The U.S. Department of Education has placed Mississippi’s public university system under a form of oversight that restricts the flow of federal financial aid dollars and hinders the creation of new academic programs, according to a letter obtained by Mississippi Today. 

The Institutions of Higher Learning is planning to appeal the sanction, known as heightened cash monitoring. It comes after IHL was 75 days late in submitting its system-wide annual audit and financial statements for fiscal year 2022.

“This untimely audit submission constitutes a failure of financial responsibility under the Department’s regulations,” according to an Aug. 4 letter the federal education department sent to Gov. Tate Reeves, the IHL commissioner, and the presidents and financial aid directors of the eight public universities. 

For the next five years, when Mississippi universities seek to cover tuition with federal financial aid dollars — everything from Pell Grants to student loans — they will be required to first provide certain documentation. Typically, universities are able to draw down federal funds in advance. 

This creates an administrative headache because universities rely on federal financial aid to cover a significant chunk of tuition, and Mississippi is no exception. About two-thirds of full-time undergraduate freshmen at the public universities receive federal financial aid like the Pell Grant, according to the most recently available federal data. 

“It’s a much bigger concern for small private colleges that are really tight on cash, but for a public system that has some money it’s much more of a slap on the wrist,” said Robert Kelchen, a professor of higher education finance at the University of Tennessee, Knoxville. 

The more significant penalty is that IHL will also be required to submit any new academic programs for a full review by its accreditor, the Southern Association of Colleges and Schools Commission on Colleges, before the Board of Trustees can approve.

Sometimes universities need to extend credit lines or shift funds in response to heightened cash monitoring, but Kim Gallaspy, an IHL spokesperson, wrote in an email that the agency won’t need to do that. Reeves’ office did not respond to questions by press time.

To date, IHL has not publicly announced the stricter status, even though it was in place before the start of the fall semester. Just last week, some of the universities started notifying faculty and staff about it at meetings and via internal email.

Gallaspy wrote the reason for the delay was IHL’s third-party auditor, the national accountancy firm CliftonLarsonAllen LLP, needed more time to perform additional audits after discovering that “some institutions had inaccurately classified federal program funds,” including major programs. Gallaspy did not specify which institutions.

“To be clear, although the funds were misclassified there were no findings from our auditor which indicate that federal funds were inappropriately spent,” she wrote.

This resulted in IHL submitting its audited financial statements on June 14 of this year when they were due on March 31, according to the letter.

The letter asked IHL to upload information to an online portal if the agency believes it did not err in submitting its audited financial statements late. It’s unclear if IHL did that, though Gallaspy wrote the agency is working to appeal the decision.

“We have also required written corrective action plans to be submitted,” Gallaspy write. “These corrective action plans will be tested for effectiveness by the Board’s Office of Internal Audit. Ineffective corrective actions will warrant further corrective measures by the Board.”

It’s not unusual for universities to be sanctioned in this way by the U.S. Department of Education, according to Inside Higher Ed

IHL will be joining six other universities in Mississippi that are under heightened cash monitoring as of June 2023, including Belhaven University, Coahoma Community College and Traxler’s School of Hair, a for-profit college in Jackson.

Higher education reporter at Mississippi Today in partnership with Open Campus.