Privatization Without a Plan
The minority financial stakeholders dominate the decision making, while the majority financial stakeholders pay most of the bills.
Chesterbrook, Pennsylvania (PRWEB) April 11, 2014
Angelo Armenti, Jr., the president of the Pennsylvania Association of State Colleges and Universities (PASCU), asserts, based on data from the Association of State Higher Education Executive Officers¹ (SHEEEO), that while the traditional highly State-subsidized public higher education of the 1950s and 1960s still exists in parts of the country, it is also evolving into something quite different in other parts, thereby creating the need for different labels for the different types of formerly public higher education.
The evolution was driven by a half-century of powerful demographic and economic forces that changed the Funding/Governance relationship that had historically defined traditional public higher education. Those changes eventually required new labels with which to accurately describe two very new realities.
Armenti’s classification scheme provides three labels to define the three types of higher education that exist today, with all three having evolved along different paths over time from their common roots in the traditional “public” higher education of the past:
Public Higher Education: State Funding Share greater than 50%; State Governance Share greater than 50%;
State-Related Higher Education: State Funding Share less than 50%; State Governance Share less than 50%; and
Government Higher Education: State Funding Share less than 50%; State Governance Share greater than 50%.
“State funding share” is the percent share of the operating budgets provided by the State, and “State governance share” is the percent share of the seats on the governing boards controlled by the State.
Costwise, according to Armenti, Public higher education is the best of the three types in terms of its higher subsidies and hence lower costs to the students.
And although both State-related and Government higher education institutions suffer from lower subsidies, and hence higher student costs stemming from receiving less than 50% of their funding from the State, these two types of higher education are quite unequal in terms of the opportunities that they provide with regard to both institutional success and student success.
From the perspective of the Majority Stakeholders, State-related higher education is enormously preferable to Government higher education—despite the state funding shares being less than 50% for both types—because state-related institutions can control their ultimate destiny by virtue of the fact that they control a majority of the seats on their governing boards which is, unfortunately, not the case for government higher education institutions.
Because State-related institutions are able to control decision-making at every level of the institution, they are able to preserve and deliver their statutory purpose and their chosen vision, mission, goals and objectives without being left totally at the whim of the politically-driven decision-making that typifies Government higher education.
On the other hand, the danger that government higher education presents to America’s future is that which stems from political decisions that have no place in formerly public universities where a majority of the funding now comes from private checkbooks of students, parents and donors, primarily alumni.
The Funding/Governance disparity in Pennsylvania and its growing negative effects on both the PASSHE universities and PASSHE students, are described in detail in Armenti’s new book² entitled “Privatization Without a Plan: A Failure of Leadership in Pennsyvania Public Higher Education.”
In Privatization Without a Plan, Armenti documented the privatization of public higher education in Pennsylvania over the last 30 years. For the current (2013-14) fiscal year, based on the classification scheme just cited, the “public” higher education provided through the fourteen “state-owned” or PASSHE universities in Pennsylvania would now earn the dubious distinction of “Government Higher Education,” owing to a state funding share of 25% coupled with a state governance share of 100%.
Majority versus Minority Stakeholders
The negative consequences of government higher education arise from the large funding/governance disparity that lies at its very heart. Government higher education relies on an organizational alignment that is fundamentally flawed because it is not aligned to serve the best interests of its majority financial stakeholders—the students, parents and donors, primarily alumni—who are now paying 75% of the bills, while controlling 0% of the seats on the boards where all key decisions affecting them are made.
While Pennsylvania is admittedly an extreme example of government higher education, even the less extreme examples will share similar weaknesses because they will always feature minority financial stakeholders being the majority governance stakeholders, that is, the minority financial stakeholders will always dominate decision making, while the majority financial stakeholders will pay most of the bills.
Because government higher education always places the decision-making power into the hands of the minority financial stakeholders—at the expense of the majority financial stakeholders—the chances of indefinite peaceful cooperation between the two stakeholder groups are clearly slight.
But as bad as it appears, according to Armenti, this patently unjust and Un-American arrangement is exacerbated further by: 1) a blatant failure of PASSHE’s 100% political leadership to preserve and deliver the mandated statutory purpose of public higher education in Pennsylvania: “High quality education at the lowest possible cost to the students;” 2) its failure to adopt a fiduciary relationship with the PASSHE students (i.e., the duties of care, loyalty and obedience); and 3) its failure to prevent the financial death spiral all 14 PASSHE universities now face, with five already having publicly declared financial distress.
¹ http://www.sheeo.org/sites/default/files/publications/SHEF-FY12.pdf. p 32, Figure 7
² http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=angelo%20armenti.
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/.