NASHVILLE, Tenn. (WTVF) — The Tennessee Senate Finance Chairman has now come forward to say Tennessee State University was in such dire financial straits that they had to advance them money from 2025 to get the 2024 school year started.
This comes after a state hearing where lawmakers discussed with the university that it couldn't continue to give them money for payroll.
Sen. Bo Watson, R- Hixon, said when the financial picture didn't improve in October, state leaders liquidated money allocated for a $32 million agriculture building on TSU's campus to shore up payroll. Watson says they will use another funding source to keep the agriculture building on track.
"The state of Tennessee has actually infused $2 to $3 million to hire the accounting firm, an $11 million advance in your budget and a $32 million infusion just to allow you to continue operating," said Jason Mumpower, the Tennessee Comptroller of the Treasury in a state hearing Thursday.
Watson said he remains committed to returning TSU to glory, but it will require major cuts to programs and staff.
TSU laid off staff this fall to help with some of the financial crisis, but Thursday the school told lawmakers during a building commission meeting their situation had turned dire. Payroll each month is between $18 to $20 million. This comes at a time when the university is in a transition.
"We can't cut any deeper in the supplies and the travel and some of the other discretionary spending, capital purchases, so yes you're right we'd have to look at the people," said Dr. Darryll Thompson, who was recently brought in as Special Advisor for External Affairs.
How did we get here?
The university experienced audit findings this year about how it deals with the school's finances. Those previous findings influenced state lawmakers to craft legislation to vacate the school's board. Gov. Bill Lee swiftly vacated the board after the legislature passed the bill. The previous university president Glenda Glover left her post this summer.
"The previous president, administration and trustees operated this university in such a way as literally you are out of money," Mumpower said during the committee. "They're gone and they've left the situation where literally you were going to fail payroll on Nov. 29 if you had not had an infusion of cash from the state."
Some of this crisis derived when TSU experienced an influx of enrollment, which resulted in a housing crisis. That caused students to live in hotel rooms. The university also struggled with distributing scholarship money, which crippled how students were going to make it through their semesters.
House Speaker Cameron Sexton, R-Crossville, pointed out that the university used one-time federal COVID-19 funding on scholarships, but didn't have funding to sustain that influx in enrollment.
"It looks like they had a plan to increase enrollment, and they were going to use federal money to do that through scholarships potentially, but there was no plan in the future on how they were going to cover that after that one year?
"That’s what the numbers would appear to show, that’s correct," said Jim Grady, Managing Partner of Alvarez and Marsal, an accounting firm retained to help TSU survive this financial crisis.
In a state audit report, Mumpower's office focused on the housing crisis on campus that started back in 2017. It was only made worse in 2022, when TSU quadrupled the scholarship budget from $6.4 million to $28.3 million, with dorm space limited for that influx of students.
"You have no reason to feel like the pressure is relieved," Mumpower said to TSU officials. "The pressure is still on and the life of this university is still on. The previous administration and its trustees have driven this university to a breaking point, and it is up to you to reorganize, reorient and lead to a rebirth of this university."
Lawmakers scorned TSU officials that Glover entered into a contract with the university, after she stepped down as President. The school said they thought the contract was for around $800,000 but didn't know the exact amount. This arrangement came from a prior TSU board, school officials told lawmakers.
"The question becomes, if she's caused all these problems, why would you continue to pay her a lot of money to advise on a situation that we're dealing because of her leadership when she was at the helm of the university?" Sexton asked.
Comptroller Mumpower said the only way to keep TSU afloat would be to make deep, painful cuts.
"That’s why you're here. You’re here basically to take it down to the studs, and then rebuild it. I know you know that," said Mumpower.
Mumpower suggested TSU leadership look into selling their downtown Avon Williams campus and to give the TSU Board of Trustees emergency power, called fiscal exigency, to slash programs and even tenured faculty.
"It is going to require a review of your academic programs, the programs that don’t have significant enrollment are going to need to be cut. And faculty are going to need to be laid off. You’re going to have to continue to reduce your workforce at the university. You cannot sustain this level of monthly payroll. And the state cannot continue on a month-to-month basis to prop up the payroll of the university," said Mumpower.
According to the American Association of University Professors, fiscal exigency is defined as "a severe financial crisis that fundamentally compromises the academic integrity as a whole and that cannot be alleviated by less drastic means than the termination of tenured faculty appointments."
Underfunding and the background context
The federal government wrote a letter to Gov. Lee last fall, explaining that Tennessee State University is owed $2.1 billion in back pay for underfunding the school.
Tennessee State University and the University of Tennessee are land-grant colleges. As outlined in the Second Morrill Act of 1890, all land-grant colleges should receive the same funding. A land-grant college is a research-based school within the state. Both schools have extensions to the U.S. Department of Agriculture, and both have agriculture programs.
In essence, TSU still had to function as a land grant college without the same funding, the letter stated.
Looking at raw figures, those clad in orange accept substantially more funding than those in blue. In 2023 for example, Knoxville received $461.4 million while TSU got $65 million. However, both schools have vastly different enrollment figures.
NewsChannel 5 looked at the state budgets for this year 2023 and spun back to 2012. That included looking at both universities' budgets to reference check.
During 2023 the legislature provided TSU with a lump sum of $250 million for infrastructure projects. This came after years of unpaid land grant matches by the state, a joint committee of the legislature decided. However, that committee said TSU was owed more than half a billion dollars.
A facility assessment concluded that TSU's maintenance needs alone total $337.5 million. Some proposed projects include updating electrical infrastructure, re-roofing buildings, safety and security infrastructure improvements on campus, demolishing four halls, building new residence halls and apartments and a new library.
In addition to facility updates, funding needs were found necessary for financial aid programs, retention and graduation support services and mental health counseling.
TSU statement in full
Tennessee State University is committed to addressing the long-standing financial challenges that we face with a strategic and transparent approach. We shared our plans with the State Building Commission today, just as we have shared with State lawmakers from the onset who have worked with us by providing funding for liquidity support. In response to these challenges, Interim President Ronald Johnson implemented a 100-day action plan focused on stabilizing university operations and ensuring the long-term sustainability of TSU. Over the past months, we have successfully identified and implemented measures that have resulted in approximately $13 million in savings for the university. However, these necessary cost-cutting measures have also led to the difficult decision to separate from 114 employees, as part of our realignment efforts.
Our financial action plan is ongoing and consists of three core components, a hiring freeze, a spending freeze, and strategic realignment that includes workforce adjustments. All are essential for right sizing the university and ensuring that we continue to meet our mission effectively. This plan is also part of our obligation to fulfil a mandate from the State of Tennessee.
We are steadfast in our commitment to transparency, accountability, and transformative action as we work to sustain a future-ready TSU. We understand the complexity of these changes and their impact on our community, and we pledge to keep our stakeholders informed as we move forward.
Do you have more information about this story? You can email me emily.west@newschannel5.com or chris.davis@newschannel5.com.
Fostering Hope provides Christmas for kids in foster care. I'm delighted to see Fostering Hope expand this year to expand their reach to now include kids in Foster care in metro AND foster kids in East TN hard hit by Helene.
-Bree Smith
