Dive Brief:
- Tennessee State University is set to raise its tuition and fees by 6% as the struggling institution tries to pull itself out of financial distress.
- The university’s board of trustees voted to approve the increase last week. The plan would reduce the historically Black institution’s projected fiscal 2026 deficit by some $7 million, to $38.9 million, Acting Chief Financial Officer Jim Grady told trustees at the Thursday board meeting.
- Since February, university leaders have identified up to $26 million in cost reductions through measures such as hiring freezes and capping scholarship awards. But officials acknowledged last week that more work still needed to be done to close the budget gap.
Dive Insight:
Tennessee State is operating with little margin for error after years of management issues. Today the university would likely not be operating at all without the release of significant state funds to keep it afloat.
One of the university’s near-fatal mistakes in past years was promising full rides to most students using emergency federal pandemic funds without a funding plan for continuing the scholarships through their academic careers.
The broken promises to students led to a massive enrollment dip. First-year student enrollment sat at around 3,500 in fiscal 2022, but fell by roughly half the next year, officials told state lawmakers last year. By 2024, Tennessee State had only 880 students.
Moreover, a recently released audit found that in fiscal 2023 — and in the several years prior — Tennessee State administration failed to enact proper financial controls and processes. That resulted in both over- and undercharging students and misstating cash balances in financial statements.
Since then, the university has been trying to right its budget and secure funding from the state for a turnaround.
This past spring, Interim President Dwayne Tucker laid out a five-year plan to modernize Tennessee State’s facilities while providing for its cash needs. The proposal would use over half a billion dollars of state money — the amount by which Tennessee underfunded the HBCU over the course of several decades, according to a 2021 report.
As for its upcoming annual budget, Grady laid out spending reductions last week that are expected to save as much as $6 million by capping unrestricted financial aid awards to students and up to $10 million in reduced personnel costs by leaving vacancies unfilled. That comes after laying off around 100 employees last year.
University leaders also found up to $10 million in proposed cuts to unspecified nonpersonnel costs.
Tennessee State faces other potential financial headaches outside its control, such as the impact on enrollment from federal Republican proposals to cut Pell Grant awards and eligibility as well as other potential policy changes. Since President Donald Trump retook office this year, the university has also seen disruption to tens of millions of dollars in federal grants, with some funds being suspended, reinstated and then suspended again.
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