Two financially struggling universities in Tennessee have been penalized by their accreditor, the Southern Association of Colleges and Schools Commission on Colleges.
In decisions announced on Tuesday, the commission removed the accreditation of Lambuth University, but the institution plans to appeal and will retain its accreditation while that process is under way.
The commission also placed Fisk University, in Nashville, on warning status for six months. Warning status is a milder sanction than probation, the step before withdrawing accreditation.
Loss of accreditation, the ultimate penalty, often results in an institution's shutting its doors permanently. Without approval by a federally recognized agency like the Southern Association, one of the nation's six regional accrediting organizations, a college's students cannot receive federal financial aid.
The Southern Association had placed Lambuth on probation a year ago.
The university, which is located in Jackson, between Memphis and Nashville, is affiliated with the United Methodist Church and enrolls more than 600 students. It was founded in 1843, but it has been struggling for most of the past two years to gain its financial footing. In 2009, the university was placed on the Education Department's list of more than 100 private, nonprofit colleges that failed a financial responsibility test.
State education officials discussed last year the possibility of acquiring the campus and making it part of the University of Memphis, but that did not pan out.
In May of this year, university officials announced that they were finalizing the sale of the institution to a group of for-profit investors, but that plan also did not come to fruition. In August, the university announced "commitments" with unidentified partners in a joint venture that it said would keep the institution going.
In a statement on Lambuth's Web site on Tuesday, the university's president, Bill Seymour, said "the university was disappointed" with the Southern Association's latest decision but was "prepared to begin the appeal process immediately."
Fisk University has also struggled with its finances and has been entangled in a long-running court battle over attempts to sell a portion of its valuable collection of 20th-century art, donated by Georgia O'Keeffe, in order to raise money.
The Tennessee attorney general's office had opposed the sale of works from the 101-piece collection, given by Ms. O'Keeffe to Fisk in the 1940s and 1950s, on the grounds that it would violate the artist's wishes that the pieces be displayed together and not be sold.
The college came up with an alternative proposal to sell a 50-percent share in the collection to the Crystal Bridges Museum of American Art, in Arkansas, for about $30-million.
But a Tennessee judge ruled last month that the university could keep only $10-million from the sale, and it would have to put the remainder into an endowment to maintain the collection. The university has said it will appeal that ruling.
Meanwhile, Fisk was dealt another blow this week by the Southern Association, which ruled that it was not in compliance with the accreditor's standards on financial resources and stability. Fisk must submit a report to the association in six months demonstrating that it is dealing with the accreditor's concerns.
In a news release, Fisk's president, Hazel R. O'Leary, stressed that the institution is still fully accredited and has a plan to deal with its problems. The plan depends on successful annual fund-raising efforts, increasing the university's asset base, and clean audits, she said, adding that the $30-million anticipated from the art-collection deal "is vital to Fisk's future."