Report: ECU finances show waning cash flow

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East Carolina University is experiencing sharply declining cash flow as it seeks to hire a new chancellor, according to an internal report that is under discussion by officials of the campus and UNC System.

The unaudited report shows that ECU is projected to report a $28 million decline in cash flow in the fiscal year ending June 30 related to tuition, state appropriations, athletics and the university’s ECU Physicians medical unit. That compares with positive cash flow of more than $34 million in 2016, $18 million in 2017 and $8 million last year, the report notes.

University spokesperson Jeannine Manning Hutson said, “We believe it’s premature to report these numbers publicly since we’re not confident in their reliability.” She called the report a “working document, not a final one.”

Kieran Shanahan, chairman of the ECU Board of Trustees, did not respond to a request for comment on the report, which has been shared with that board and top administrators at the UNC System. Data in the report was compiled by a senior ECU official, according to four people familiar with the matter.

ECU, North Carolina’s fourth-largest public university and the key economic driver for much of eastern North Carolina, has said its enrollment dipped last fall, with further declines likely in the 2019-20 school year. Fewer students means reduced tuition revenue and less state funding, contributing to an expected $10 million decline in tuition-appropriations cash flow this year. That compares with gains of $9 million last year and $20 million in 2016, according to the report.

Chancellor Cecil Staton, who is stepping down in May, has said that other UNC System campuses are recruiting more aggressively for students from eastern North Carolina. Also, two regional schools — Elizabeth City State University and UNC Pembroke — are offering $500-per-semester tuition plans that undercut ECU.

The biggest expected cash flow decline is in the ECU athletics department, with a $12 million reduction projected this year, compared with a cumulative decline of $4 million over the last three fiscal years.

ECU’s football program has experienced attendance declines with the team losing 75% of its games over the last three years. To reverse those fortunes and fill a stadium undergoing a $60 million renovation, ECU hired a new athletic director and football coach in December. An athletics department spokesman declined to discuss the report, deferring to other university officials.

In addition to the projected cash-flow declines cited previously,  the report cited additional expected deficits totaling $28 million related to four other university accounts: student unions ($9.6 million decline); dining service ($10.7 million); facilities and administrative services ($5.5 million) and housing ($2.6 million.) Previous performance of those accounts wasn’t included in the report.

ECU’s board met with UNC System President Bill Roper Monday, partly in private. Roper told the trustees he wanted input on filling Staton’s position on an interim basis while the university seeks a permanent chancellor, according to a Greenville Daily Reflector story. It made no mention of financial issues.

After announcing his resignation on March 18, Staton said he was receiving about $590,000 as part of the separation. He also said he had agreed to a non-disparagement clause.

Former UNC President Margaret Spellings conducted a review of Staton’s performance last year, which hasn’t been made public. More recently, former N.C. Senator Pete Brunstetter, a Winston-Salem lawyer who now works for the UNC System, has examined the campus’ operations. Brunstetter’s LinkedIn page cites his title as the system’s interim chief operating officer.

According to ECU’s audited 2018 financial statement, the university had total revenue of $962 million, nearly a fourth of which stemmed from medical patient services. ECU operates the Brody School of Medicine and employs several hundred physicians, many of whom teach medical students and work for the ECU Physicians practice. ECU Physicians is expected to have a negative cash flow of $5 million this year, down from gains of $19.7 million in 2016;  $6.7 million in 2017 and about $600,000 last year, according to the internal report.

State appropriations made up 32% of ECU’s total funding in 2018, while tuition and fees contributed 21%.

 

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