TSU finance committee outlines bridge-to-sustainability plan; proposes 4% in-state tuition increase, 20% freshman scholarship cap and funding flexibility

Tennessee State University finance officials presented a multi-part “bridge to sustainability” plan to the finance committee on March 12, 2025, asking trustees to support near‑term measures to stabilize operations and to approve a special board session after the Tennessee Higher Education Commission (THEC) sets its binding tuition range.

Presentation and the funding ask

Presenters reviewed a plan built around three elements: use of remaining state appropriations from a prior $250,000,000 allocation, internal cost reductions, and revenue adjustments including tuition and scholarship policy changes. Presenters said about $150,000,000 of the previously appropriated $250,000,000 remained available and that the university is seeking authority to expand permissible uses of those funds beyond deferred maintenance to include operating support while the institution implements multi‑year adjustments.

The pro forma and timeline

Officials showed a five‑year pro forma that, under current assumptions, projects a cumulative funding need that was highlighted as roughly $95,700,000 by the model's later years (presenters referenced that figure in discussing the fiscal 2029 outlook). The presentation said the university expects to move toward break‑even on the operating forecast by approximately 2029–2030 if the recommended actions are implemented.

Tuition, THEC guidance and recommended scenario

University staff briefed trustees on tuition modeling and scenarios. Staff explained the framework used to calculate a recommended in‑state increase to cover fixed costs (inflation) and a portion of personnel costs not fully funded by the governor’s budget. The model calculated that covering the governor‑recommended 2.6% salary pool and projected non‑personnel inflation would require an approximate 5.4% revenue increase; staff said the THEC guiding range available when materials were prepared was 0–4% for in‑state tuition, and that THEC staff later indicated a recommended range up to 5.5%.

Given the THEC uncertainty, presenters recommended a conservative operational step: a 4% in‑state tuition increase for fiscal year 2026 (consistent with the then‑guidance) together with one of several out‑of‑state options. The preferred approach presented (scenario 3) would implement a 4% in‑state increase and a 4% adjustment to the 250‑mile out‑of‑state rate in year one, while maintaining current full‑freight and scholar out‑of‑state rates for the coming year and moving to a single out‑of‑state rate by fiscal year 2027. Staff said that under the presented scenario the fiscal year‑to‑fiscal year revenue pickup is modest (a few million dollars in aggregate) and that the tuition recommendation would be finalized only after THEC sets the binding range; the trustees would be called to a special board session at that time.

Scholarships: 20% cap for incoming freshmen and current scholarship levels

Staff presented a scholarship strategy tied to the tuition model: limit institutional scholarship (unrestricted tuition discounting) for each incoming first‑time freshman cohort to 20% of that cohort’s tuition and fees. Presenters said the cap would apply to the freshman cohort budgeted for fall 2025 (the presentation used an assumed cohort of about 950–980 first‑time freshmen and a working pool of about $2.4 million for the freshman cap under the pro forma). Presenters emphasized this cap would apply to future freshman cohorts and that existing scholarship commitments to current juniors and seniors (described as roughly $17–$18 million) would run through as committed and not be cut short.

Current scholarship picture: presenters told trustees TSU expects to end fiscal year 2025 with roughly $33,000,000 in institutional scholarship and discounting. They said roughly $11,000,000 of that is a TSU full‑ride category and about $6.5 million is university scholarships; around $17–$18 million of the institutional scholarship total is currently committed to juniors and seniors and therefore will naturally “play through” over the next two years.

Enrollment and constraint issues

Staff said the pro forma assumes a conservative 2025 freshman cohort (about 950–980 first‑time freshmen). They warned that scholarship totals are sensitive to actual enrollment; if the freshman cohort is larger than the model assumes, the 20% cap dollar amount will also grow. The presenters also noted NCAA Division I scholarship and sport‑sponsorship requirements constrain how deeply scholarship pools can be reduced for athletics and band without additional planning because of gender balance and minimum sport counts.

Budget process, operations and cash

Finance staff walked trustees through budget‑vs‑actual reporting through January 2025. They reported recognized tuition and fees near $75,000,000 to date (noting an end‑of‑year allowance for bad debt under discussion) and operating cash balances in the range of roughly $35,000,000–$37,000,000 at the time of the meeting. Staff said payables were largely under control and that months‑end liabilities over 60 days were minimal.

Fundraising and institutional advancement

Dr. Tony, TSU’s institutional advancement officer, told the committee that through March the university had recorded about $4,300,000 in fundraising for the fiscal year against a $10,000,000 internal goal. He said alumni giving trends are improving for the first time since FY2019 and described plans to implement a new development CRM (Blackbaud) and to strengthen staffing; Dr. Tony said the advancement office currently has limited fundraiser capacity (three fundraisers including himself) and would need additional staffing to support a larger capital campaign.

Trustee direction and next steps

Trustees did not vote on tuition or scholarship policy on March 12. Staff were instructed to return with final tuition recommendations after THEC sets the binding range and to provide more detailed enrollment sensitivity analyses, a finalized scholarship policy (staff noted draft language that would require board approval for any exception to the 20% cap), and clearer reconciliation of state appropriations, federal funds, and projected tuition revenue to the consolidated budget.

Ending

Committee members were briefed on multiple levers the university plans to use to reach financial sustainability: targeted scholarship limits for incoming freshmen, personnel and non‑personnel cost reductions, use of remaining state appropriations to bridge operating shortfalls, and a modest tuition adjustment timed with THEC action. Staff emphasized that the measures are part of a multi‑year plan and that trustees will be asked to act on tuition and any scholarship policy exceptions once THEC sets the official guidance.