Pennsylvania Approves $30 Million Debt Forgiveness Program For Cheyney, But Questions Remain for Future

The Pennsylvania State System of Higher Education has alerted Cheyney University that it will forgive more than $30 million in state and system loans to the school, if the nation’s oldest historically black college cuts more than $7.5 million dollars from its 2017-18 operating budget.

The Philadelphia Inquirer reports on the forgiveness program, which would likely result in faculty terminations and discontinued academic programs. Cheyney will be required to keep up a balanced budget for the next four years, to receive full relief from the $30 million debt.

The proposal comes just over a week before the university will submit a proposal to the Middle States Commission on Higher Education to reverse a show-cause order from the accrediting body, which will revoke the school’s full accreditation if it cannot show financial solvency in its working and revenue building strategy.

Cheyney officials say the cuts, along with renegotiated contracts and debts with campus vendors, will help to preserve student services while maintaining regular business.

“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.”

The show cause order, which will formally be decided in November following a site visit from Middle States, outlines a list of compliance issues from Cheyney dating back years, including:

To request that the show cause report document evidence that the institution has achieved and can sustain ongoing compliance with Commission standards including, but not limited to documented evidence the institution has:

(1) documented financial resources, funding base, and plans for financial development adequate to support its educational purposes and programs and to assure long-term financial stability

(2) developed, implemented, and widely communicated a resource allocation strategy that is clearly aligned with the institution’s strategic priorities and includes a clear description of resource allocation strategies and  a means of assessing the effectiveness of these  strategies;

(3) developed plans to initiate a strategic planning process that will reflect the institution’s mission and goals as they may be redefined by the work of existing task forces

(4) developed and implemented a financial plan that provides for annual and multi-year budget projections, utilizes planning and assessment documents, and addresses both near- and longer-term resource acquisition and debt reduction

(5) initiated a process to hire permanent campus leadership to address the significant issues they face and to ensure progress and stability of the campus

To further request that the show cause report include the following data for the three most recent years available:  Title IV cohort default rates; USDE Financial Responsibility Composite Scores; and the institution’s status with regard to Heightened Cash Monitoring with USDE.

In June, a system-commissioned task force released recommendations for resolving Cheyney’s academic infrastructure and financial issues, but did not give details on specific corporate outreach strategies to secure private funding, or to resolve debt servicing issues with public and private vendors, did not outline commitments from the PASSHE or state resources to offer cash infusion to the school, and did not offer strategic approached to resolving federal compliance issues, which some reports suggest may add $30 million to the school’s debt servicing outlook.

The school announced last week its plans for a presidential search, but expects that the process could take more than six months to complete.

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