HARRISBURG, Penn., Dec 17 (Reuters) - The nation's oldest black college, Cheyney University, one of Pennsylvania's 14 state-run universities, is on the verge of a financial meltdown that threatens its ability to continue operating, a state official said on Wednesday.
Cheyney's student body has shrunk by two-thirds, to about 1,000, since its 1983 peak, and its four-year graduation rate is just 9 percent. A quarter of students never receive a degree, and student loan defaults are high.
"Cheyney is in dire, dire, dire straits," the state's auditor general, Eugene DePasquale, said. The university has had a deficit for four of the last five years, growing to a cumulative $12.3 million shortfall as of June 30, 2013.
Cheyney's fiscal problems - students who are unable to repay debt and increasing pension costs - were exacerbated by cutbacks in state higher education funding.
DePasquale called upon the State System of Higher Education - the governing body for the state-owned universities - and the legislature to help Cheyney find a way out of "a vicious, destructive cycle" in which declining enrollment and state funding leads to less money for investments that could attract much-needed students.
Cheyney, located in the Philadelphia suburb of the same name, was founded in 1837 after Quaker philanthropist Richard Humphreys bequeathed part of his estate to build a school to educate descendents of the African race, according to the university's website.
Its alumni include journalist Ed Bradley, state and U.S. elected officials, several National Football League players, a U.S. ambassador to South Africa, and Robert Bogle, chief executive of The Philadelphia Tribune.
Cheyney officials did not respond to requests for comment. The university has begun to shrink its workforce by 23 percent and to cut offices' discretionary spending in half, DePasquale's audit said.
School officials are planning more aggressive recruitment and will try to improve student retention and graduation rates. They hope to present a new policy to be implemented in January, the audit said.
Across the country, states have cut higher education spending, especially as they struggled to recover from the 2007-2009 recession.
From fiscal 2003 through 2012, state funding fell by 12 percent while median tuition rose 55 percent across all public colleges, the U.S. Government Accountability Office said in a report published Tuesday.
Cheyney is just six miles from Pennsylvania's largest and best-off state system university, West Chester University, which has nearly 16,000 students. Tuition and fees at the two schools are roughly the same. (Reporting by David DeKok in Harrisburg, Penn.; Editing by Hilary Russ and Leslie Adler)