Salus president was surprised by merger partner Drexel’s financial woes: ‘We’re not happy about it’

Days after Drexel University announced it would cut staff and benefits to cope with a structural deficit, Salus University president Michael H. Mittelman said in a faculty meeting that he had only recently learned the extent of the school’s financial woes, and that if he had known before Salus completed its merger with Drexel last summer, the result may have changed.

“We’re not happy about it,” Mittelman told faculty and staff at an Oct. 7 meeting, days after an Inquirer article detailed Drexel’s financial challenges. “Frankly, if we would have known what we know today, I think the outcome would have been different.”

The Middle States Commission on Higher Education, the accrediting body that approves college mergers, last summer approved the joining of Drexel and Salus, a small, private health sciences university based in Elkins Park. But the schools are still awaiting approvals from the U.S. Department of Education for the combined entities to participate in federal financial aid programs, which are expected in June. Until then, Salus continues to run its student programs, courses, registration, billing, and financial aid systems.

“When we agreed to merge and this was done with a lot of scrutiny and a lot of rigor,” Mittelman told faculty at the meeting, according to a recording and transcript provided to The Inquirer, “… the financials were strong, on both sides, and we moved forward.”

» READ MORE: Drexel will trim senior leaders’ salaries, slash retirement benefits, and consider layoffs in the face of its $63 million operating loss

When reached through a spokesperson Wednesday, Mittelman issued a statement about his meeting remarks.

“I do not dispute making an offhand comment, which I regret, during a private meeting … but I want to reaffirm that I enthusiastically support the Salus-Drexel partnership and the extraordinary potential it represents,” he said.

In a separate statement, Drexel maintained that the merger was approved by both universities, which have been sharing financial and operational information since fall 2022. Drexel was “seriously impacted” by continued problems nationally with federal financial aid forms, called FAFSA, which contributed to a decline in first-year enrollment this fall, adding $22 million to the university’s budget challenges, the school said.

“Drexel is well-positioned to successfully address the challenges facing so many higher education institutions, and it is doing so in a proactive and clear-eyed way,” the university said. “The opportunities presented by the merger with Salus are one component of this work, which will ultimately benefit both institutions, their faculty and students.”

But a group of emeritus faculty and current faculty in Salus’ Pennsylvania College of Optometry said they are extremely concerned about the recent news concerning Drexel’s financial state and the departure of John A. Fry as Drexel’s president. Fry will become president of Temple University on Nov. 1.

» READ MORE: Drexel University’s merger with Salus gets approval as President John Fry prepares for a likely exit

“It naturally leads one to wonder what kind of due diligence was done at the time of the proposed merger between Salus and Drexel,” said Anthony Di Stefano, a retired emeritus professor and the optometry college’s former vice president of academic affairs. “So now we are in what I call limbo land. We’re not quite sure where we’re heading.”

Di Stefano said he is among a group of 13 emeritus professors who have been asking Drexel questions but haven’t been given any meaningful responses.

Fry’s departure, said Alissa Coyne, a former associate professor, “just adds more to the uncertainty and to the feelings of uneasiness.”

At the Oct. 7 meeting with Mittelman and provost Gerard “Gerry” O’Sullivan, optometry faculty expressed concerns about Drexel’s financial struggles and what they would mean for their future, and asked if the merger could be overturned.

“Do we have an exit clause or exit strategy?” one staff member asked.

“We don’t,” Mittelman responded. “This corporate merger is completed.”

Several faculty said in interviews they have been reaching out to both the Pennsylvania Department of Education and the U.S. Department of Education to see if they have any recourse. Two of four associate deans have resigned in recent days, following the university’s ouster of Melissa Trego, its optometry dean, last month, they said. Faculty rallied around Trego, seeing her as someone who could successfully and fairly implement the merger, though the university has maintained the leadership change was needed and followed multiple years of declining National Board of Examiners in Optometry (NBEO) scores.

» READ MORE: Drexel and Salus Universities have decided to proceed with a merger

Both optometry faculty and more than 360 students have approved no-confidence votes in Mittelman and O’Sullivan. No-confidence measures are largely symbolic and carry no authority but send a strong signal of discontent.

Coyne, a graduate of the college who joined the faculty in 2013, resigned last month after Trego’s removal.

“I could no longer be associated with an institution that could be so callous and myopic in their decision-making,” she said.

» READ MORE: Salus optometry faculty oppose the loss of their dean amid the university’s merger with Drexel

Mittelman and O’Sullivan said during the Oct. 7 meeting that they believed that Drexel was taking the right steps to improve its financial condition and urged faculty to have faith.

“They’re not a sinking ship, they’re a ship that’s trying to right themselves,” Mittelman said. “I give them a lot of credit because they’re leaning into it. I give them a lot of credit because they went public. … They know what they’re doing.”

» READ MORE: Drexel University is consolidating schools and asking several deans to step down

Drexel in September asked several deans to step down and announced it was consolidating its Colleges of Engineering and Computing and Informatics, and the School of Biomedical Engineering, Science, and Health Systems into a new entity. The West Philadelphia university also said it was preparing to move from a quarter system to a semester system over the next several years as part of a larger academic restructuring.

Then, on Oct. 1, the school announced it would be cutting staff and benefits as it faced a $63 million operating loss and 15% fewer first-year students. The university also said it planned to come up with $150 million through cuts and revenue increases to close the gap between ongoing revenue and expenses. Drexel said it had about a 10% “structural imbalance” in its $1.5 billion budget.

» READ MORE: Drexel is cutting staff and benefits as it faces a $63 million operating loss and 15% fewer first-year students

The university provided more details at a meeting with employees earlier this month, saying it planned to trim senior leaders’ salaries, slash retirement benefits, and consider layoffs. A reduction in employees is planned for next month, though the number of workers potentially affected was not released.

Mittelman said in his statement that he saw the merger with Drexel, “one of the leading urban research universities in the nation, with total assets of nearly $3 billion and an endowment of more than $1 billion” and an “array of clinical and research opportunities for Salus students,” as “unquestionably the only sustainable course for Salus.”

But Di Stefano said many on the optometry staff continue to question the move. An alumnus of the college who retired in 2016, he said he attended a meeting that Salus leaders held with alumni.

“None of my questions were answered,” he said.

Mittelman’s remarks about not knowing the extent of Drexel’s financial challenges before the merger “raise a lot of serious questions that I believe external accreditation and regulatory agencies should really take a look at,” he said.