FKCC in danger of losing accreditation
BY JOHN L. GUERRA
After years of financial misreporting and sloppy bookkeeping, Florida Keys Community College finds itself on the slippery slope to losing its accreditation.
If it loses that certification with the Southern Association of Colleges and Schools, any credits earned by students will be virtually worthless, unless another college agrees to recognize those credits. Not only that, but the federal government does not provide loans, grants or other forms of financial assistance to students attending a non-accredited college or university.
In short, losing access to state and federal tuition money could bankrupt an institution that, according to a letter from the head of state community colleges, may not have enough money in its reserves to survive a rainy day.
Randy Hanna, chancellor of the Florida College System, warned FKCC President Dr. Jonathon Gueverra — who inherited the college’s financial mess — that the college was in financial straits.
“We remain seriously concerned that the ‘liquid’ portion of the college’s reported fiscal reserves may, from a practical perspective, be insufficient to meet college needs should unanticipated changes in enrollment or cash flow occur,” the chancellor wrote Gueverra in June.
Gueverra did not respond to an email seeking comment.
The college has been under warning status with SACS for more than a year. SACS extended the warning at its June 2013 Board of Trustees meeting at about the same time Gueverra received his warning letter from the state. The board meets again in June to determine if the college has fixed its financial practices. If not, SACS could downgrade the college to probationary status. After that, continued problems means the college could lose its accreditation, said SACS spokeswoman Pam Cravey.
“Probation is our strongest sanction,” she said. “I don’t have a sense how this is going to go in any direction,” she said.
According to SACS, FKCC is financial unstable, has no control over its finances, and failed to control research and external funds.
As for FKCC, Gueverra and college trustees have been working closely with state auditors to iron out every glitch and improve financial processes to get the college in the clear. Every time FKCC receives an audit complaint, the college responds with a written response that outlines how it plans to fix the problem. Re-training employees, tightening procedures for accounting, installing third-person oversight of bookkeeping at the department level — the college is doing what it can to fix problems, the college wrote in response to the auditors’ findings.
Details of the college’s chaotic financial practices are also described in a state audit released in December — six months after the college was put on SACS’ warning list. According to that audit, the same college employees who collected cash for student fees and other sources also were responsible for recording how much cash was collected. While auditors don’t say any money is missing, the audit warns that lack of controls can lead to fraud and theft.
Among other problems cited in the December audit:
- The college failed to properly record $12,647 in cash in its general ledger; unreported cash ranged in amounts of $39 to $8,422. The misreporting occurred during fiscal 2012 but it was not fixed until 2013. The college blamed employee turnover and new employees who didn’t understand the accounting system.
As of March 31, 2013, the college books showed it was owed $3 million from the independent organization that built the new dormitories on campus, which was $2.3 million more than it was actually owed. School officials blamed employees for not posting cash they had collected to the accounts.
The college overcharged students for online or distance-learning fees. The college is not allowed to charge students more than it costs the school to provide the online service to students.
The college’s financial problems are not new. In addition to showing SACS in June that it has fixed these problems, it must also clear up problems with a financial audit released in March, 2013. Again, how the college accounts for cash is a problem:
$1.8 million in cash disbursed to students for the Federal Direct Student Loan Program was not reported as a source or use of cash by the college.
- Cash from operating activities, for grants and contracts were overstated and cash flow from other sources was understated by more than $531,158.
- Cash for purchases of capital assets totaling $336,957 were reported as proceeds from sales of capital assets.
With years of troublesome state audits, and more financial misreporting coming to light since SACS put the college on warning, it’s anyone’s guess whether the college can convince SACS it can demonstrate sound financial procedures at the June meeting.
“The SACS trustees meet in June to review the college’s status,” Cravey said. “As for outcome, there’s no way to know what the outcome would be.”
SACS does not lightly excommunicate its members, Cravey said. The organization doesn’t like to lose members.
“Our goal is never to drop anyone,” she said.
But they have and they do, she said.
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