There are financial problems, and then there are financial problems. Lots of American colleges are struggling this year, either due to bad investments or reductions in state support.

And then there’s Birmingham-Southern College. According to an article by Jeff Hansen in the Birmingham News, on Wednesday the school’s president, David Pollick, laid off 51 employees and announced dramatic pay and benefits cuts:

The steps came about 110 days after school leaders discovered massive accounting errors in financial reports routinely given to Birmingham-Southern trustees, the finance committee and Pollick. Several high-ranking finance and financial aid employees resigned.

A review by outside auditors revealed that Birmingham-Southern would have to cut spending by about $10 million—20 percent—to balance its budget.

The accounting errors, revealing frightening levels of incompetence, included staff over awarding financial aid and “misstating revenues and expenses, as well as the effects that the current economic downturn has had on Birmingham-Southern,” according to the school’s president. These accounting problems may have been going on for as long as 20 years. It doesn’t appear that the school broke any laws or was profiting from these irregularities; employees simply didn’t know what they were doing.

In April Forbes listed Birmingham-Southern among its top (bottom?) ten private schools facing the most financial strain.

Pollick responded angrily, questioning the magazine’s methodology and assumptions. As he explained:

Birmingham-Southern College has been and continues to be an extraordinary collegiate community of incredible achievement. Just this past year Birmingham-Southern was recognized as being one of the highest ranked colleges in the nation in The Chronicle of Higher Education‘s “Great Colleges to Work For” program. And perhaps there can be no stronger endorsement of this college’s quality and character than to be included in the elite group of 40 American institutions in noted higher education author Loren Pope’s Colleges That Change Lives.

All of these things are true. As far as the college’s balance sheet looks, however, they’re also irrelevant. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer