Webber International and the others were placed on the list because financial audits turned up some troubling results.
Webber International President Keith Wade said the university is on the list because the education department mislabeled a debt it took on from a branch campus and a second mislabeling of a revenue from that branch.
In 2011, Webber International took over St. Andrews University in southern North Carolina. Before becoming part of Webber, St. Andrews took out a $2 million loan for capital improvements. When Webber took over St. Andrews, the loan came with it.
Wade said the bank that holds the loan and the university’s independent auditor have labeled that as a long-term loan, but the education department has labeled it as short term.
As part of St. Andrews joining Webber, St. Andrews had to restructure its debt, Wade said. St. Andrews renegotiated some of its loans, sold some land on campus and, ultimately, the restructure resulted in Webber gaining $4 million, Wade said. The university didn’t take the lump $4 million, but is instead receiving $400,000 a year for 10 years.
The education department labeled the $4 million as short-term debt, Wade said. Wade said he thinks the department labeling those two items differently is inconsistent with accepted accounting practices.
Wade said the university made an appeal last month and is awaiting a decision.
“I have confidence that we’ll be off the list for 2015, but we’re trying to get off the list for 2014,” Wade said. “Our next fiscal year ends in 55 days. It will be a good year. Neither of the two items which are causing us difficulties will be on our 2015 financials.”
Some of the 39 Florida schools on the cash monitoring list include the now-defunct Fortis Institute campus in Mulberry; and International Academy of Design and Technology, and Manhattan Beauty School, both in Tampa.
Higher education groups on the national level say it’s too early to determine how being on this list impacts a university’s public image.
“Nationally, the U.S. Department of Education’s Federal Financial Responsibility scores are only one measure of institutional fiscal well-being,” said Paul Hassen, communications director at the National Association of Independent Colleges and Universities. “Being on the HCM (heightened cash monitoring) list means a college must agree to additional reporting, financial aid monitoring, or administrative oversight requirements — or post a letter of credit — to be deemed financially responsible by the Education Department.”
The information was released for the first time when Inside Higher Ed, an online higher education news organization, requested the data after being denied access last year.
Education department officials have said being on this list isn’t a complete vilification of those institutions or their ability to manage money. Despite being on the list, these schools continue to operate and educate students.
“Heightened cash monitoring is not necessarily a red flag to students and taxpayers, but it can serve as a caution light,” the department’s Under Secretary Ted Mitchell told the Wall Street Journal. “It means we are watching these institutions more closely to ensure that institutions are using federal student aid in a way that is accountable to both students and taxpayers.”
Colleges are on the list for one of a couple of reasons:
• Submitting financial statements late.
• Missing a mandatory audit.
• General financial mismanagement.
bulll; Accreditation issue.
All the colleges on the list are grouped in either cash monitoring 1 or cash monitoring 2. Cash monitoring 2 is the most severe label and it likely means the college must submit additional paperwork to the government before being taken off the naughty list.
Webber International is in cash monitoring 1. Wade stressed the money involved in this issue isn’t in the university’s operational budget, alluding that the school isn’t in any danger of shutting down or making cuts.
[ Khristopher J. Brooks can be reached at email@example.com or 863-802-7536. Read his Extra Credit blog on TheLedger.com. Follow him on Twitter @americanglow ]