State regulators have slapped Terra State Community College with a fiscal watch designation after an audit uncovered missed tax filings, late payments and steep operating losses at the small Fremont campus. Late last week, the college’s trustees accepted President Ronald Schumacher’s resignation and tapped a veteran administrator as interim president while leaders pull together a three-year financial recovery plan. College officials insist classes and campus services will carry on as usual even as state agencies tighten their grip on the school’s finances.
Audit finds big shortfalls and missed filings
According to Cleveland.com, independent auditors reviewing Terra State’s books for the fiscal year ending June 30, 2024, reported an operating loss of nearly $11.5 million and roughly $681,000 in unpaid taxes as of that date. The audit also cited late vendor payments, accounting corrections that ranged from about $47,000 to more than $5 million, and bank reconciliations that were not completed on time, a lapse auditors say led to about $551,000 in payments that exceeded available cash. Auditors additionally detailed problems involving federal grants and student-aid programs and found that about one quarter of vendor invoices were paid late.
Auditor orders repayment and blames officials
The Ohio Auditor of State’s office issued a formal finding for recovery against former finance officials after concluding that certain payroll withholdings and tax submissions were not made on time. In a press release, the Auditor of State said it ordered repayment of $22,255.46 tied to missed municipal income-tax withholdings and delinquent sales-tax payments and named two former employees as liable for the amount. Auditors also reported that employer payroll withholding submissions to the Regional Income Tax Agency were missed during part of 2023 and said the penalties could have been avoided if required filings had been submitted on schedule.
State places campus under fiscal watch
The Ohio Department of Higher Education placed Terra State on fiscal watch after the auditor recommended stepped-up oversight, and Chancellor Mike Duffey notified the college of the designation on March 23, according to local reporting. The fiscal watch status gives the institution a limited window to correct accounting and governance problems and requires Terra State to submit a financial recovery plan that will go before state officials for review. Local officials said in coverage of the move that the designation is intended to increase monitoring and bookkeeping standards while maintaining academic continuity on campus.
Trustees name interim president and lay out recovery steps
On the same day trustees accepted Schumacher’s resignation, the Board of Trustees appointed Dr. Cory Stine, a 12-year Terra State administrator who most recently served as senior vice president for innovation and strategic planning, as interim president, according to a college statement reported by local outlets. Trustees also announced plans to work with the Auditor’s Office to align accounting systems, set up a mandatory and frequent review cycle for college finances and complete a comprehensive three-year recovery plan for state review. Terra State leaders say students, faculty and staff should not see disruptions to classes or campus services while the plan is crafted.
Legal and accountability implications
Beyond the fiscal watch designation, the auditor’s finding for recovery creates a formal cost-recovery obligation against the named former officials and their insurers, a step that can lead to civil collection actions if the ordered amounts are not repaid. The college has acknowledged many of the audit’s findings and said it concurs with or is taking corrective action on a number of issues, per local reporting. In the meantime, the fiscal watch status will require heightened financial reporting to the state as Terra State rolls out cost controls and accounting fixes over the coming months.
