NASHVILLE, Tenn. (WTVF) — Without financial intervention, the Tennessee State University Board of Trustees heard Thursday that the school would be in a $46 million deficit by the end of the year.
Auditors told the board that the school started the school year with only $5 million in cash. This conversation comes a week after the school recently told state lawmakers and the Tennessee comptroller it couldn't make its November payroll without more money from the state. TSU's interim financial officer Daarel Burnette said the school had to improve retention and improve the freshman class, which was half of what it was in fall 2023.
Collectively, new TSU staff said the burden came from retention of previous freshman classes, financial aid issues on student accounts, university brand identity issues and no financial reserves before the school year started.
If the board approves a financial action plan, the school will end the year with about $3 million in cash. Without intervention, that number is a $46 million deficit.
"It's going to be two to three years before we build an adequate reserve," Burnette said. "Most colleges try to put 90 days of cash in reserve for the summer. We didn't have anything. We have to build reserves to get us through the summer cycle. The issues and problems we are seeing today — this has been a wave building since COVID ended and maybe going on before that."
This fall, the school has eliminated ads at the Nashville International Airport, eliminated band trips to away football games and nixed the football team staying at a hotel near the Tennessee Titans stadium before home football games. The school is traveling in golf carts on campus, not vehicles, to keep fuel costs down. They are repurposing assets, like furniture. The school also eliminated 117 contracts that duplicated services, saving $3.5 million.
"This was eating up our cash," Burnette said. "There were no financials. There was no forecasting like other university institutions have. We need to develop reports that help us provide reliable information."
TSU has already laid off employees in hopes of averting deeper cuts. The school estimates its monthly payroll is between $18 and $20 million.
Since the summer, the Tennessee Board of Regents has been helping the current TSU administration with the deficit it's facing and trying to help produce basic financial statements with the university and its accounting. The Tennessee Higher Education Commission has also helped administrators with financial aid.
TSU trustees wanted to see the full financial statements of the university. Burnette said the university was doing everything manually in the finance department.
"We need to know where we are so we don't keep falling off the cliff," board trustee Dwayne Tucker said.
The finance department is updating the job descriptions for the finance department because they haven't been updated since the early 2000s. The university will soon post a job on the website for the financial aid director.
The enrollment numbers at TSU
TSU posted its fall enrollment figures in early November. Those show that the university only had 6,310 students enrolled for fall classes. In 2023, the school started the year with 8,198 students.
In an interview with NewsChannel 5 Investigates, former president Glenda Glover said that is the reason why the university went into a financial tailspin. This year, the school was down $26 million in tuition and fees.
However, Bridgett Golman, interim vice president for TSU Student Affairs, said it's much more complicated than that.
"It's absolutely cheaper to keep our students and we only keep 33% of them in the 2022 freshman class," Golman said. "You're going to lose sophomores and juniors and senior class. It's not just about bringing students in on the front end so they succeed and they are successful. We need to have the Chick-fil-a way. No ifs, and, buts about it."
So far for the spring, only 3,542 students have enrolled for the spring at TSU — which is less than projected. The school figured 4,390 students.
"Those numbers will get better daily, but we have 1,200 students to take care before we get to our conservative model," Golman. "We are looking at students who are here. Students have various reasons why they haven't enrolled based on holds. They have to have a bill of less than $200 to be eligible to enroll. If your bill hasn't been resolved or their payment plan defaulted, there's various reasons they have holds. Then they can register for spring."
Golman said the financial aid director left in September after a resignation and other team members resigned as well. Trustees said they knew some students hadn't received some financial aid dollars, putting a hold on their accounts.
"When you have a financial aid director, they have certain security pieces for the Department of Education," Golman said. "When our person left, we had a gap. There's some state aid we didn't have on students' accounts. We couldn't add federal aid on our students' accounts. We have to get some training. When you say in not fault of the students' part, that could be that they have some aid that hasn't been applied to their account from our inability to pull down funds. I can't tell you how many students I have had to do intervention with."
What funding TSU did receive from the state before the payroll crisis
As budget for the current school year, TSU was allotted $71.9 million from the state.
The state spent $8,557 per student at TSU this year. In contrast, the University of Tennessee-Knoxville students received $10,061 per student from the state.
Of that, $54 million went to their general fund, according to the budget lawmakers passed in April.
Because TSU is a land grant school, agricultural programs are a key focus. From that, the state provided $13.9 million
The other $4 million went to maintenance and electrical upgrades for the school.
Chronic underfunding of TSU has contributed to the crisis
TSU has been underfunded for years, according to both state and federal officials.
How much is still up for debate and depends on who's asked. The state said half a billion was owed in 2022, while the federal government said that number is $2.1 billion.
In 2023, the federal government wrote a letter to Gov. Bill Lee explaining the university is owed the larger figure, which was calculated from 1987 until 2020.
This comes out of a federal policy for land grant schools. Congress established that act in the 1860s for public universities to receive federal dollars for state agricultural colleges. The University of Tennessee didn't receive that funding until after the Civil War because the state was part of the Confederacy.
The University of Tennessee-Knoxville and TSU are land grant colleges, meaning they have an elevated funding status when it comes to state dollars. The two schools were established before desegregation when Tennessee higher education institutions wouldn't accept Black students.
Federal partners from the USDA and the Department of Education found that state lawmakers weren't funding the two schools the same. However, the letter doesn't provide any enforcement — just the figure owed.
State lawmakers would ultimately decide whether to give TSU the $2.1 billion. The letter from the federal government wasn't discussed in the legislature in 2024.
Do you have more information about this story? You can email me at emily.west@newschannel5 or chris.davis@newschannel5.com.
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