Supporters rally to save Berean as audit lists school's troubles

THE BEREAN Institute, threatened with imminent closure after training African-American students for more than a century, has not accurately tracked its financial or student records, according to the state's report of a 32-month performance audit of the school.

"Berean Institute had no cohesive system of internal controls to administer programs or safeguard its assets or those of the Commonwealth of Pennsylvania," according to the June 23 report by the state comptroller's office, a copy of which was obtained by the Daily News.

The report of the audit - covering the period from July 1, 2005, through Feb. 29 of this year - said: "The accounting software system used . . . did not provide appropriate audit trails to allow us to accurately capture the status and activity of many accounts as of a specific date."

The report said that the 109-year-old school, on Girard Avenue near 19th Street, "experienced four consecutive years of net losses through June 30, 2007."

The Daily News reported Tuesday that the venerable institute could go out of business as early as today because of funding and accreditation problems.

The institute's board issued a statement Wednesday challenging that report and saying that the school was simply undergoing a transition and that some classes would resume next week.

Clouding the school's financial problems has been confusion over who speaks on behalf of the school. Board Chairman John Braxton said that the school could close today because it had run out of money to pay staff, but Wednesday's statement from the rest of the board contradicted him.

The immediate fate of the school could not be determined last night.

Meanwhile, supporters of the institute, which has a legacy of lifting African-Americans out of poverty, gathered at the school yesterday in a rally to save it.

The audit found that the number of students in Berean's academic program - as opposed to its cosmetology and barbering programs - dropped from 92 in the fall semester of 2005 to just six last spring.

Because of a recruitment drive for an athletic program, the school's enrollment jumped to 157 for the 2007-08 year, but fell to just six after the school lost its accreditation in September.

As for its student record-keeping system, the report said, "Berean Institute did not have written policies and procedures governing the collection, maintenance and security of student attendance and other student information."

A spokeswoman for the school said last night that the board had no comment on the audit.

The report also noted that the son of the school's president, Norman K. Spencer, managed the student records until Spencer retired in 2006.

"We were unable to obtain accurate student enrollment, attendance, graduation and job-placement information from Berean Institute for the period of the review," the report said.

Enrollment numbers provided "did not agree with available supporting documentation."

In one example, the report said, a brochure for the 2006-07 fiscal year identified 17 students who had graduated with an associate's degree. But the audit later "determined that three students listed on the 2005-06 fiscal year commencement brochure were also listed on the 2006-07 fiscal year receiving the same associate degree."

The school's state funding had been based on student enrollment.

Also, the report said the scope of the audit was restricted by the fact that the school's "accounting system was not maintained in a consistent manner . . . ."

The auditor's work also was hampered because "most of the student record sets obtained from the business office, student financial aid office, registrar's office and the classroom attendance records were not synchronized, complete or accurate," the report said.

Another problem in conducting the audit was that "certain key employees were terminated" around the time of the audit, the report said.

The report said that Berean also may owe money to the U.S. Department of Education's financial-aid program. The amount is unknown because of an "ongoing audit and dialogue between Berean Institute and the USDE," it said.

The report noted that the federal Education Department discovered serious problems in Berean's Federal Student Aid Programs in June 2006.

Some of the federal findings cited in the report were: "Improper retention of student credit balances; ineligible federal Pell Grant disbursement, late and inaccurate return of Title IV funds, inadequate recordkeeping and improper fee[s] charged to students for processing Title IV application form[s]."

"In July 1996, Berean Institute lost its accreditation for the first time from the ACCSCT [Accrediting Commission of Career Schools and Colleges of Technology] due to noncompliance with Student Financial Aid programs," the report said.

In 2002, the school regained accreditation. "During these and ensuing years, the issues of recruitment, retention, graduation, job placement and financial stability became growing problems for Berean Institute," it continued.

The report, signed by Thomas R. George, assistant comptroller for audits, said the audit found other legal issues that could make the school's financial situation even worse, including:

* Claims for unpaid rent and damages by landlords who provided housing to students who were primarily football players from out of state;

* Claims for nonpayment of football equipment purchased;

* A notice from the U.S. Department of Labor of a complaint that retirement money was owed to past employees;

* A sexual-harassment suit against Berean Institute and a vice president who was paid as a consultant;

* Notices from the IRS for a late filing and unpaid taxes and interest for the fiscal year ending in June 2002 and for the underpayment of federal unemployment taxes for the tax period ending Dec. 31, 2005.

A rally of support

Around noon yesterday, about 50 people rallied for the school at the front steps, not far from a historical marker that notes its 1899 founding by the Rev. Matthew Anderson, pastor of the Berean Presbyterian Church.

Tara Fears took off a half day from her accounting job at Philadelphia's Redevelopment Authority to attend the rally.

"My heart is hurting," Fears said, referring to the news that Berean could close today or reorganize under another name.

"This is where I'm from. I feel as if this is my birthright," added Fears, who got an associate's degree in accounting in 1979 and later went on to St. Joseph's University to earn a bachelor's degree. "It wouldn't be the same place under another name. The name makes it what it is."

The crowd included former and current students, ministers, teachers, barbers and historian Charles Blockson, founder of an African-American archive at Temple University.

"We did not come here to point fingers," Paul Randleman, a former Berean alumni-association president, told the crowd.

"We're here to show that we're behind the vision and dreams that were put [into this school] when many of us were not allowed into restaurants and not allowed to use restrooms."

Randleman, president of the 52nd Street Business Association and its cultural branch, Arts West, urged those at the rally to sign petitions, donate money, volunteer and do whatever else they can to keep Berean afloat.

"We're going to keep it going for another 100 years," Randleman said after the rally. *