The Purpose of the PASSHE Universities – Part I

With Act 188 of 1982, the Pennsylvania State System of Higher Education (PASSHE) was given—by law— the following purpose:  “To provide high quality education at the lowest possible cost to the students.”

This act of the Pennsylvania Legislature was signed on November 12, 1982 by Gov. Richard Thornburgh, and took effect on July 1, 1983. Although the law was amended more than once since its initial passage, the statutory purpose of the PASSHE universities has remained unchanged for the past 30 years, and features two distinct elements: 1) high quality education; and 2) lowest possible cost to the students. 

High Quality Education

In higher education circles, the term “high-quality education” is given meaning primarily through a number of “proxy” measures.  Generally speaking, a “proxy” measure approximates or represents a phenomenon in the absence of a direct measure of that phenomenon.

However, average faculty compensation has been widely seen as a predictive proxy measure for academic quality; similarly, E&G (Educational and General) revenue/FTE student has been seen as a predictive proxy measure for a high quality educational experience—which includes academic quality—but goes on to include other educationally enhancing amenities such as technology, internships, travel, facilities and equipment, all of which—just as with faculty compensation—require financial resources.  

PASSHE has had a history of compensating its faculty at or near the 90^th percentile nationally for at least the last 20 years, and that is certainly good news for the faculty, as well as for the PASSHE students who benefit directly from the academic quality indicated by this proxy measure.

But while the proxy measure for academic quality appears to be holding over time, the larger proxy measure for the quality of the educational experience—Total E&G Revenue/FTE Student—has deteriorated severely in just the last ten years.        

Earlier we documented the drastic declines in State appropriation funding to the PASSHE universities over the last thirty years.  Recall, however, that the Total E&G revenue is the sum of Appropriation Revenue plus Tuition + Fee + Other revenue.  So, a drop in State Appropriation can be—and at various times in PASSHE’s history, has been—made up for with increases in Tuition + Fee + Other revenue.

When we look at the total funding pattern to the PASSHE universities in terms of constant dollars (i.e., with inflation effects removed), we can clearly see the decline in the quality of the educational experience over time in terms of the proxy measure Total E&G Revenue/FTE Student.

In 1984, the first fiscal year of the PASSHE system under Act 188, the total E&G revenue/FTE student (in constant dollars) was $11,500.  Over the next fifteen (15) years, it grew by 26%, reaching its peak of $14,500 in the year 2000!  But between the years 2000 and 2011 that same proxy measure dropped to $12,500.  It continues to fall and will soon reach, or even fall below, the $11,500 level of 1984.    

How could this happen?

The data show that between 1984 and 2000, the BOG did its duty by increasing the Tuition + Fee + Other revenue, to more than make up for declines in State appropriation—as they occurred.  This produced the 16-year, 26% increase in this key proxy measure.  (‘Other’ revenue includes privately raised funds.)

But since the year 2000, elected officials of both parties have not only cut state appropriation, they have exerted heavy political pressure on key members of the PASSHE governing board to simultaneously hold down tuition increases for political, as opposed to educational reasons, thereby disgracefully reducing opportunities for high quality educational experiences for PASSHE students in the process.

The good work of the early PASSHE governing board members in delivering high quality education, as called for—and promised to the students—in Act 188, has been largely undone through abdication of responsibility by PASSHE governing board members in the last decade.  This is a tragedy that can and does happen when the 70% majority stakeholders are denied  representation and the 30% elected and appointed State officials make decisions that serve their own political interests, instead of serving the educational interests of the students, parents and donors, primarily alumni of the PASSHE universities.