PASCU President Says PASSHE Universities are Trapped in a ‘Death Spiral’ Not of Their Own Making

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The timing may be in doubt, but the final outcome is not.

Chesterbrook, Pennsylvania (PRWEB) March 27, 2014

All three forces, as well as their growing negative effects on PASSHE universities and PASSHE students, are described in detail in Armenti’s new book¹ entitled “Privatization Without a Plan: A Failure of Leadership in Pennsylvania Public Higher Education.”

Media stories published between mid-August and late October 2013 reported that Clarion², Edinboro³, Mansfield⁴, and East Stroudsburg⁵ had, in that order, announced plans to cut tenured faculty positions and to take other actions in order to close budget gaps ranging from $5.5 million to $12 million.

On December 24, 2014, Slippery Rock University⁶ became the fifth PASSHE university to declare financial distress, specifically, a projected $10 million deficit for 2014-15, accumulating to $29 million by 2015-16.

According to Armenti, the funding crises just described were totally predictable—and in fact had been predicted to PASSHE’s top leadership—on the basis of evidence which he presented during an invited one-hour keynote address to a joint meeting of the PASSHE Board of Governors, the Pennsylvania Association of Councils of Trustees, and the PASSHE University presidents, back on October 13, 2010.⁷

The title of his keynote address was “The Future of Public Higher Education in Pennsylvania,” and it focused on three very disturbing Assertions which later also formed the basis of his book in 2013:

“Assertion 1: California University of Pennsylvania (Cal U) and all the public universities in Pennsylvania are being privatized without a plan.”

“Assertion 2: The business model under which the 14 PASSHE universities currently operate is financially unsustainable. Without changing key policies that drive that business model, PASSHE universities will face severe financial distress and bankruptcy in the near term, resulting in impending mission failure in the near term as well.”

“Assertion 3: Although the PASSHE universities were intended to carry out the purpose spelled out in Act 188 of 1982: “…to provide high quality education at the lowest possible cost to the students,’ the rapid decline in Commonwealth funding, compounded by key operating policies, portend mission failure, both with respect to providing high quality education, as well as with respect to providing the lowest possible cost to the students.”

According to Armenti, it seems inexplicable in view of clear evidence of impending financial disaster based on seven years of audited financial statements, that PASSHE’s Board of Governors would choose to ignore that evidence and allow individual PASSHE universities to fail—through no fault of their own.

“Demographics is destiny.” Arthur Kemp

According to Armenti, of three major forces creating the ‘death spiral’ in which the PASSHE universities find themselves, the first two—demographics and economics—involve powerful laws that humans can’t control but, to a limited degree, can choose decisions to best accommodate universities to those laws.    

Currently, the decisions needed to best accommodate the universities to those powerful demographic and economic forces are controlled at the level of the Board of Governors, and not at the level of the universities. And according to Armenti, too many of those decisions in recent years have been made to deal with political concerns, as opposed to demographic or economic realities faced by the universities.

According to the book, the 100% political leadership of PASSHE is focused almost entirely on tuition, i.e., “sticker price,” rather than on the “bottom line,” as mandated in the statutory purpose of PASSHE universities according by Act 188: “high quality education at the lowest possible cost to the students.”

Compelling evidence for the validity of all three Assertions is presented in the book¹ as well as in the video of the 2010 Keynote Address presentation.⁷ There is no doubt that all 14 PASSHE universities are destined for bankruptcy and mission failure, unless current PASSHE policies are changed substantially to deal with critical demographic and economic realities, as opposed to current political preferences.

According to Armenti, PASSHE’s longtime practice of tinkering around the margins will not forestall the bankruptcy and mission failure that ultimately awaits all 14 of the PASSHE universities, regardless of how financially solid they might now appear to be. There are only two means available for the other seven PASSHE universities to stay afloat financially: 1) Constant growth; and/or 2) gigantic fund balances.

As a few PASSHE universities continue to grow enrollments—while rapidly impoverishing the rest—those few may delay the inevitable for a while. But as soon as their enrollments level off, which they eventually must, those universities will also begin drawing down their fund balances in order to survive.

The huge fund balances accumulated over the years by the PASSHE Board of Governors, the Office of the Chancellor, and the 14 universities—totaling well over $500 million—will also help to postpone the inevitable temporarily. But fund balances are finite, one-time funds, while virtually all university costs are recurring annual costs, which means that while the timing may be in doubt, the final outcome is not.

¹ http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=angelo%20armenti.
² http://www.pennlive.com/midstate/index.ssf/2013/08/clarion_university_restructuri.html. Penn Live, August 16, 2013.
ᶟ http://www.post-gazette.com/education/2013/09/11/Edinboro-University-plans-faculty-program-cuts/stories/201309110152. post-gazette.com, September 11, 2013.
⁴ http://www.pennlive.com/midstate/index.ssf/2013/09/mansfield_university_becomes_t.html. Penn Live, September 26, 2013.
⁵ http://www.post-gazette.com/news/education/2013/10/30/East-Stroudsburg-is-fourth-state-owned-Pennsylvania-university-to-announce-cuts/stories/201310300139. post-gazette.com, October 30, 2013.
⁶ https://www.keepandshare.com/doc/6756902/tribune-review-december-24-2013-slippery-rock-university-facing-10-million-deficit-possible-l. Tribune-Review, December 24, 2013.
⁷ http://www.youtube.com/watch?v=kl_wYG3OC88.

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 its statutory purpose as 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. He also writes for his blog at http://angeloarmenti.blogspot.com/.

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