The List Your College Does Not Want To Be On!
by Silence Dogood

The U.S. Department of Education on Tuesday released, for the first time, the list of 556 colleges under “Heightened Cash Monitoring” (HCM). Most of the schools (487 institutions) were under the lowest level of scrutiny (HCM1), while sixty-nine schools were subject to more stringent restrictions (HCM2). Of the sixty-nine, eleven of thirty-one were not released because there were “ongoing investigations.” The twenty-one schools were placed on HCM2 status because a federal audit of the institution resulted in “severe findings.” At these twenty-one institutions, Department of Education employees must manually approve each dollar that flows to the institution. The one odd thing about all of this is that the schools in the worst financial shape were not listed, which in a way makes it seem like they are not in trouble—actually the opposite of what is true.

According to Ted Mitchell, the under secretary of education, a college being on the list “is not necessarily a red flag to students and taxpayers, but it can serve as a caution light.”

According to Inside Higher Education on March 31, 2015:

“colleges may be placed on either form of cash monitoring for a range of reasons, some of which are more serious than others.”

“The department, for example may impose the sanction on a college for submitting its financial statements late. That appears to be the case for 43 public colleges and universities in Minnesota, all of which were on cash monitoring with the designation of ‘audit late/missing’.”

So Minnesota made the national news—and not in a good way! Looking at the list, it is clear that it all of the MnSCU colleges and universities are on the list that the article cites. Hopefully, it is because the financial reports were submitted late rather than for being ‘missing.’

I’ll go out on a limb and assume that the reports must have been submitted as a package by the MnSCU central office because it is hard to believe that at least a few of the financial reports would not have been submitted on time if they were left up to the individual colleges/universities. If it is, in fact, a fault of the central MnSCU office for failing to submit the reports on time, one is left to wonder who will be responsible for paying a fine and/or whatever sanctions that are imposed?

When asked about who was responsible for the late submissions, a VP of Finance at MnSCU in an email replied:

“MnSCU schools being on this list is as a result of the State of Minnesota financial statements being submitted late in FY2013. It was due to the conversion of state accounting systems. The schools had no control of this issue, but nevertheless have seen s the negative results of this. Below is the information I received from the system office on this matter:

It is our understanding that our colleges and universities are on this list as a result of the sanction the state of Minnesota received last year for late filing of its Single Audit. All of our colleges and universities altered cash management practices regarding federal financial aid after the state’s sanction. We do not anticipate any further changes due to the publication of the list by the department.”

So apparently the “conversion of the state accounting systems” is to blame for being submitted late. BUT it then goes on to state: “All of our colleges and universities altered cash management practices regarding federal financial aid after the state’s sanction.” If there wasn’t a problem, why would it be necessary to alter the “cash management practices regarding federal financial aid”? I guess I’ve been around long enough to recognize ‘administrative speak’ when I hear it–blame someone or something else and then say the problem is fixed. Now, it isn’t necessary to find out why there was a problem in the first place and no one loses their job. With all the missteps by MnSCU over the past few years, I’m a lot less likely to accept this ‘story’ as being entirely truthful.

If the State of Minnesota was responsible for the late filing, this also begs another question: Why weren’t the financial statements for the University of Minnesota also late? I guess I’m expecting a bit more ‘administrative speak’ when this one gets answered.

Given the current financial conditions of the colleges and universities within MnSCU, eleven of forty-three are being required to submit “Financial Recovery Plans” to MnSCU. As a result, it is not hard to imagine that it may not be long before MnSCU’s status is changed from HCM1 to HCM2 and this won’t be for late filing of financial statements.

On the list from Minnesota, five institutions other than the ones in MnSCU: Brown College (Mendota Heights), Crossroads College (Rochester), Art Institutes International Minnesota [The] (Minneapolis), Regency Beauty Institute (Blaine); and Walden University (Minneapolis). Simply by association, this does not look good for MnSCU. Additionally, by their absence from the list, it is clear that the financial statements for the University of Minnesota system were submitted on time. According to an official of the U.S. Department of Education, in an email to Inside Higher Education on Tuesday states: “Given the highly competitive environment in which these institutions conduct business, any public release of the confidential financial standing of these institutions will likely cause the institutions substantial competitive injury.”

Just what MnSCU needs—another reason for a student to choose attending a school that is not part of the MnSCU system—or should we now call it the “Minnesota State” system? Maybe ‘rebranding’ MnSCU with a new name will make all the difference!

One Response to “MnSCU’s incompetence”

  • Reader3 says:

    It’s an absolute outrage that this happened. All 31 institutions are on the list. As Dogood put it: what more does any student from any other state need to choose to attend a university or college not part of MnSCU.

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