Introducing PASCU - Part 10

The Pennsylvania Association of State Colleges and Universities (PASCU)

 
Armenti’s New Book Explains How Two PASSHE Universities Might Appear to be Financially Sound Despite Five Others Having Declared Financial Distress
 
With their recent enrollment increases, West Chester and Bloomsburg may exude financial success, while sister institutions Clarion, Edinboro, Mansfield, East Stroudsburg and Slippery Rock have instead lost student enrollment and signaled financial distress.  But, according to Armenti, all 14 PASSHE universities continue to labor under an unsustainable business model leading to financial distress for all.
 
Angelo Armenti, Jr., the former Villanova University Dean and 20-year President of California University (Cal U), recently announced the release of his new book, Privatization Without a Plan: A Failure of Leadership in Pennsylvania Public Higher Education.¹ 
 
According to the book, Armenti provided evidence to PASSHE leadership on October 13, 2010 that the business model under which the 14 PASSHE universities operate was financially unsustainable, and that without changing key policies driving that business model, all the PASSHE universities would face severe financial distress, bankruptcy and mission failure in the near term.  The leadership in question included members of the Board of Governors, the Councils of Trustees and the University presidents. 

Armenti also provided evidence to the leadership at that time that the rapid decline in Commonwealth funding, compounded by key operating policies, would result in PASSHE mission failure, both as far as providing high quality education, as well as in providing it at lowest possible cost to the students—the statutory purpose of the 14 PASSHE universities according to Act 188, PASSHE’s enabling legislation.²

Recent news articles have described a plan that would enable West Chester, Bloomsburg and possibly other PASSHE universities with more than 7,000 students to move to state-related status.³⁻⁴ State Sen. Andrew Dinniman, a backer of the proposal, was quoted as follows in the February 26, 2014 article:

“The only way currently that the system has for survival is to take money away from those institutions that are doing well, which is actually only West Chester and Bloomsburg universities, and [shift] it to institutions that are not in as good a shape,” said Mr. Dinniman, citing enrollment gains at both schools.

Financial records recently obtained by a Right to Know request from PASSHE⁵ confirm that between fiscal years 2012 and 2013, West Chester and Bloomsburg universities together added a total of $18.3 million to their unrestricted net assets (fund balances).  At the same time, Clarion, Edinboro, Mansfield, East Stroudsburg and Slippery Rock universities subtracted a total of $12 million from their fund balances. From these data, it would appear that Sen. Dinniman’s characterization of events is correct.
 
However, according to Armenti, the financial evidence presented to PASSSHE leadership establishes that the recent enrollment increases at West Chester and Bloomsburg are actually impoverishing all the other PASSHE universities with constant or shrinking enrollments, due to the PASSHE allocation formula that is aligned to distribute annual operating funds primarily on the basis of enrollment share. That is, universities that grow enrollments are actually taking money from universities that are not growing.
 
One clear consequence of the financial evidence from 2010 is that, under current funding patterns and policy decisions, all 14 PASSHE universities—including West Chester and Bloomsburg—will face mission failure and financial bankruptcy sometime after they have reached level enrollment, a situation that will inevitably occur as both institutions reach their physical capacity and can’t accept additional students.  

Under current funding patterns and policy decisions, according to the book, PASSHE Universities with fixed or declining enrollments—are headed for imminent mission failure and financial bankruptcy, as recent news stories about announced financial distress at five of the PASSHE universities will attest.

PASSHE universities with growing enrollments can postpone that sad fate—but only temporarily.  When enrollments eventually level off, as they must, those PASSHE Universities will also face the prospect of mission failure and financial bankruptcy.

The time between the arrival of level enrollments and the onset of mission failure and bankruptcy, however, can be extended only for as long as it takes for PASSHE universities to burn through the one-time fund balances they still retain.⁵  But those fund balances will only postpone the inevitable.

¹ Privatization Without a Plan: A Failure of Leadership in Pennsylvania Public Higher Education is on sale now, available from Amazon.com in paperback and e-book.  http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=angelo%20armenti.
² https://www.keepandshare.com/doc/6772880/act188-pdf-405k.
³ http://www.post-gazette.com/news/education/2014/02/27/Change-in-wind-for-Pa-college-system/stories/201402270220.
⁴ http://www.post-gazette.com/news/education/2014/03/06/Proposed-legislation-would-grant-more-autonomy-to-state-owned-universities/stories/201403060289.
⁵ https://www.keepandshare.com/doc/6848404/passhe-2012-13-unrestricted-net-assets-march-10-2014-pdf-87k.

The Role of PASCU

PASCU’s mission is “To ensure that the statutory purpose of public higher education in Pennsylvania as specified by Act 188 of 1982: ‘High quality education at the lowest possible cost to the students,’ is indefinitely preserved and faithfully delivered.”  To advance that mission, PASCU seeks to reform the governance of PASSHE so as to enable it achieve the statutory purpose mandated by Act 188.   

ABOUT THE AUTHOR

 
Dr. Angelo Armenti Jr. served as President of California University of Pennsylvania (Cal U) from 1992 to 2012.  Before that, he was a Dean at Villanova University, a professor of physics, and author of The Physics of Sports (American Institute of Physics, 1992). During his career at Cal U, Armenti is credited with establishing numerous funding sources for student scholarships and for campus revitalization projects, efforts made in part to address the problems that he describes in Privatization Without a Plan.  In June of 2012, Armenti founded a non-profit corporation entitled The Pennsylvania Association of State Colleges and Universities (PASCU) whose mission it is to preserve the statutory purpose of public higher education in Pennsylvania.