrowing money more expensive.
That’s why she said the task force is studying the test’s accuracy and reliability and hopes to get recommendations to the Department of Education in the spring or summer.
In the meantime, since Lon Morris is on the list of schools deemed financially not responsible, it will have to agree to additional reporting, financial monitoring and write a letter of credit, which Ms. Budetti said helps protect financial aid provided to students.
Lon Morris President Dr. Miles McCall said the school has had to put up a letter of credit in previous years, but the situation is not specific to the institution. He noted that the number of private nonprofit colleges that failed the financial test increased by 5.2 percent, and the number of colleges evaluated by the department increased 7.6 percent.
In McCall’s seven years with the school, Lon Morris has had a composite score below 1.5 three of those years. It’s score for fiscal year 2008-09 was 2.2.
He said several factors likely contributed to the school’s score decrease between 2009-10 and 2008-09, including its endowment. Compared to a lot of private schools, Lon Morris’ endowment is small, he said, so the school doesn’t experience the positive changes in the market like some other institutions do and is not always able to help its endowment recover by increasing donations.
Jessica Chiles, director of admissions, said, “Because of the way it’s judged, sometimes the endowment can be used to negatively adjust scores. A lot of private schools go through this.”
McCall further attributed the financial score decrease to operational challenges from previous growth.
“Hundreds of schools across the nation have been on the list …,” McCall said. “All it means is we have to report more information … We hope someday to be a healthier school, but right now we try to deliver quality education on our campus and we do that.”
In fact, McCall said more than 90 percent of students receive some kind of financial aid from the government or Lon Morris, and the goal is to get them to the school to ensure that they can be more competitive at four-year institutions.
“We’re a school that tried to help those who don’t have the same opportunities as others,” he said.
And while the financial score is not something the school takes lightly, it is also not something it is panicking over, Ms. Chiles said.
For instance, she said the institution is in the midst of some good initiatives and cost-saving measures. That includes proactively using the skills of faculty and staff on campus.
“A lot have more than one skill set, and we allow them to step into other roles,” Ms. Chiles said. “I’m the director of admissions and am also doing public relations.”
She said the school also has gotten creative with recruiting, and a lot of faculty and staff are now involved with the process, which saves manpower and funds. Additionally, she said, many volunteers and community members have helped the school with landscaping and beautification efforts, and the school comptroller has worked to ensure that spending is done efficiently and effectively. The college also is eyeing a capital campaign, possibly as early as the spring.
“We’re going to push through,” she said. “Our main goal is our students and that they have the quality education and that our mission is being fulfilled. We’re faith-based and believe students need more than education of mind and will continue to fulfill that mission as long as we can.”
The composite score scale goes from - 1.0 to 3.0. Schools with a score of 1.5 or higher are deemed financially responsible as are schools with a score less than 1.5 but greater than or equal to 1.0, although they require additional oversight, according to the department website. Schools with a score of less than 1.0 are considered not financially responsible.
The U.S. Department of Education and the National Association of Independent Colleges and Universities make it clear that the composite financial score is not representative of the quality of education at a school.
In fact, Maureen Budetti, the association’s director of student aid policy, said the list has been placed under scrutiny by accounting experts, and a task force has been formed to look into the issue.
“We were concerned about schools (that) were financially responsible and stable getting a failing score in large part just because of the decline of value in endowments …,” she said. “It seems that they are counting the decline in the value of the endowment as an operating loss.”
She said it’s also a problem for schools if they are unfairly classified because students could be reluctant to attend and it may make borrowing money more expensive.
That’s why she said the task force is studying the test’s accuracy and reliability and hopes to get recommendations to the Department of Education in the spring or summer.
In the meantime, since Lon Morris is on the list of schools deemed financially not responsible, it will have to agree to additional reporting, financial monitoring and write a letter of credit, which Ms. Budetti said helps protect financial aid provided to students.
Lon Morris President Dr. Miles McCall said the school has had to put up a letter of credit in previous years, but the situation is not specific to the institution. He noted that the number of private nonprofit colleges that failed the financial test increased by 5.2 percent, and the number of colleges evaluated by the department increased 7.6 percent.
In McCall’s seven years with the school, Lon Morris has had a composite score below 1.5 three of those years. It’s score for fiscal year 2008-09 was 2.2.
He said several factors likely contributed to the school’s score decrease between 2009-10 and 2008-09, including its endowment. Compared to a lot of private schools, Lon Morris’ endowment is small, he said, so the school doesn’t experience the positive changes in the market like some other institutions do and is not always able to help its endowment recover by increasing donations.
Jessica Chiles, director of admissions, said, “Because of the way it’s judged, sometimes the endowment can be used to negatively adjust scores. A lot of private schools go through this.”
McCall further attributed the financial score decrease to operational challenges from previous growth.
“Hundreds of schools across the nation have been on the list …,” McCall said. “All it means is we have to report more information … We hope someday to be a healthier school, but right now we try to deliver quality education on our campus and we do that.”
In fact, McCall said more than 90 percent of students receive some kind of financial aid from the government or Lon Morris, and the goal is to get them to the school to ensure that they can be more competitive at four-year institutions.
“We’re a school that tried to help those who don’t have the same opportunities as others,” he said.
And while the financial score is not something the school takes lightly, it is also not something it is panicking over, Ms. Chiles said.
For instance, she said the institution is in the midst of some good initiatives and cost-saving measures. That includes proactively using the skills of faculty and staff on campus.
“A lot have more than one skill set, and we allow them to step into other roles,” Ms. Chiles said. “I’m the director of admissions and am also doing public relations.”
She said the school also has gotten creative with recruiting, and a lot of faculty and staff are now involved with the process, which saves manpower and funds. Additionally, she said, many volunteers and community members have helped the school with landscaping and beautification efforts, and the school comptroller has worked to ensure that spending is done efficiently and effectively. The college also is eyeing a capital campaign, possibly as early as the spring.
“We’re going to push through,” she said. “Our main goal is our students and that they have the quality education and that our mission is being fulfilled. We’re faith-based and believe students need more than education of mind and will continue to fulfill that mission as long as we can.”
