Pennsylvania state universities move toward more shared services, cost savings

The Pennsylvania system overseeing 14 universities wants to move toward more consolidation and cost savings and plans to ask the commonwealth for more money to make it happen.

Just how much money remains uncertain.

The Pennsylvania State System of Higher Education’s Board of Governors at its meeting at Kutztown University on Wednesday first proposed to ask for $100 million over five years, but board chair Cynthia Shapira said she thought that wouldn’t be enough and recommended raising the amount to $300 million.

“It’s just not going to touch everything that we need to touch,” she said of the $100 million.

But State Rep. Brad Roae (R., Erie) said he couldn’t support $300 million and questioned whether his colleagues in the legislature would.

“I’m just afraid that’s such a big number that a lot of legislators won’t even hear what you say when you’re talking to them,” he said.

Board members then debated asking for a smaller amount over one year, with the understanding that they would be returning to request more in subsequent years. The board tabled the decision until Thursday morning when its meeting is scheduled to resume.

As recommended by consultants, the system wants to move toward consolidated operations in some areas, including information technology, facilities management, online learning, and services like accounts payable and human resources. But system officials said they need the additional state dollars to create the infrastructure for the consolidated operations.

The special funding request would come in addition to the system’s regular state funding request; it plans to ask for nearly $487 million from the state for 2020-21, up 2%, or $9.5 million, over the current year.

On Thursday, the board will consider a proposal for an academics master plan that will foster more collaboration — rather than competition — in planning and launching new programs.

The plan mirrors what chancellor Daniel Greenstein said he envisioned for the system earlier this year: that the schools must start operating more like a system, consolidate business and administrative operations to save money , and open courses on all campuses to all students.

“We are undergoing nothing less than a complete cultural change,” Shapira said.

Greenstein estimated the system, which operates on a $2.3 billion budget, could save and/or grow revenue by as much as $240 million by making the changes. The plan includes attracting a new student base through online learning.

The moves come as the system continues to struggle with enrollment loss and ever-tightening finances. Earlier this month, the system announced it had sustained an additional 2.6% enrollment loss and was down to 95,802 students. Enrollment is down nearly 20% from its 2010 peak of 119,513 students.

Kenneth M. Mash, president of the Association of Pennsylvania State College and University Faculties — the union that represents more than 5,000 faculty — was pleased that the board wants to ask for more funding.

Without it, costs at the universities and student debt will continue to rise, he said. Whether he will support the shared services plan depends on the details, Mash said.

“I haven’t yet seen all the details,” he said.

The Board of Governors also on Wednesday approved a uniform system for assessing the financial condition and sustainability of each of its campuses. All universities will have to submit a common set of data for evaluation. Criteria to be evaluated include enrollment trends, revenue, operating margins, assets and liabilities, budget reserves, and cash balances.

“It’s a new way for us to make apples-to-apples comparisons for all of our universities [in determining their] financial well-being,” said Dave Pidgeon, system spokesperson.

That way, he said, the system will know which schools are struggling the most.

“We want all schools to understand if one is struggling, it has an impact on everybody,” he said.

Cheyney University for years has struggled with dropping enrollment and precarious finances. It has borrowed more than $30 million from the system, which has agreed to forgive the loan if Cheyney balances its budget for three consecutive years.

The new policy states that “loans and/or investments to a university must not jeopardize the overall financial health and stability of the system or place undue burden on any other individual university.”

It also states that if a university is unable to repay a loan, the system could suspend some or all operations of that university, temporarily or indefinitely.

Greenstein said the new policy was not targeted at Cheyney, though he said he wasn’t aware of any of the 13 other universities borrowing money from the system.

Cheyney president Aaron A. Walton said earlier this year that Cheyney had ended the year with a surplus after a fund-raising campaign that brought in a $2.5 million grant from the Pennsylvania Department of Education. The state system has yet to release the audited 2018-19 budget for Cheyney, or for the other schools in the system.

Cheyney this fall added 149 students, a 32% increase in enrollment.

Other universities in the state system are: West Chester, Bloomsburg, Clarion, California, Edinboro, East Stroudsburg, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Slippery Rock, and Shippensburg.