Executive Committee of ASU Board of Trustees discuss credit downgrade, accreditation warning


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MONTGOMERY, Alabama — Alabama State University officials on Wednesday outlined initial steps they plan to take to recover from a credit downgrade, and said they're looking for more information on specific things the school must do to respond to a warning from an academic accreditation agency.

The Alabama State University Board of Trustees executive committee met to discuss the school's recent downgrade by Moody's Investors Service and a warning from the Southern Association of Colleges and Schools. The committee also heard presentations on potential campus technology upgrades and online education opportunities.

Committee chairman Elton Dean said he's assembled a group that will have weekly conference calls to discuss what the school needs to do to address its third credit downgrade by Moody's within a roughly nine month period. The group includes representatives from two banks, Merchant Capital and First Tuskegee, and other Alabama State University officials, Dean said.

"We're trying to show people we're going to work together on this," he said. Moody's found the school had been drawing from its reserves to cover debts this year and is expected to do so again in 2015 and possibly longer. Committee members said the school's financial path was unsustainable and officials must look for ways to put money back into its reserves quickly.

"If we continue on the path we're on right now, we will not be able to cover our debt service for a year and a half," said committee member Herbert Young.

University President Gwendolyn Boyd said the school launched an alumni fundraising campaign Wednesday focusing on former students donating $100 within the next 30 days. Boyd, an ASU alumna, said she'd be donating $1,000.

ASU administrators are awaiting a letter from the Southern Association of Colleges and Schools outlining what specific issues the school needs to work on to address last month's warning, Boyd said. ASU officials met with SACS on June 19, Dean said. General issues cited by the accreditation agency in the warning included the school's governing board, conflicts of interest within the board, control of finances, and other matters.

The school's warning period lasts for six months. Boyd said ASU officials are expected to meet with a special SACS committee Oct. 14 through 16, and a monitoring report must be delivered to the SACS committee by Sept. 16. SACS has said its board of trustees will review ASU's situation in December and expects to make a decision on accreditation or further action then.

Committee member Alfreda Green said despite not knowing exactly what SACS wants the school to improve, ASU officials should put together a plan to show the agency that the school's board is working to address general concerns they've already been made aware of.

"We definitely should look at our processes and procedures because we definitely need to show them that we have some measures in place so when they get here they can see we've been proactive," she said.

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