A PASCU Chapter at Each PASSHE University - Part 15

A Bold Assertion

Last week’s blog post included the following assertion:  “Both West Chester University and the other thirteen PASSHE universities see themselves as losers under the current status quo.”

An obvious corollary to that assertion is this:  “The fourteen PASSHE ‘state-owned’ universities would see themselves as winners if permitted to secede from PASSHE to attain ‘state-related’ status.”

That West Chester University saw itself as a loser under the status quo—and a big winner under the West Chester Proposal—is obvious from the tremendous efforts West Chester supporters put into their unsuccessful attempt to secede from PASSHE and become State-related.  

Not so obvious perhaps is why the other thirteen PASSHE universities would see themselves as losers, both under the West Chester Proposal as well as under the status quo.

The answer may be quite simple: The other thirteen PASSHE universities opposed the West Chester Proposal primarily because it didn’t include State-related status for them!  Had it opened the door to all PASSHE universities, the vast majority of those universities would have welcomed the opportunity.

But Senate Bill 1275, announced by State Senators Tomlinson and Dinniman at a press conference in Harrisburg on March 11, 2014, only made specific provisions for West Chester University to secede and become State-related, while allowing that other PASSHE universities might follow at some future time.¹     

Defining an Onerous Status Quo

 

Last week’s blog post concluded with these words:  “Given the opportunity all fourteen PASSHE universities would love to escape the onerous status quo that West Chester’s supporters had shown the courage and determination to secede from, to gain a much better future.” (Emphasis added.)

If you ask those who have experienced State-owned status first hand from inside a PASSHE university, they might well describe that onerous status quo as “Being trapped in PASSHE’s smothering embrace.”

That sensation in State-owned universities of being suffocated by PASSHE might explain, by simple comparison, why the relatively airy atmosphere inside State-related universities would be so attractive.

The Differences Between “State-owned” and “State-related Status

Financial Differences - See the Penn State vs. PASSHE appropriation funding chart for the fiscal years 1984-2010.² By FY 2014-15, State appropriation provided only 25% of total E&G revenue for PASSHE, and about 15% of total E&G revenue for Penn State.  That is a relatively small difference in funding.

One financial bottom line is this: PASSHE’s Majority Financial Stakeholders (students, parents and private donors, primarily alumni) provide about 75% of PASSHE’s annual revenue, while Penn State’s Majority Financial Stakeholders provide about 85% of Penn State’s annual revenue.

In terms of who pays, PASSHE universities are now 75% private while Penn State is now 85% private, due to the fact that both sectors were privatized without a plan over the past thirty years. 

Governance Differences - While the financial differences between State-owned and State-related universities in Pennsylvania are not very large, the differences in university governance are gigantic.

The State-Related universities control 66⅔% of the seats on their governing boards, meaning that State-Related universities—with their two-thirds majority in board seats—can control their own destinies whenever the most important university decisions get made.

Although PASSHE universities receive a slightly higher share of annual State Appropriation (25% instead of 15%) those universities control zero seats on PASSHE’s fifteen governance boards.  As a result, the students, parents and alumni donors at the 14 PASSHE universities, who are paying 75% of the bills, have no say with regard to how their $1.2 billion share of PASSHE’s $1.6 billion annual operating revenue gets spent.  Those decisions all get made by Pennsylvania’s elected officials and their political appointees—PASSHE's minority financial stakeholders—who now provide only 25% of annual funding. 

The current lack of any voice in governance may be the single most important reason why State-Related status is so attractive to PASSHE Universities.

While the one-third versus two-thirds governance shares (33 ⅓% - 66⅔%) at State-related universities allow those universities—with their supermajority—to control their own destinies while still receiving sizable State funding, the governance shares at the State-owned universities are seriously misaligned.

The great disparity (100%-0%) in governance shares at the State-owned universities can only be described as both counterproductive and conflicted:

·         Counterproductive because the absence of a strong voice representing the interests of the majority financial stakeholders on PASSHE’s governance boards has allowed the 100% political Board of Governors to fail to support or to deliver the Act 188 statutory purpose of the fourteen PASSHE universities: “High quality education at the lowest possible cost to the students.”  If the majority financial stakeholders held a governance share on PASSHE’s governance boards commensurate with their funding share, the Board of Governors would never have been permitted to ignore the Act 188 mandate in regard to PASSHE’s statutory purpose—at great detriment to the majority stakeholders.   

·         Conflicted because since 2002 the Board of Governors has ignored its fiduciary responsibilities to PASSHE’s students, parents and alumni donors and, instead, has made decisions benefitting not the majority financial stakeholders, but the minority stakeholders in the person of the elected officials and their political appointees themselves, who benefit at the expense of the majority stakeholders.  

 
To be continued.

Next time: The Legal and Aspirational differences between State-owned and State-related universities.

¹ https://www.youtube.com/watch?v=DsJxlvjBQtc.  This is a video clip from the press conference that announced Senate Bill 1275 held by Senators Tomlinson and Dinniman on March 11, 2014.

² https://www.keepandshare.com/doc/7610779/privatization-without-a-plan-chart-1-nearly-parallel-twenty-seven-year-funding-trends-for-passhe.