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Money

Tennessee State University's Financial Dilemma and Path to Recovery

2024-11-21

NASHVILLE, Tenn. (WTVF) — Facing a significant financial challenge, the Tennessee State University Board of Trustees was informed on Thursday that without immediate financial intervention, the school would be facing a staggering $46 million deficit by the end of the year. Auditors revealed that the school began the academic year with a mere $5 million in cash. This revelation comes just a week after the institution informed state lawmakers and the Tennessee comptroller that it was unable to meet its November payroll without additional funds from the state. Daarel Burnette, the interim financial officer at TSU, emphasized the need to enhance student retention and improve the freshman class, which had dwindled to half of its size in fall 2023.

Challenges Facing TSU

New TSU staff identified several key issues contributing to the financial burden. These included the retention of previous freshman classes, financial aid issues on student accounts, university brand identity problems, and the absence of financial reserves at the start of the school year. If the board approves a financial action plan, the school aims to end the year with approximately $3 million in cash. Without such intervention, the deficit could reach a disheartening $46 million. Burnette stated, "It will take two to three years to build an adequate reserve. Most colleges strive to maintain 90 days of cash in reserve for the summer. We had nothing. We must build reserves to navigate through the summer cycle. The issues we are witnessing today have been building like a wave since COVID ended and perhaps even before that."

Cost-Cutting Measures

This fall, the school has implemented several cost-cutting measures. Ads at the Nashville International Airport have been eliminated, band trips to away football games have been cancelled, and the football team is no longer staying at a hotel near the Tennessee Titans stadium before home games. On campus, the school is using golf carts instead of vehicles to keep fuel costs in check. They are also repurposing assets such as furniture. Additionally, 117 duplicate service contracts have been eliminated, saving $3.5 million. Burnette explained, "This was draining our cash. There was no proper financial management or forecasting like other universities. We need to develop reliable reporting systems."

Employee Layoffs and Financial Department Updates

TSU has already taken the difficult step of laying off employees in an effort to avoid deeper cuts. The school estimates that its monthly payroll ranges from $18 to $20 million. Since summer, the Tennessee Board of Regents has been assisting the current TSU administration in addressing the deficit and working on producing basic financial statements with the university and its accounting. The Tennessee Higher Education Commission has also provided support to administrators with financial aid. TSU trustees expressed the need to see the full financial statements of the university. The finance department is in the process of updating job descriptions as they have not been revised since the early 2000s. The university will soon post a job opening for the financial aid director.

Enrollment Figures and Financial Aid Issues

TSU released its fall enrollment figures in early November, showing that only 6,310 students were enrolled for fall classes. In 2023, the school started the year with 8,198 students. Former president Glenda Glover attributed this to the financial situation. However, Bridgett Golman, the interim vice president for TSU Student Affairs, emphasized that it is a more complex issue. She stated, "It is indeed more cost-effective to retain our students. Only 33% of the 2022 freshman class was retained. We lose sophomores, juniors, and seniors. It's not just about attracting students; we need to ensure their success. We need to adopt the Chick-fil-a approach – no excuses."For the spring semester, only 3,542 students have enrolled so far, which is less than the projected 4,390. Golman explained, "These numbers will improve daily, but we have 1,200 students to address before reaching our conservative model. Students have various reasons for not enrolling, such as holds on their accounts due to unpaid bills or defaulted payment plans. Financial aid plays a crucial role, as when the financial aid director left in September and other team members resigned, it created a gap. We couldn't apply federal aid to students' accounts, and we needed training. Many students have had to seek intervention."

State Funding and Underfunding

For the current school year, TSU was allocated $71.9 million from the state. The state spent $8,557 per student at TSU, while the University of Tennessee-Knoxville received $10,061 per student. Of this, $54 million went to the general fund, and $13.9 million was provided for agricultural programs as TSU is a land grant school. Another $4 million was allocated for maintenance and electrical upgrades. TSU has been chronically underfunded for years, with the exact amount still a subject of debate. The state claims that $500 million was owed in 2022, while the federal government states it is $2.1 billion. In 2023, the federal government wrote a letter to Governor Bill Lee explaining the owed amount, which was calculated from 1987 to 2020. TSU and the University of Tennessee-Knoxville are land grant colleges with elevated funding status, but state lawmakers will ultimately decide whether to provide the $2.1 billion. The letter from the federal government was not discussed in the legislature in 2024.