The campus of Tennessee State University in Nashville, the state’s largest historically Black university. (Photo: John Partipilo)
State officials authorized a $43 million infusion into Tennessee State University’s operating budget in November to make payroll and prop up the university for the rest of the year, even after it laid off 114 people and cut expenses to cope with a financial crisis.
That was one of several revelations Thursday at a State Building Commission meeting where TSU interim President Ronald Johnson and his administration also acknowledged that TSU’s previous Board of Trustees signed a contract to pay former President Glenda Glover at least $800,000 to serve as an advisor after she resigned June 30.
House Speaker Cameron Sexton, a member of the commission, raised questions about the payment to Glover considering TSU’s new leaders believe she and her administration were largely to blame for the university’s financial woes.
Johnson responded to Sexton’s questions by saying he wasn’t certain whether the contract could be canceled, and he pointed out the payment was part of Glover’s separation package.
TSU’s new president acknowledged the university was about to go into the red on Nov. 1, even after it saved $11 million annually by letting go of the 114 staff members in October and saved another $13 million by cutting spending, travel and purchases. University officials also went to Washington, D.C., and met with Saudi Arabia officials at the consulate there to request $7 million owed to TSU.
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Johnson, who took office on an interim basis in July, said the “lack of checks and balances” within the previous administration was “beyond troubling.”
“It has essentially put the institution in a crippled position,” Johnson said, adding it could take three to four years for TSU to rebound once it settles on the proper student enrollment size.
Before TSU could go into the red, state leaders gave the nod to use $32 million appropriated as part of a campus building project to fill the gap through the rest of 2024. The state also made an $11 million advance to TSU on its budget and spent up to $3 million to hire an accounting firm to delve into the university’s financial position.
Still, the State Building Commission, which is made up of the Senate and House speakers, finance commissioner and constitutional officers, directed Johnson’s administration to adopt an emergency operating plan and to release administrators linked to Glover. The commission also wants TSU to sell the Avon Williams Campus located on valuable property in downtown Nashville.
Jim Brady, managing director with Alvarez & Marsal, a global management consulting firm, told the commission that TSU used $37 million from a federal grant to pay for scholarships when enrollment jumped to 8,026 in fall 2022 before it fell back to 7,254 in fall 2023.
Previous reports showed enrollment increased to 9,200 in 2022 from 7,600 in 2020, largely as a result of freshmen students who were the first in their families to enroll in college. TSU increased yearly scholarships to $28.3 million from $6.4 million.
TSU was forced to make a last-minute request of the Building Commission two years ago to house students in hotels and a nearby church, which led to Senate hearings and a move to vacate the Board of Trustees and push Glover out of office.
According to Brady, TSU didn’t have the funds to continue offering those scholarships to students for subsequent years. Many of them left the college or sustained debt, and this fall enrollment dipped to 6,300 as only 1,000 freshmen opted to attend, putting TSU in an even more precarious situation.
The financial shortfall stems, in part, from increases in daily operating expenses to serve the higher number of students on scholarships as tuition and fees declined, according to Brady.
Johnson acknowledged that TSU postponed plans to initiate an emergency financial plan once the state allowed it to divert construction funds to operations.
But Lt. Gov. Randy McNally encouraged Johnson to work with the TSU Board of Trustees to enact a new plan immediately.
Mumpower, who recommended Glover and the former board be replaced after an audit last year, told Johnson he should release anyone connected to the Glover administration. Mumpower also said TSU should find the number of students that would allow the university to function financially and then it could focus on campus improvements.
TSU ran into most of its financial trouble after starting the scholarship program. Once those federal funds ran out, the university had to find other sources, such as $19.6 million in tornado insurance money.
“It’s really just a lack of planning and financial control over scholarship programs,” Brady said. He added that students might not have understood they had outstanding balances and that “it’s not a free ride.”
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Secretary of State Tre Hargett, a member of the commission, said he considers the plight of those students “heartbreaking,” especially since many were the first members of their families to attend college.
The state ran a $1.8 million audit on TSU earlier this year that made numerous findings but no fraudulent activity and less than $4,000 in questionable expenses. That was conducted in addition to a state audit that found a lack of oversight that led to a breakdown of controls that caused an error-prone environment.
TSU’s finances have been in a difficult situation for decades. In some instances, officials have said, the TSU Foundation had to send money to the university to make payroll.
A federal report last year found that TSU had been underfunded by $2.1 billion over 30 years. A previous state study determined the university, one of two land grant institutions in Tennessee, was shorted by $150 million to $540 million over the course of a century.
At the governor’s request, lawmakers approved $250 million for improvements to the campus two years ago, but those funds can’t be used for housing. TSU is working on a separate dorm project.
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