The struggling Lagoon Landing dormitory project at Florida Keys Community College has led to the finding of a "significant deficiency" in the college's 2011-12 financial audit by the state of Florida - and could put completion of its marine propulsion building in jeopardy.
Specifically, the college spent $800,000 of Public Education Capital Outlay (PECO) funds, which are appropriated for specific purposes, to pay the bondholders of the dorm project, on behalf of the Campus Foundation, which technically owns the dorms, to cover the shortfall caused by the meager use of the dorms by students.
As the March 22 report makes clear, "The $800,000 of PECO funds . . . represents questioned costs. By using PECO funds, in this manner, and considering the college's financial condition difficulties, there is increased risk that the college may not have sufficient cash needed to complete the college's marine propulsion building for which the state has appropriated PECO funds."
The "significant deficiency" arises from the combination of four findings:
One, that "The college needed to improve its controls to ensure that financial statement transactions are properly reported."
Two, that "The college paid the operating costs for one of its direct-support organizations without specific legal authority."
Three, that "the college used Public Education Capital Outlay funds for purposes not specifically authorized by law, resulting in $800,000 of questioned costs."
And four, that "The college's current funds-unrestricted fund balance had declined to a level that may leave the college with no resources available for emergencies and unforeseen situations."
In his written response to the audit, FKCC President and CEO Jonathan Gueverra acknowledged "financial statement errors," but defended the first installment of the loan, for $200,000, stating that "had the college not advanced the amounts to the foundation, the residence halls would not have been completed and opened for the fall semester, jeopardizing the receipt of revenues for the entire year, which far exceeded the amounts advanced by the college . . . as it turned out, the initial advance of funds was the first of several challenges that the college faced associated with the building and operation of the residence hall. Apparently the management consultant working with the financial team for the bonds underestimated the operating costs and overstated the anticipated revenues."
Gueverra also assured the AG's office that he is certain Lagoon Landing will eventually pay for itself, and the loan to the foundation will thus be repaid.
"The monies owed to the college may be classified as a collectible receivable since there is a good possibility that the project will generate the revenues to meet the obligations due the bondholders and the amounts advanced by the college."
The dorms have been a money-losing proposition since opening in the fall of 2011.
Their remote location, strict regulations against alcohol and drugs, and routine inspections by college staff have chafed students who feel like they're being left out of a "true" college experience.
"If I wanted to live with my mom and dad, I'd live with them," then-resident Morgan Meserve told The Citizen in February of 2012. "We're all good kids. We don't ask for much. We're college kids. I know I'm leaving here. I'm out of the dorm," she added.
Gueverra is currently out of town, and at press time, hadn't responded to emails, sent via a college employee, requesting comment.