Our inside sources indicate that the U.S. Department of Education (USDOE) is going to put Paine College on a cash reimbursement status soon. This means that the school would be placed on a heightened cash monitoring status under which funds derived from federal student financial aid would be provided on a reimbursement basis only and not at the beginning of the semester. This could be the beginning of the end for Paine even without losing accreditation. The college is cash strapped. Dr. Bradley has announced furloughs and our sources state that he has converted salaried employees to hourly employees, and cut this month’s pay to all employees in half. We are still in the process of verifying this information but for now it seems credible. Hopefully someone attending the July 12, 2014 Alumni meeting will ask Brandon P. Brown to confirm or deny whether this is true or not.
Reimbursement status means that if the college cannot come up with the cash to meet expenses from external sources it would not be able to meet ongoing expenses such as payroll, utility bills, loan payments, etc. Our sources indicate that the USDOE is looking for some sign that there is a functioning governance structure in place at Paine. For the last two years they have not seen that that is the case. They have concluded that the Bradley administration is inept, incompetent and possibly lacks integrity. Read the 2013 DOE Program Review Report from June 2013. It is on the website under Financial Aid Concerns.
In the 2010 – 2011 school year Paine received $8,003,314 in federal financial aid awards. In the 2012 – 2013 school year the comparable number was $10,294,446. Reimbursement status means that Paine would have to pay those funds up front and get reimbursement after it proved payment. This is not likely to be accomplished in today’s economic environment.
The 2013 USDOE Program Review Report made 12 Findings:
Finding #1: Account Records Inadequate Not Reconciled & Advances Used for Non-Program Purposes
Finding #2: Student Credit Balances Deficiencies
Finding #3: Current Year Charges Paid With Prior Year Funds
Finding #4: Pell Overaward
Finding #5: Enrollment Status Not Verified Before Disbursement
Finding #6: Direct Loan Underaward
Finding #7: Incomplete/Incorrect Verification
Finding #8: Conflicting Information
Finding #9: Satisfactory Academic Progress Not Met
Finding #10: Return to Title IV (R2T4) Calculation Errors
Finding #11: Failure to Reconcile Records for COD, NSLDS, and Student Account Ledgers for Federal Pell Grants and Direct Loans
Finding #12: Financial Aid Packaged Incorrectly/Full Eligibility Not Awarded
As of March, 4 months ago, the USDOE wrote to the college that it had failed to adequately explain disbursements of $1.6M in Pell grant funds and $2.7M in Direct Loan funds. At the Paine Project we have interviewed all four of the last CFOs of Paine College and other former business office personnel. The school cannot produce the required records because the disbursements were not properly documented at the time they were made and were diverted to other uses. For these reasons it is likely that Paine will be placed on reimbursement status. It is actually required under USDOE regulations. As stated, this could amount to taking the patient off life support to die a slow natural death, even without the loss of accreditation, which is also likely to come next spring, to be announced in June of 2015 by SACS.
The bottom line is that our collaboration at the Paine Project concludes that unless the Board of Trustees shows that it is in control by terminating the Bradley administration, USDOE is likely to pull life support from Paine between now and the start of the next semester. For lack of a better term, “sacrificing” Bradley would be some sign to the USDOE that the Board is alive and trying to do the right thing. It would also be an important, although belated, sign to SACS that the Board is a functioning governing entity.