Monday, January 26, 2015

If Elected Officials Cared about PASSHE Students, What Would be Different? - Part 2

If Pennsylvania’s elected officials cared about PASSHE students, they would require every political appointee whom they place on PASSHE governance boards to take a fiduciary oath of office, and to be bound by that oath to maintain a fiduciary relationship between themselves and the PASSHE students.

Here are some of the benefits that PASSHE students would receive if the PASSHE Board of Governors (BOG) were to initiate and maintain a fiduciary relationship with the students, meaning that the BOG would accept and comply with the following three fiduciary duties¹ of governance board responsibility:

The Duty of Care

The duty of care requires the full attention to one’s duties as a board member, setting aside competing personal or professional interests to protect the assets of the institution. This includes financial assets to be sure, but it also includes the institution’s reputational, personnel, and tangible assets as well. The expectation is that a board member acts reasonably, competently, and prudently when making decisions as a steward of the institution.”  (Emphasis added.)
 
Because PASSHE governance board members currently take an oath of office that does not specify to whom they owe their fidelity, those very same governance board members can legally meet the requirements of their oath—even when ignoring the best interests of the PASSHE students, and even while being loyal instead to the elected officials who appointed or confirmed them to their positions.
 
And because they are exempt from the duty of care, PASSHE governance board members don’t have to set aside any “competing or professional interests.”  They don’t have to be concerned about protecting the assets of the institution.  Nor do they have to act “reasonably, competently, and prudently when making decisions as a steward of the institution”—because their current oath doesn’t require them to accept the responsibilities associated with being a “steward of the institution.”
 
If elected officials cared, however, students could expect their PASSHE governance board members to make decisions based—not on any competing personal or professional interests—but solely on the best interests of the PASSHE students and the PASSHE institutions themselves.   That would represent a huge change from the status quo, however, in which PASSHE governance board members have occasionally acted to put their personal interests above those of PASSHE students by, for example, securing multi-million dollar contracts with the PASSHE universities while “serving” on the Board of Governors.²

The Duty of Loyalty

The duty of loyalty requires board members to put the interests of the institution before all others. It prohibits a board member from acting out of self-interest. The board’s conflict of interest policy provides guidance on how a conflicted board member can avoid putting personal interests first.”
(Emphasis added.)
 
The duty of loyalty contains a provision for ensuring that a conflicted governance board member can avoid putting their personal interests first.  The operative provision in question, however, relies on guidance provided by the board’s conflict of interest policy. (Emphasis added.) 
 
We will now address the two key issues from the previous paragraph as they apply to PASSHE: 1) what constitutes a “conflicted” PASSHE governance board member; and 2) what guidance is provided to PASSHE governance board members by “the board’s conflict of interest policy?”
 
Conflict of Interest

Merriam-Webster defines “conflict of interest” as “a conflict between the private interests and the official duties of a person in a position of trust.”
 
Columbia University has provided additional insight into whether a person is in a “conflicted” position: ³

It is important to note that a conflict of interest exists whether or not decisions are affected by a personal interest; a conflict of interest implies only the potential for bias, not a likelihood.” 
 
The fact that in the past PASSHE governance board members have secured multi-million dollar contracts from PASSHE universities while serving on the PASSHE Board of Governors² suggests that there may be insufficient sensitivity regarding the issue of conflict of interest by PASSHE governance board members.
 
PASSHE Board of Governors’ Policy 2012-01: Conflict of Interest

The PASSHE Board of Governors adopted the above-cited conflict of interest policy⁴ on January 19, 2012.
 
The verbal presentation touting PASSHE’s new conflict of interest policy was so effusive prior to being moved, seconded and unanimously approved, that many of those in attendance at the public meeting—including members of the media—were convinced that the conflict of interest policy just passed actually applied to the members of the Board of Governors who had just approved it so enthusiastically.  But:
 
PASSHE’s Conflict of Interest policy does not apply to PASSHE’s governance board members!
 
That is, PASSHE’s conflict of interest policy doesn’t apply to either the 20 members of the Board of Governors, or to the 154 members of the 11-member Councils of Trustees at the 14 PASSHE campuses.
 
If you are surprised at the contradiction between the hoopla of January 19, 2012 on the one hand, and the fact that PASSHE’s conflict of interest policy doesn’t apply to PASSHE governance board members on the other, you are not alone.
 
Interestingly, and no doubt helping to create the false impression that the policy actually applied to PASSHE governance board members, the Definitions section of the policy prominently displays the following entry: Public official” is a person appointed by a governmental body or an appointed official of the government of the Commonwealth.
 
Although the above definition of “public official” certainly sounds exactly like the political appointees who end up with seats on the Board of Governors and the 14 Councils of Trustees—Surprise!  PASSHE’s conflict of interest policy applies only to some appointed officials—but not others  
 
In the Procedure section of the policy, only three types of persons “appointed by a governmental body or an appointed official of the government” are actually covered by PASSHE’s Conflict of Interest policy:  The PASSHE “chancellor,” the 14 PASSHE “presidents” and PASSHE’s “other employees.”

The bottom line: PASSHE governance board members can't get any guidance from the "board's conflict of interest policy" because in PASSHE's case, that policy doesn't apply to them!
 
To be continued. 

¹ http://agb.org/knowledge-center/briefs/fiduciary-duties.
² https://www.keepandshare.com/doc/7471137/tribune-review-article-pa-university-board-members-grab-14m-in-contracts-july-1-2012-pdf-2.
³ http://ccnmtl.columbia.edu/projects/rcr/rcr_conflicts/foundation/#1_1.
http://www.passhe.edu/inside/policies/BOG_Policies/Policy%202012-01.pdf.

Monday, January 19, 2015

If Elected Officials Cared about PASSHE Students, What Would be Different?


As we saw in last week’s blog post:
 
“If Pennsylvania’s elected officials cared about PASSHE students, they would begin by obeying the law, and demanding that the political supporters they appoint to PASSHE’s governance boards do the same.”
 
But—if the elected officials cared—that is not the only thing that would be different.  Here’s another:

If Pennsylvania’s elected officials cared about PASSHE students, they would require every political appointee whom they place on PASSHE governance boards to take a fiduciary oath of office, and to be bound by that oath to maintain a fiduciary relationship between themselves and the PASSHE students

The Lack of a Fiduciary Oath or Fiduciary Relationship between PASSHE and Students

Currently, the political supporters who get appointed by elected officials to seats on PASSHE’s Board of Governors (BOG) and PASSHE’s 14 Councils of Trustees (COTs) must take the following oath of office:
 
“I do solemnly swear (or affirm) that I will support, obey and defend the constitution of the United States and the Constitution of this Commonwealth and that I will discharge the duties of my office with fidelity.”
 
Note that these 37 words constitute the entire oath taken by PASSHE’s BOG and COT members.¹
 
Note also, that while the oath calls on the PASSHE governance board members to “discharge the duties of their office with fidelity,” the object of their fidelity is not specified!
 
According to Merriam-Webster, “fidelity implies strict and continuing faithfulness to an obligation, trust, or duty, such as, for example, marital fidelity.”  That is, fidelity requires both a subject and an object.
 
Question: To what, or to whom, are PASSHE governance board members required to be faithful?
 
Answer: Neither the official oath nor Act 188—which stipulates² the duties, powers and responsibilities of the Board of Governors and the Councils of Trustees—specifies the object of fidelity in the official oath.  The many stipulations in Act 188 apply to the Board of Governors and Councils of Trustees only as groups, without ever specifying the responsibilities of individual members of those governance bodies. 
 
Lacking an oath-mandated requirement as to whom the governance board members owe their fidelity, it would not be surprising if political supporters of elected officials who receive appointments to PASSHE’s governance boards chose, as the objects of their fidelity, the same elected officials who appointed them. 
 
In fact there is convincing evidence that politically-appointed officials on the PASSHE Board of Governors and the 14 PASSHE Councils of Trustees discharge the duties of their office with fidelity to the elected officials who appointed them, apparently in the hope of being reappointed when their terms expire.³
 
The current oath taken by PASSHE governance board members—which doesn’t explicitly require them to put the best interests of the students first—is incredibly damaging to the students because there is a huge difference between the best interests of the PASSHE students and those of the elected officials.
 
These facts portray still another example of Pennsylvania’s elected and appointed officials competing against the PASSHE students, and doing so with impunity—because PASSHE’s governance board members can ignore the interests of PASSHE students and still be faithful to their oath of office!
 
If Pennsylvania’s Elected Officials Cared about PASSHE Students, What Would be Different?
 
If Pennsylvania’s elected officials really cared about PASSHE students and required every political appointee whom they place on PASSHE governance boards to take a fiduciary oath of office, and to be bound by that oath to maintain a fiduciary relationship between themselves and the PASSHE students, everything, from the PASSHE student’s point of view, would not only be different but incredibly better!
 
A fiduciary relationship is a relationship of trust that has been well described⁴ by the Association of Governing Boards (AGB) on its website as follows:
 
Members of college and university boards are fiduciaries of the institutions they serve. The concept of ‘fiduciary’ is well established in law and practice. It refers to the one charged with acting beneficently on behalf of those whose welfare depends on trust.  In fact, the word "fiduciary" comes from the Latin word for "trust." College and university board members govern within a long-standing tradition, with responsibility for the public trust, for the future of the institution, and for the benefit of current and future students.”  (Emphasis added.)

The AGB also defines the three duties of governance board responsibility⁴ as follows:

1.       The duty of care requires the full attention to one’s duties as a board member, setting aside competing personal or professional interests to protect the assets of the institution. This includes financial assets to be sure, but it also includes the institution’s reputational, personnel, and tangible assets as well. The expectation is that a board member acts reasonably, competently, and prudently when making decisions as a steward of the institution.

2.       The duty of loyalty requires board members to put the interests of the institution before all others. It prohibits a board member from acting out of self-interest. The board’s conflict of interest policy provides guidance on how a conflicted board member can avoid putting personal interests first.

3.       The duty of obedience refers to the board member’s obligation to advance the mission of the college or university. It also includes an expectation that board members will act in a manner that is consistent with the mission and goals of the institution. Failure of this duty can result in a loss of public confidence in the institution.

If PASSHE’s individual governance board members were to accept their responsibilities as fiduciaries—as they are morally obligated to do—their adoption of the duties of care, loyalty and obedience would change the lives of PASSHE students in many positive ways.  More later.
 
¹ https://www.keepandshare.com/doc/6750603/oath-of-office-pdf-37k.
² https://www.keepandshare.com/doc/6772880/act188-pdf-405k.
³ http://www.amazon.com/Privatization-Without-Plan-Leadership-Pennsylvania/dp/1491295244/ref=sr_1_1?ie=UTF8&qid=1408368767&sr=8-1&keywords=angelo+armenti.  Pages 31-33.
http://agb.org/knowledge-center/briefs/fiduciary-duties. 

Monday, January 12, 2015

How Elected Officials and their Political Supporters Compete Against PASSHE Students - Part 4


If Elected Officials Cared about PASSHE Students, What Would be Different?

If Pennsylvania’s elected officials cared about PASSHE students, they would begin by obeying the law, and demanding that the political supporters they appoint to PASSHE’s governance boards do the same.
The Facts
 
Act 188 was the enabling legislation that created the public corporation now known as the Pennsylvania State System of Higher Education (PASSHE), which controls the 14 “PASSHE” universities that include Bloomsburg, California, Cheyney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock and West Chester Universities.

According to Act 188, Section 20-2003-A. Purposes and General Powers, (a) “The State System of Higher Education shall be part of the Commonwealth’s system of higher education.  Its purpose shall be to provide high quality education at the lowest possible cost to the students.”  (Emphasis added.)
 
From Merriam-Webster, when found in ‘law’ the word ‘shall’ is used to express what is mandatory.”
 
Sticker Price vs. Bottom Line
 
Act 188 mandates a clear, measurable limit on student costs without ever mentioning the word “tuition,” i.e., “sticker price.” In fact, Act 188 imposes no limitation whatsoever on tuition rates, or tuition and fees, but only on the “cost to the students,” which is a limitation on bottom line—not sticker price.
 
In short, Act 188 mandates that PASSHE students should receive their education at the lowest possible “bottom line,” not at the lowest possible “tuition.”   Sad to say, that mandate has been totally ignored.
 
The evidence unequivocally shows that the ACT 188 statutory purpose of the PASSHE universities “High quality education at the lowest possible cost to the students,” has not been provided to Pennsylvania’s students since 2002, reducing the “promise” of Act 188 to empty words for those students and alumni.
 
This is not a failure of law, but rather a failure of Pennsylvania public officials to obey the law.
 
Evidence for a failure to obey the law is seen in the fact that the public officials with authority over the 14 PASSHE universities have been determined since 2002 to maintain the lowest possible tuition, i.e., sticker price, when the law requires the lowest possible cost to the students, i.e., the lowest bottom line.
 
Recall Mark Twain’s dictum: “The difference between the right word and the almost right word is like the difference between lightning and the lightning bug.”  And so it is in this case as well.
 
And while it may seem inconceivable to most PASSHE students and parents that Pennsylvania’s elected and appointed State officials would simply ignore the legal mandate of Act 188 with regard to PASSHE—“Its purpose shall be to provide high quality education at the lowest possible cost to the students”— overwhelming evidence proves that our elected and appointed State officials on the PASSHE Board of Governors have done precisely that since 2002, and continue to do it to this very day.

Giving the Voters “The Finger

Don’t tell the children, but sometimes our “lawmakers” at both the State and Federal level have been known to exempt themselves from the laws they “make” for the rest of us.
 
History shows that when elected officials exempt themselves from a law, they tend to do it brazenly by, in effect, daring the voters to do something about it.  They always seem to be supremely confident that most voters, possessing short attention spans, will be too busy to hold them accountable.   
 
E.g., when Title VII of the 1964 Civil Rights Act became law, protecting Americans from employment discrimination on the basis of race, color, religion, sex or national origin, Congress exempted itself.
 
That meant that thousands of congressional staffers would be denied equal-opportunity protection, including protection from sexual harassment.  Congress succeeded in maintaining its exemption from Title VII for 31 years, but finally yielded with passage of the Congressional Accountability Act of 1995.   
 
When elected or appointed officials fail to perform sworn duties—as in this case—it raises a question of divided loyalty, otherwise known as a conflict of interest, which Merriam-Webster defines as “a conflict between the private interests and the official responsibilities of a person in a position of trust.”
 
Based on the clear language of the law and the Merriam-Webster definition of ‘shall’ when used in law, it is clear that the Act 188 statutory purpose of the 14 PASSHE universities was and is “to provide high quality education at the lowest possible cost to the students.”
 
But there is overwhelming evidence,¹ based on PASSHE’s own official data, that in the recent 11-year period (2002-2013), the PASSHE Board of Governors eliminated half the educational quality gains of the previous 19 years (1984-2002).  The evidence also shows that since 2002, the Board of Governors hasn’t provided a PASSHE education at anything remotely like the lowest possible cost to the students.
 
In FY 2013 a typical financial aid package for students at PASSHE universities consisted of 25% grants and 66% loans, while the typical financial aid package for students at “All Institutions” across America—where 75% of all college students attend public universities—consisted of 52% grants and 39% loans. 
 
If PASSHE were to provide financial aid packages equal to just the average package across America, each PASSHE student would save $1,433 per semester, $2,866 per year, and $11,464 over four years!  And that would only bring PASSHE students to the average  aid package in America, which is nowhere near the financial aid packages that would result in the “lowest possible cost to the students.”
 
If Pennsylvania’s elected officials cared about the PASSHE students, they would obey the law and deliver the promise of Act 188 to Pennsylvania’s students: “High quality education at the lowest possible cost to the students.”  The evidence shows that they are not only not doing it, they are not even trying to do it.
 
¹ http://www.amazon.com/Privatization-Without-Plan-Leadership-Pennsylvania/dp/1491295244/ref=sr_1_1?ie=UTF8&qid=1408368767&sr=8-1&keywords=angelo+armenti.  See Chart 9, page 35 and Chart 20, page 66.

Monday, January 5, 2015

How Elected Officials and their Political Supporters Compete Against PASSHE Students - Part 3

A Competition for Money

 As we saw last time, one critical way in which Elected Officials and their Political Supporters compete against PASSHE Students involves a Competition for Money.
 
The “playing fields” on which that competition takes place are the 15 PASSHE governance boards on which all decisions affecting PASSHE stakeholders are made.  Those playing fields include a 20-member Board of Governors (BOG) and fourteen individual Councils of Trustees (COT) with 11 members each.
 
Currently, the membership of the BOG includes five Elected Officials and 15 political appointees, a.k.a., Political Supporters.  The membership of each of the 14 COTs includes eleven Political Supporters.
Politicians vs. Students
 
Elected Officials, a.k.a., Politicians, need money to wage political campaigns and to pay their campaign staffs in order to get elected and reelected; they employ Political Patronage to help secure that money.
 
PASSHE Students need money—in the form of scholarships—in order to be able to pay for a PASSHE education which has gotten increasingly expensive due to massive cutbacks in State Appropriation.
 
The Essence of the Competition

At private universities, individuals get on the governance boards by making donations to the universities!

At PASSHE universities, individuals get on the governance boards by making donations to politicians!
Money is the mother's milk of politics.”
Jesse M. Unruh, Speaker of the California State Assembly (1961-1969)

·         It is a fact of our system of government that Money plays an inordinate role in American politics.
 ·        That has always been so, and is likely to continue to be so for the indefinite future.
 ·        But money for politics should not be dictating the future of “public” higher education!

This last bullet is an understatement when one realizes that the quotation marks around the word “public” are absolutely necessary because the so-called public higher education institutions in Pennsylvania are already 75% private in terms of funding.
Seventy-five percent of PASSHE’s annual revenue—some $1.1 billion out of PASSHE”s $1.5 billion in annual operating revenue—comes from the private checkbooks of PASSHE’s Majority Stakeholders, i.e., the students, parents and private donors, primarily PASSHE alumni.

Money for politics should be the last thing dictating the future of the PASSHE quasi-public institutions of higher education that are, financially speaking, already seventy-five percent private.
The Governance Imperative

Fortunately, correcting that totally outrageous situation—money for politics dictating the future of increasingly privatized “public” higher education—would not require changing the nature of American politics.  For that would be tantamount to changing human nature, with its many well-known and serious character flaws and other terrible weaknesses.
Correcting that totally dreadful situation only requires changing the governance shares of the Majority and Minority Financial Stakeholders to largely reflect their respective Funding Shares.

It is both common sense and a bedrock American fairness principle that PASSHE’s Majority Financial Stakeholders should be controlling a majority of PASSHE’s governance seats, and PASSHE’s Minority Financial Stakeholders should be controlling a minority of PASSHE’s governance seats.
Currently the Commonwealth of Pennsylvania, in the person of its elected and appointed officials, controls 100% of PASSHE’s governance seats despite providing only 25% of PASSHE’s annual revenue.

At the same time, the Majority Stakeholders, in the person of the PASSHE students, parents and alumni donors, control zero percent of PASSHE’s governance seats despite providing 75% of PASSHE’s revenue.
The Political Appointment Process

During my 20 years as a PASSHE president I came to learn some details of the political appointment process as it applied, e.g., to the PASSHE Board of Governors and the University Councils of Trustees.
My interest in the workings of the appointment process grew out of my frustration with the fact that so many members of the Council of Trustees at my institution—all fine people—seemed to have no real affinity for the university on which they sat as Trustees, as manifested for example by any inclination for or history of donating to the University to fund student scholarships—by far our most critical need. 
PASSHE Presidents and the Raising of Private Funds

Prior to the passage of Act 188 of 1982, the presidents of the 14 institutions that would eventually become known as the PASSHE or “state-owned” universities were forbidden to raise private funds.  In that era, the presidents were political appointees, nominated by the Governor, confirmed by the State Senate, and reporting directly to the Secretary of Education who was a member of the Governor’s Cabinet.  The 14 institutions were considered part of the Executive Branch of State Government.
The directive banning presidents from raising or receiving private funds came in the form of a memo from the Secretary of Education stating that if an institution received a private gift of any amount, a like amount would be deducted from that institution’s State Appropriation—a most effective deterrent.

But that all changed with Act 188, §2003-A (b)(3).2 which reads as follows:  “Nothing herein shall empower the Board of Governors or the chancellor to take or receive any moneys, goods or other property, real or personal, which is given or granted to specific institutions.”
 
That sentence from Act 188 effectively revoked the earlier memo from the Secretary of Education forbidding the raising of private funds by institution presidents.  It set a totally new policy direction.
 
It gave permission for private fund raising by including a promise that private gifts would not be taken by the chancellor or Board of Governors, very important assurances for both donors and presidents. 
 
The Board of Governors followed up on this “permission to raise private funds” with BOG Policy 1985-04-A: University External Financial Support, which directed university presidents to raise private funds!

I was hired in 1992 with the expectation that, as a PASSHE president, I would raise private funds.  After reading the policy directive in BOG Policy 1985-04-A, I set about creating a team to do just that.
And in the 20-year period between 1992 and 2012, some $55 million in private gifts were raised.¹

To be continued.  
¹ http://www.amazon.com/Privatization-Without-Plan-Leadership-Pennsylvania/dp/1491295244/ref=sr_1_1?ie=UTF8&qid=1408368767&sr=8-1&keywords=angelo+armenti.  See Chart 12, page 43.

Monday, December 29, 2014

How Elected Officials and their Political Supporters Compete Against PASSHE Students - Part 2

A Definition of Terms

According to The Free Dictionary, the idiom “to compete against someone” means “to contend against someone; to play against someone in a game or contest.”

The same dictionary provides that the idiom “to compete against something” means “to struggle against something; to seem to be in a contest with something.”

Recall that PASSHE’s governance system consists of a 20-member Board of Governors (BOG), plus a Council of Trustees (COT) at each of the individual 14 universities, with eleven members on each COT.  

Both of the above definitions have relevance in describing the ways in which Pennsylvania’s elected officials, and their political appointees to PASSHE’s BOG and COTs, compete against PASSHE students.

Two key ideas in the above definitions are “competition,” and “struggle.”  The Elected Officials and their Political Supporters are in competition against PASSHE students, and the students are struggling against the tyranny implicit in a majority (100%) governance share combined with a minority (25%) funding share.

Elected Officials and their Political Appointees Against the PASSHE Students

We have previously described an example of game theory with three players in which a “two-against-one” scenario involved Elected Officials and their Political Supporters working against the best interests of  PASSHE’s Majority Stakeholders—the students, parents and private donors, primarily PASSHE Alumni.

Recall that the State, with its minority (25%) funding share of PASSHE’s annual budget, continues to cling to a 100% governance share, meaning that the State continues to exert total control over the 14 PASSHE Universities. As a result, the Majority (75%) Stakeholders have no say whatsoever in how their share of PASSHE’s annual budget—the $1.125 billion which comes from their private checkbooks—gets spent.

Recall also that since 2002, the 100% political leadership of PASSHE has ignored the statutory (Act 188) purpose of the PASSHE universities, which is: “To provide high quality education at the lowest possible cost to the students,” that is, at the lowest possible “bottom line.”

Instead, PASSHE’s Board of Governors has meekly followed the wishes of elected Governors—both Democratic and Republican—and focused instead on maintaining the lowest possible “sticker price,” i.e., “tuition,” a decision that may benefit Governors politically while causing great harm to PASSHE students:

It saddles students from less affluent families with crushing student loan debt, while

providing totally unnecessary State subsidies to students from more affluent families. 

Recall finally that since 2002 the PASSHE Board of Governors took actions resulting in the loss of half (14%) of the quality gains (29%) achieved by the Board of Governors in PASSHE’s previous 19 years.
We will now describe examples of how the two-against-one behavior of Elected Officials (EO) and their Political Supporters (PS) on PASSHE governing boards seriously disadvantages PASSHE students.
EO + PS against the Students

The essence of the relationship between EO and PS has previously been captured by means of the term “political patronage.”  Elected Officials (EO) do favors for their Political Supporters (PS) in return for favors done by their PS for the EO.  This is known as: “You scratch my back and I’ll scratch yours.”

This mutual back-scratching involves an exchange of favors, and typically involves exchanges of money.
Elected Officials have the power to appoint Political Supporters to government jobs—involving salary and benefits.  Elected Officials also have the power to appoint Political Supporters to governance boards that may not offer salary and benefits, but can still provide large financial rewards to Political Supporters.¹ 

Political Supporters, on the other hand, often provide financial campaign contributions to Elected Officials, or aspiring Elected Officials, as a way of getting the attention of the individuals with the power to either provide government jobs, or to appoint their “friends,” a.k.a., “political supporters,” to public boards.    
Financially Speaking, the 14 PASSHE Universities are Already 75% Private!

As the State share of PASSHE”s budget fell from 63% in 1983 to 25% in 2013, the Elected Officials and their Political Supporters who control the 14 PASSHE Universities never developed a plan to preserve the mission or financial viability of these universities, as State funding declined precipitously and the costs of education were rapidly shifted away from the State and onto the Majority Stakeholders.

The unrelenting loss of State funding for Pennsylvania’s “public” universities has been described as “Privatization.” And the absence of a plan by PASSHE’s 100% political leadership for dealing with that situation has been truthfully described as “Privatization Without a Plan,” in a book with that very title.²  
The fact that the PASSHE Board of Governors is not delivering a PASSHE education at anything like the “lowest possible cost to the students” means that PASSHE students desperately need scholarships to help reduce their “bottom line” cost of education—something promised to the students by Act 188 but, unfortunately, not delivered to PASSHE students by the current Board of Governors.

At private universities, student scholarships are often funded by philanthropists on the governing boards who are typically wealthy alumni that are grateful for their educations, and who want to “give back” to their Alma Maters. One example of this would be Les Wexner’s $100 million gift to Ohio State University.³  
Here’s Just One Way in which EO + PS Compete Against PASSHE Students
  • At private universities, individuals get on the governance boards by making donations to universities!
  • At PASSHE universities, individuals get on the governance boards by making donations to politicians!
Elected Officials need money from their Political Supporters to get elected, and they reward their PS with government jobs or appointments to pubic boards in exchange for those donations of money.   

The PASSHE universities are already 75% private, financially speaking, and need to be transitioning rapidly toward that status in terms of governance.  That is, the Majority Stakeholders should be selecting a majority of PASSHE’s governance board members, and the Minority Stakeholder should be selecting a minority of PASSHE’s governance board members.
To be continued.   
¹ https://www.keepandshare.com/doc/7425061/tribune-review-article-pa-university-board-members-grab-14m-in-contracts-july-1-2012-pdf-2.
² http://www.amazon.com/Privatization-Without-Plan-Leadership-Pennsylvania/dp/1491295244/ref=sr_1_1?ie=UTF8&qid=1408368767&sr=8-1&keywords=angelo+armenti.
³ https://www.keepandshare.com/doc/7445735/wexner-s-100-million-gift-to-ohio-state-university-february-16-2011-pdf-317k.

Monday, December 22, 2014

How Elected Officials and their Political Supporters Compete Against PASSHE Students


PASSHE’s Majority and Minority Stakeholders

PASSHE is the 14-University system of taxpayer-supported institutions of higher education that includes

Bloomsburg, California, Cheyney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock and West Chester Universities.
As shown in previous blog posts, the 14 PASSHE universities are now, financially speaking, 75% private.
 
That is, 75% of the annual funding for the PASSHE headquarters in Harrisburg plus the 14 PASSHE universities around the State comes from the private checkbooks of PASSHE’s Majority Stakeholders, i.e., the students, parents and private donors, primarily PASSHE alumni.  
 
25% of annual funding comes via State Appropriation, making the State PASSHE’s Minority Stakeholder.

Governance Shares vs. Funding Shares

The Minority Stakeholder provides a 25% Funding Share but clings to a 100% Governance Share.
 
The Majority Stakeholders provide a 75% Funding Share but receive a zero % Governance Share. 
 
If there were evidence that the Minority Stakeholder was actually looking out for the interests of the Majority Stakeholders, the lack of any meaningful Majority Stakeholder representation on the various PASSHE governance boards—itself an un-American Travesty of Justice—might be barely tolerable. 
 
But Pennsylvania’s Elected Officials and their Political Supporters—who control 100% of the governance seats on the PASSHE Board of Governors and the 14 Councils of Trustees—have routinely used their iron grip to advance their own personal interests at the expense of the Majority Stakeholders, especially the PASSHE students.  Consider the following list of PASSHE Board of Governors’ achievements:

The Achievements of PASSHE’s 100% Political Leadership

Since 2002, the Board of Governors has ignored the Act 188 statutory purpose of the 14 PASSHE Universities which is: “To provide high quality education at the lowest possible cost to the students.”
 
High Quality Education

During PASSHE’s first 19 years of existence (1984-2002), the Board of Governors obeyed the specific language of Act 188 and produced a 29% increase in the quality of the educational experience delivered to the PASSHE students!  This was an admirable achievement built on two pillars: 1) Act 188 mandated “high quality education;” and 2) the Board of Governors acted with fidelity to the law—and delivered it.¹
 
Most notably, this achievement was political but not partisan.  In fact, it was a bipartisan success story! 
 
Democrats and Republicans worked together during those early years to follow the law and to do what was right for PASSHE’s Majority Stakeholders.  In effect the Board of Governors, with elected officials and political supporters from both political parties, acted with integrity to deliver the “Pennsylvania Promise” contained in Act 188: “High quality education at the lowest possible cost to the students.”
 
But during the subsequent eleven-year period between 2002 and 2013, the Board of Governors simply ignored the specific mandate of Act 188 regarding “high quality education” and instead, took actions which resulted in the loss of almost half (14%) of the quality gains (29%) of PASSHE’s previous 19 years.
 
This was a disgraceful “achievement” that was also—as in the earlier case—political but not partisan.
 
But here, Democrats and Republicans worked together to gut the quality gains of the previous 19 years!
 
Note that the statutory purpose of the law, Act 188, did not change between 1984 and 2013.  The only thing that changed was the Board of Governors’ level of fidelity (or lack thereof) to that unchanging law.

At the Lowest Possible Cost to the Students

Act 188 sets a clear and measurable limit on student costs.  By law, PASSHE is to provide a high quality education “at the lowest possible cost to the students.”   Note that Act 188 imposes no limitation on “tuition rates” or “tuition and fees,” but only on the “cost to the students.”  This immediately brings up the difference between “sticker price” and “bottom line.”

Sticker Price vs. Bottom Line

Rather than imposing limitations on PASSHE tuition, i.e., “sticker price,” Act 188 imposes a limitation on the “cost to the students,” i.e., the “bottom line.”  The bottom line is the amount that a student must pay after Federal or State grants and private scholarships have been deducted from the “sticker price.” Hence the bottom line cost is typically lower than, and often much lower than, the tuition sticker price.
 
Despite the clear mandate of Act 188 regarding “the lowest possible cost to the students,” the Board of Governors has ignored this part of Act 188’s statutory purpose, just as it ignored the “high quality” part.

In 2011, the average financial aid package for students at all institutions nationally consisted of 51% grants and 42% loans.  At California University that year, a typical financial aid package consisted of 27% grants and 65% loans. 
 
By 2013, the average financial aid package for students at all institutions nationally consisted of 52% grants and 39% loans.  At California University that year, a typical financial aid package consisted of 25% grants and 66% loans. 
 
Despite the “Pennsylvania Promise” contained in Act 188’s statutory purpose:  “High quality education at the lowest possible cost to the students,” the official data cited above clearly confirm that since 2002 the PASSHE Board of Governors has been:  1) rapidly lowering the quality of a PASSHE education; and 2) failing to provide that PASSHE education at anything like the lowest possible cost to the students.
 
Not only has the Board of Governors failed to support PASSHE students with financial aid packages that lead to the lowest possible cost to the students—as called for by Act 188—it has not even come close to providing financial aid packages that lead to the average cost for all higher education students, i.e., the 21 million college students at all institutions across America, 75% of whom attend public universities.

To be continued.