BOARD OF TRUSTEES ISSUES

• Mismanagement of Endowment Fund.  Paine College’s $8.2M endowment has a net worth of only $4.1M.  The endowment has been used as collateral to a line of credit with total borrowings of $4.1M with no payment plan established.  In essence, the endowment is used to support operations when the donor may have wanted the money to be used for scholarships or other specified purposes.  Because there is little to no documentation to discern the real purpose of donations made to the College, endowment investment standards and protocols may have been broken by use of the endowment fund to collateralize operating loans to the College.  Because the borrowings against the endowment are unlikely to be repaid, with no repayment plan between the college and the lender, and because the borrowings are collateralized by the total endowment fund there has been in effect a de facto liquidation of the endowment fund to the extent of the borrowings against it, i.e. $4.1 million.  Moreover, the college is paying interest on the loan borrowings ($90,507 in fiscal year 2013) while simultaneously paying management fees calculated as a percentage of  the total endowment fund of $8.2 million when in essence it is worth only half that amount. [click here to see 2013 Audit Report by BDO, notes 9 and 15]

• The $4.1M Line Of Credit Borrowing Is Considered All Current Liability.  The current ratios that measure liquidity are severely impacted because of this large line of credit.  If an organization’s liquidity is in question then their financial stability will be a concern.  Paine’s financial stability has been called into question by SACSCOC.   [click here to see the 2013 and 2014 SACS Disclosure Statements on the Status of Paine College]

• The Endowment Fund Manager, Morgan Stanley Smith Barney, Did Not Receive The Appropriate Board Authorization To Borrow $360,000 Against The Endowment In December 2013.  The Bradley administration attempted to have the unauthorized loan paid back prior to the April Board of Trustees meeting, however, there was no cash available to do so.  [click here to see letter to Board of Trustees from CFO Ed Patrick]

• Annual Endowment Disbursements Exceed Board Established Guidelines.  The Board of Trustees has established a disbursement guideline which determines the maximum amount of money which can be disbursed to the college annually for operating expenses.  This guideline has not been adhered to as the college has, in addition to $4.1 million in borrowings collateralized by the endowment, drawn directly from the endowment over $1.7 million dollars in excess of the board established guideline between 2002 -2011. [click here to see Endowment Disbursement Analysis]

• Dr. Bradley Limits The Information Provided To The Board Of Trustees Such As SACSCOC Letters, Department Of Education Letters, Financial Statements Compliance Audit Reports And Other Important Communications.  The Chairman of the Board of Trustees, Dr. Silas Norman, receives much of this information, but he does not disseminate these documents to all of the other Board members.  SACSCOC warning letters and Department of Education letters dating back to 2012 have not been shared with several Board members.  The Board is unable to hold Dr. Bradley accountable for creating a plan of action to address many of the major issues confronting Paine College.  Unfortunately, they get more information from the Augusta Chronicle articles and other sources than from their Board meetings.  A lack of Board of Trustee governance has been cited by SACSCOC as one of the violations that has landed Paine on probation.  [click here to see the 2013 and 2014 SACS Disclosure Statements on the Status of Paine College]

• The Paine College Board of Trustees Has Not Held Dr. Bradley Accountable For The Eroding Financial And Academic Standing That Is Occurring Under His Administration.  Prior to Dr. Bradley, Paine College was not under SACSCOC warning status, or probation, and now Paine College accreditation is in jeopardy as the SACSCOC status has moved from warning to the more sever status of probation.  There has been no plan presented to the Board to address the ten SACSCOC standard violations that justify the probation status, and yet, Dr. Bradley has been allowed by the Board to continue as the President of Paine College.  [click here to see the 2013 and 2014 SACS Disclosure Statements on the Status of Paine College]

• In 2012, Under the Leadership of Former Board Chairman, Dr. Eddie Cheek, Dr. Bradley was allowed to write his own employment contract.  Most of the current Board of Trustees members have never seen his employment contract and have never asked to see it.  The primary job of the Board of Trustees is to hire, evaluate, and if necessary to fire the President of the college.  Yet at Paine there is no effective evaluation or oversight of the President as is evidenced by the fact that a majority of the Board members have never even seen his employment agreement or have any idea of how much money he makes or his wife makes.  Reportedly, Dr. Bradley’s wife, Tina Marshall Bradley, has been hired as a consultant to the college.  It is doubtful that any of the current Board members could recite what her job duties are, or how much money she is to be paid, or have ever seen a consulting agreement between her and the college or have ever asked to see it.

CAPITAL EXPENDITURE ISSUES

• Rather Than Renovate The Resident Halls And Or Build A New Resident Hall, Which Would Generate Revenue, The College Built The HEAL Center, A Basketball Gym That Generates Very Little Revenue.  The result is that debt service (repayment of the loan to build it) and maintenance expenses (cash outflows) are significantly in excess of revenue (cash inflows).  These expenses impact the financial statements and contribute to the negative change in net assets that feeds into the financial instability of the College. [click here to see Endowment Disbursement Analysis]

• Dr. Bradley Has Established Short-Term Loans With Balloon Payments That Come Due In 2015 And 2016.  The HEAL Center loan ($4.5M) and Capitol City Bank loan ($3.1M) expire in 2015 and 2016, respectively.  When Paine College becomes unable to make the balloon payments due on these loans, which is likely because of the precarious financial condition of the College, the loans could be called and the College would face default on these obligations.   Again, these short term debt financings of such large amounts of money feed into the financial instability of Paine College.

• Expensive Loans That Were Negotiated By Dr. Bradley.  The large dollar loans with short-term repayment structure are unfavorable in cost and expense to Paine College.  The interest rates appear to be reasonable but if Paine College is paying closing costs every 3 years, these loans become very expensive, and again, contribute to the financial instability concern.

FINANCIAL AID ISSUES

• Dr. Bradley Meets With The Financial Aid Director Weekly Even Though This Position Does Not Directly Report To Him.  He gives instructions to the Financial Aid Director to draw down enough financial aid each month to meet payroll and payoff a certain amount of obligations.  This draw down approach hurts the students since many of them do not receive their financial aid until the fourth and fifth month of the semester, and therefore, the students do not receive their refunds until the fourth and fifth month.  The semester is virtually over and students receive money that is intended for them to purchase books, supplies and other educational related items.  This draw down approach also does not comply with the Department of Education regulations. [click here to see March 2014 U.S. Department of Education deficiency letter]

• Because Financial Aid Draws Down Financial So Late In The Semester, Students Also Do Not Receive State Financial Aid Such As Hope Scholarship And Georgia Tuition Equalization Grant (GTEG).  State funding is shrinking and these funds are available on a ‘first come, first served’ basis.  Ironically, this approach to manage cash through the financial aid department actually hurts Paine College because less cash payments are received than are available earlier in the semester, and of course, the students are impacted because they must find a way to seek out other sources to pay for their tuition or pay the balance themselves.  [click here to see March 2014 U.S. Department of Education deficiency letter]

• Financial Aid Department Experiences Repeated Severe Findings, And Yet, No Changes Are Made Under Dr. Bradley.  Deficiencies in Financial Aid have been reported in annual audits, and SACSCOC has noted sub-standard performance by the financial aid department in their two warning status letters and probation status communications.  Financial aid professionals who want to work at Paine College and have more expertise and knowledge than the current staff have been refused employment by Dr. Bradley.   Training for the financial aid personnel is limited and/or non-existent.  80-90% of students and parents complaints are related to financial aid not being applied timely, accurately or completely.   [click here to see 2013 U.S. Department of Education Program Review Report]

• Past Audits, all the Way Back to the Year Ending June 30, 2011, have Identified as one of the Root Causes of Accounting Errors and Inaccuracies the Constant Turnover of Personnel in the Business Office.  Notwith-standing this fact, Dr. Bradley fired two CFOs and other Business Office personnel after this period.  In essence the dysfunction in the Business Office can be traced directly to Dr. Bradley and his proclivity to terminate the employment of the people he hires. [click here to see Cherry Baekert and Holland 2011 fiscal year audit, p. 43]

GENERAL MISMANAGEMENT AND LEADERSHIP INCOMPETENCE ISSUES

• Dr. Bradley Spearheads The Establishment Of A Financially Failing Football Program.  Athletics is only profitable at less than 10% of all higher education institutions in the United States.  That means for more than 90% of the colleges and universities athletics cost more money than it brings back.  Over $1M was spent on football in its inaugural year.  These expenses that included coaching staff payroll, coaching staff offices, coaching staff bonuses, equipment and uniforms, weight room building renovation, weight room equipment, and the building of a field house with showers and lockers were untimely and again, contributed to the concern about Paine College’s financial stability.

• Dr. Bradley Does Not Consider The Students As Being His Clients, But Rather His Constituents That Include The Board Of Trustees, Alumni, Southern Association Of Colleges And Schools, Commission On Colleges (SACSCOC), Local Politicians And Department Of Education.  Therefore, basic needs of students are not considered in the budget such as maintenance of the resident halls, food service equipment, HVAC in the student center where the air conditioning is consistently in disrepair.  Instead, over $300,000 in funding is requested from the United Methodist Church to install stain glass windows in the Chapel.

• Staffing Is Based On Satisfying Constituents Rather Than What Is Most Beneficial To Paine College.  This is the reason for lack of transparency.  Paranoia and secrecy is the culture rather than openness and availability. Administration staff includes positions to satisfy constituents because when questioned for the reason to keep them, the explanations references their experience, their loyalty or who they know rather than their performance and relevance in meeting full time operational needs.  The result is furloughs and high turnover in positions that meet dire operational needs.

• Dr. Bradley Is Primarily An Administrator Who Approves All Checks Regardless Of The Dollar Amount; Approves Financial Aid Drawdowns;  And Does Not Allow Any Staff Members To Interact With The Board Without His Prior Approval.  Additionally, Dr. Bradley prohibits staff interaction with media, even if it is a positive story.  Violation of these rules is a basis for termination.  This type of daily operational oversight is rare from the office of a college/university president because this position rarely has the time and the expertise to oversee these types of responsibilities.  Essentially, if the President is overseeing these responsibilities, the primary responsibilities of the President’s office are being neglected, and due to the lack of expertise, the administration of these areas suffer.

• Dr. Bradley Rarely Interacts With The Local Business And Augusta Community To Raise Awareness Of Paine College Offerings And Raise Private Donations.  Even during times of dire circumstances such as the recent shootings, Dr. Bradley made no public appearance as the leader of Paine College to quell the students, parents and community’s fear and concern.  This impacts contribution revenue from private donors that continues to decline along with student enrollment of both currently enrolled students and new students.

MISMANAGEMENT OF BANKING RELATIONSHIPS

• Paine College Previously Proposed A $22+ Million Bond Financing Transaction Which Was To Be In Large Part Underwritten By Wells Fargo Capital Finance.  However, shortly after Dr. Bradley abruptly terminated the employment of the last Vice President for Fiscal Affairs, Edward Patrick, Wells Fargo pulled out of the deal and the transaction collapsed.

• Dr. Bradley Has Considered Moving A Significant Portion Of Banking Operations From Wells Fargo To Capitol City Bank.  Capitol City Bank is under FDIC watch and some will consider this bank more financially unstable than Paine College, and yet, Dr. Bradley is interested in moving more banking operations to them.

• Dr. Bradley Requested That $163,000 Be Invested In Capitol City Bank Stock Offering.  The stock offering prospectus acknowledged that Capitol City Bank’s ability to sustain operations was in peril and the profile of a suitable investor is one that could assume a high risk investment.