Central State University is under fiscal watch by the Ohio Department of Higher Education

By Megan Henry
Ohio Capital Journal
 
Central State University has been placed under fiscal watch by Ohio Department of Higher Education Chancellor Mike Duffey. 

Central State, Ohio’s only public Historically Black University, will adopt a financial recovery plan “that will outline a path toward financial stabilization with a goal of ending the fiscal watch within three years,” according to ODHE. 

“Post-pandemic, institutions of higher education nationally are facing constrained finances,” Duffey said in a statement. “With today’s fiscal watch declaration, Central State University will receive assistance in adapting and positioning itself to become an even stronger and more competitive institution.”

There are eight criteria under Ohio’s law that would prompt a fiscal watch designation and Central State met five of them, ODHE spokesperson Jeff Robinson said. The five criteria are: 

• The state university requested an advance of state subsidy money during the quarter covered by the report.

• The state university failed to make any payments to vendors when due during the quarter covered by the report as a result of a cash deficiency or a substantial deficiency in the payment processing system of the state university or college.

• The state university has revised its original budget for the fiscal year and the revision will result in a substantially reduced ending fund balance or larger deficit.

• The state university projects a significant negative variance between its most recently adopted annual budget and actual revenues or expenses at the end of the fiscal year.

• The state university is identified by the federal government or a regional accrediting organization as subject to heightened reporting standards or special monitoring status, including but not limited to the United States department of education’s heightened cash monitoring process.

The State Auditor will consult with Central State and the university must provide quarterly reports to its Board of Trustees and Chancellor. ODHE will also work with Central State by offering additional accounting support. 

Central State President Morakinyo A.O. Kuti became the university’s 10th president in July and said he first noticed something was off with the university’s finances when he requested a financial review during his presidential transition period. After becoming president, Kuti asked the university’s chief financial officer at the time questions about finances, but Kuti “wasn’t satisfied with the answers that he was giving me.” 

“I thought the university had a lot more cash in reserves than he told us we had,” Kuti said. 

Kuti said he “relieved (the CFO) of his duty” 30 days after becoming president and hired an interim CFO in August who discovered the “situation was worse than we thought.” 

He informed ODHE once he became aware of how dire the financial situation was and his goal is to get out of fiscal watch in 18 months. 

“(The) fiscal watch was because our financial operations were not operating in a proper manner,” Kuit said. “The future is bright at Central State  …  There’s lots of opportunities at Central State University, and we needed to get our fiscal house in order in order for us to achieve our goals.”

He met with members of the AAUP-CSU Executive Committee on Monday.

“Dr. Kuti was frank and forthright about the challenges we face, but was optimistic that CSU would meet the financial goals necessary to lead the university back to fiscal health,” AAUP-CSU said in a statement. “AAUP-CSU is hopeful in Dr. Kuti’s leadership and looks forward to partnering with him to meet the challenges ahead.”

Ohio Gov. Mike DeWine met with Duffey, Kuti and Central State’s Board of Trustees Chair Jacqueline Gamblin. 

“We are all in agreement there is sufficient cause to warrant the chancellor placing the institution under fiscal watch,” DeWine said in a statement. “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.”

Central State’s enrollment has had its ups and downs in the past decade. 

Enrollment remained steady with about 1,700 students from fall 2014 to fall 2017, then it saw a spike in fall 2018 with 2,066 students, according to data from the ODHE. Enrollment doubled in fall 2020 — jumping to 4,066 and peaking with nearly 6,000 students in fall 2021.

Since then, enrollment has been on the decline. It dropped 34% in fall 2023 and the university’s preliminary enrollment this fall is 2,719 — a 23% decrease, according to ODHE.

“That decline was part of the reason why our budget was out of alignment,” Kuti said. 

Part of their enrollment spike was due to an increase of online students through a partnership Central State had with the soon to be closed Eastern Gateway Community College. Eastern Gateway will close Thursday after financial and legal troubles in recent years. 

When the partnership ended, Central State’s online enrollment declined. 

“Because we did not get the projected revenue from those online students, our expenses exceeded our revenue,” Kuti said. 

A little more than half of Central State’s students are in five majors — business administration, criminal justice, family education, psychology and exercise science, Kuti said. 

Wilberforce University is the state’s only other HBCU, but it is a private school. Central State started as a department of Wilberforce University in 1887 and became an independent university in 1951. The universities are down the street from each other. 

Central State became a land-grant institution in 2014. Ohio State University is the only other land-grant university in the state. 

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