Tennessee State University could run out of cash this spring without help

An article from site logo Dive Brief Tennessee State University could run out of cash this spring without help

The struggling HBCU is dependent on state money to survive — but is also owed money by Tennessee, the feds have said.

Published Feb. 7, 2025 Ben Unglesbee's headshot Ben Unglesbee Senior Reporter Two brick buildings connected by an overhang with Tennessee State University written across it. Tennessee State University, in Nashville, Tenn. The image by Kaldari is licensed under CC BY 1.0 Dive Brief:
  • Tennessee State University is looking for help from state lawmakers as it tries both to stay afloat and to revamp its operations and finances for the long term.
  • The public historically Black institution is on pace to run out of cash by April or May, Interim President Dwayne Tucker said Tuesday at a meeting hosted by Black Caucus members in the state Legislature. 
  • TSU intends to present a five-year turnaround plan to the Legislature. Operations through the first year of the plan could be financed by removing restrictions on roughly $150 million out of $250 million the state previously set aside for university infrastructure, Tucker noted.
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TSU’s financial troubles are steep and immediate. An FAQ page on the university's website acknowledges that the financial condition has reached crisis levels stemming from missed enrollment targets and operating deficits. This fall, the university posted a projected deficit of $46 million by the end of the fiscal year. 

The university identified inefficient processes in financial aid, advising and enrollment systems, that contributed to its woes. It also said those problems were exacerbated by 2024’s messy federal rollout of the Free Application for Federal Student Aid. 

Additionally, and perhaps most damaging, the university launched a full scholarship program for some students without a plan to fund it throughout students’ journey to graduation. It paid $37 million toward the scholarship in fiscal 2022 using federal pandemic emergency funds. When that money ran dry, TSU had to issue tens of millions of dollars in institutional financial aid, causing it to heavily discount its tuition. 

The scholarship helped attract students, with fall enrollment hitting 8,198 students in 2023, compared to 7,774 in 2018. But the university couldn’t ultimately afford to maintain those aid levels.

Taking aim at the university’s management, Tennessee lawmakers last March passed a Republican-led bill to replace all of the university’s trustees and restructure its board, over the objection of Democrats. 

Emergency state funding last fall kept the institution operating, but Tucker said TSU will need more to not just turn around — but to stay open. 

“It’s a fact that we can’t pay our bills,” Tucker said, noting also that the university would likely not be open today without state help. 

But Tennessee also owes TSU money, according to a federal assessment. 

In a letter to Tennessee Gov. Bill Lee in 2023, then-U.S. Education Secretary Miguel Cardona and U.S. Agriculture Secretary Tom Vilsack said the institution had been hurt by “longstanding and ongoing underinvestment” as a public land-grant HBCU. By their estimate, inequitable funding gaps led Tennessee State to miss out on $2.1 billion over 30 years. 

Tucker dismissed the idea of suing the state for the $2.1 billion, arguing that the legal process could take years — while the university’s financial needs are immediate. Legal action could also potentially anger the legislators whose support TSU needs to help provide funding. Moreover, the institution could lose a legal challenge, he added. 

Tucker — the university’s second interim president in less than a year — argued for focusing instead on the state funding gap identified by the Legislature in 2021. That gap amounts to over $540 million. 

Since identifying the amount, Tennessee lawmakers lined up a one-time $250 million sum for the university to invest in infrastructure. Tucker said the university could use a portion of those funds to keep it afloat through the first year of a five-year plan. 

Along with state help, TSU and its board are considering financial exigency, a restructuring process that allows an institution experiencing budgetary distress to lay off tenured faculty and shut down academic programs. 

In a special meeting of TSU’s board on Jan. 31, a consultant with the National Association of College and University Business Officers presented a detailed workshop on how exigency works.

Tucker said Tuesday that officials were considering exigency but that it wasn’t in the university’s immediate plans. 

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Originally posted on: https://www.highereddive.com/news/tennessee-state-university-cash-financial-crisis/739605/