MOTION by Regent Jantzen:
MOHION by Regent Jantzen: Move the Board to reconvene in general session at 1:22 p.m. Seconded by Regent Robinson and passed without dissent.
MOTION by Regent Harnice:
Move the Board to authorize KSU staff to complete the process that was outlined in the RFP for the executive search firm and to give KSU staff the opportunity and authorization to make the contract award.
Seconded by Regent Jantzen and passed without dissent.
Dr. Aaron Thompson, President of the Council on Postsecondary Education (CPE), and Hon. Travis Powell, Vice President and General Counsel of CPE, presented the Board with an update on CPE's Finance Assessment and Management and Improvement Plan Update. They expressed their gratitude to KSU's staff and faculty, Susan Krauss, Shaun McKiernan, Bill Payne, and Ryan Kaffenberger for their cooperation and hard work.
Mr. Powell commenced his presentation with a review of the July 20, 2021 Executive Order Related to KSU and then transitioned to an in-depth review of the Kentucky State University Financial Assessment performed by CPE. He assured the Board that this was not an audit or an investigation, but an exercise to assess the financial status of KSU. The final report will be approved by CPE at its meeting of November 5, 2021.
Mr. Powell stated that the review of KSU’s cash reserves and working capital found that KSU’s liquidity crisis began in 2019 when KSU experienced a significant drop in cash combined with an increase in liabilities. Among the major issues noted were overdue payments, staff being instructed to not pay certain vendors, students with outstanding balances, and asset preservation fee receipts used for operations. KSU’s current cash position experienced some relief due to an advancement of the fourth quarter allotment from the Commonwealth and CARES Act debt forgiveness dollars. Current projections indicate that cash reserves will be depleted by March of 2022 and the $5 million Revenue Anticipation Note will be used for April operations. Additionally, a non-recurring appropriation from the General Assembly is needed for continued operations beyond April.
Mr. Powell noted that CPE used widely recognized best practices and KPMG’s publication titled, Strategic Financial Analysis for Higher Education to prepare the Financial Assessment. The team considered five fundamental research questions: does KSU have sufficient liquidity to meet its short and intermediate term obligations, does KSU have sufficient resources and are they flexible enough to support the university’s mission, is KSU strategically managing its resources (including debt) to advance the university’s mission, does KSU’s asset performance and management support the university’s strategic direction, and do KSU’s operating results indicate that the university is living within available resources.