Pennsylvania's state university system on Tuesday extended a lifeline to struggling Cheyney University, agreeing to forgive more than $30 million in loans if the school can achieve and maintain a balanced budget over the next four years.
The measure, approved by the board of governors for the Pennsylvania State System of Higher Education at a special meeting in Harrisburg, comes as the nation's oldest historically black university faces serious financial woes and plummeting enrollment.
The system and its other 13 member universities have extended the loans to Cheyney over the last several years to help keep it afloat.
Cheyney, facing a Sept. 1 deadline to prove that it should not lose its accreditation, also has begun to take bold steps to close a more than $7 million gap in what would have been a $35 million budget.
The 746-student university in Chester and Delaware Counties in the last week has cut 17 administrative positions, including its chief spokesperson, and plans to shut down some academic programs. The board of governors gave the school permission to end programs without adhering to previous guidelines that required currently enrolled students be allowed to finish.
"They have to submit a balanced budget if they want their accreditation to be continued," said Kenn Marshall, a spokesman for the state system.
That's the message, he said, the university received from the Middle States Commission on Higher Education. Without its accreditation, Cheyney's students no longer would be eligible for state or federal financial aid, and in effect, the university would go out of business.
The commission put Cheyney on probation in 2015. In June, the commission told the university it had to submit a plan by Sept. 1 to address serious deficiencies in its finances, programming and other areas.
"Cheyney University cannot survive without accreditation, period," Cynthia D. Shapira, chair of the board of governors, said in a statement. "And today's serious actions give Cheyney the path forward."
Cheyney has lost more than half its enrollment since 2010. In 2015, the university came under scrutiny for mismanagement of student financial aid, which could mean the school will have to repay $29 million to the U.S. Department of Education. The university could not provide high school transcripts for 45 percent of the students who received aid from 2011 to 2014, nor could it document that some students receiving aid were making the required progress toward a degree.
Under the plan approved Tuesday, the system will forgive one-third of the loans when Cheyney cuts $7.5 million in its current budget and maintains a balanced budget for 2018-19. The next two-thirds will be forgiven if the university keeps a balanced budget over the next two fiscal years.
"By holding Cheyney accountable for achieving these goals, we are making an important shift toward rewarding good performance and away from enabling the kinds of decisions that have fostered Cheyney's problems for decades," Chancellor Frank T. Brogan said.
Marshall said no decision had been made on which programs could be discontinued; the university has 18 majors. In the past, a university that discontinued programs had to let current students finish their degree over the next few years. Because of the urgency of Cheyney's predicament, the system waived that requirement. Instead, Marshall said, the state system will offer current undergraduates whose programs are discontinued the opportunity to transfer to one of the other 13 universities in the system to complete their degree, he said. Exceptions also will be made for graduate students.
The system also is in discussions with Lincoln University, a historically black school in Chester County, about a similar arrangement.
"Our number-one goal is to serve students, and we cannot do that if we lose accreditation," Aaron A. Walton, interim president of Cheyney, said. "Now, we can focus our available resources on students in academic programs where there is the greatest demand and that meet Pennsylvania's needs."
Faculty members affected by the cuts will be notified by Oct. 30 and allowed to remain at the school through the spring 2018 semester, then given an opportunity to transfer to another position at Cheyney or another of the system's universities.
Kenneth M. Mash, president of the Association of Pennsylvania State College and University Faculties union, endorsed the board's decision to forgive the loans to Cheyney.
"If Cheyney is going to survive, it's going to have to be under circumstances where there is some forgiveness," he said. "It was something that had to be done."
But he opposes the elimination of programs. "They're pulling the rug out from under these students without giving them a chance to speak up," he said.
Once Cheyney submits its plan to Middle States, the commission will send a team to the school and rule by mid-November on whether to discontinue accreditation or give the school one final year to prove it can fix its problems.
In addition to two rounds of administrative cuts, the school also has reorganized its business and campus operations and renegotiated contracts with vendors, the system said.