State University System: Problems and Possibilities

Summary: The Pennsylvania State System of Higher Education (PASSHE) faces a number of acutely serious problems that have prompted the system’s Chancellor to begin a thorough review of the difficulties with the intention of developing solutions. This Policy Brief suggests possible reforms.

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PASSHE is a state owned group of universities made up of 14 schools ranging in size from Cheyney University with just over 700 students to West Chester University with more than 15,000 fulltime equivalent students (FTE) as of the 2015-16 academic year. (All statistics taken from the Joint State Government Commission report of February 2017).

Over the five academic years between 2010-2011 and 2015-2016 combined enrollment fell 12,452 or 11.1 percent. All schools except West Chester experienced declines in percentage terms ranging from less than one percent at Slippery Rock to a 43 percent drop at Cheyney.  Eight schools had decreases of 15 percent or more while four saw enrollment down over 20 percent.  Mansfield and Clarion recorded huge losses with enrollment down just shy of 30 percent.

In terms of numbers of students, the 13 schools with declining enrollment had an average loss of 1,100 FTE students over the five year period. The largest losses occurred at Clarion (1,936), Indiana (1,830), California (1,559), Kutztown (1,515) and Edinboro (1,481). Enrollment at four other universities was down around a thousand students.

In short, for PASSHE, the last five years have been a time of struggle.  Competition for students is intense. The number of high schoolers graduating each year in Pennsylvania has plateaued and is projected to fall.  Because Pennsylvanians make up the lion’s share of enrollment at PASSHE schools a falling pool of potential attendees is a very unwelcome development. Moreover, there are 260 or so postsecondary education and training institutions for Pennsylvania graduates to consider for further education. Granted many of these are private and attract students from all the country and the world. Still, many of the small private schools likely depend heavily on Pennsylvania for the bulk of their enrollment.

Without question, PASSHE schools face major competition from the universities that are state related including the University of Pittsburgh, Temple, Penn State and Lincoln. These four universities (with their satellite campuses included) combined had 2015-2016 enrollment of 158,702, nearly 59,000 more than the PASSHE school total of 99,911.

Penn State, the largest state related school, had 87,756 FTE students in 2015-2016 with the University Park campus accounting for nearly 50,000 and the rest in the 20 satellite campuses across the state and a “World” campus offering online courses. Penn State was the only state related university to experience significant gains over the five years with enrollment up nearly 9,000. Pitt, with its four satellite campuses, was down slightly and stood at 33,988 FTE students in 2015-2016 while Lincoln’s FTE count tumbled six percent. Enrollment at Temple with its two satellite campuses was essentially flat.

In short, except for Penn State and West Chester, the enrollment picture for PASSHE and state related institutions of higher education schools ranges from basically flat to extremely poor.

Enrollment is not the only issue of concern. Despite PASSHE schools having significantly lower tuition and fee costs than the state related universities, faculty costs per FTE undergraduate at PASSHE schools are on average about the same as the four state related schools ($3,631 PASSHE vs $3,741 for state related). However, for upper division students the PASSHE schools have substantially greater faculty costs per FTE student than the state related schools ($5,055 vs $4,167). Indeed, three had upper division faculty costs of over $6,000 per student led by Edinboro at $6,752 followed by Shippensburg ($6,187) and East Stroudsburg ($6,130). Penn State and Pitt by comparison had faculty costs per upper division student of $4,395 and $4,704.

Meanwhile, the faculty costs per masters’ degree student are higher on average in the four state related schools ($5,969) than at PASSHE schools ($5,417) principally because of the $6,591 cost at Penn State. The average faculty cost per student at the other three state related schools is only $4,848 and significantly lower than the PASSHE average.

Class size is also important in this discussion. For PASSHE schools and the state related schools, class sizes for lower division students were quite close at 30 and 31 respectively. However, there is a large gap in class size for upper division students; PASSHE 19, state related 27. For all undergraduates, the state related schools class size was at 29, PASSHE 25.

The much smaller upper division class size at PASSHE schools is undoubtedly a major factor in the substantially higher faculty cost per student.

Graduation rates are also an issue of possible concern in some of the PASSHE schools.  While most of the schools with the notable exception of Cheyney have graduation rates that are in line with or better than the national average rates for both four-year and six-years, the graduation rates at several schools are far higher than are expected based on the academic readiness of enrollees at the schools.  Does that mean the schools have far superior instruction compared to other schools across the country or are the curricula and courses not sufficiently rigorous?

Graduation statistics are compiled and produced by College Factual, an organization that tracks the key statistics covering costs, graduation rates, salaries of graduates, average SAT scores of enrollees, student debt, faculty to student ratio, male to female student ratio, fulltime faculty, etc.

Bloomsburg University has a four year graduation rate of 43.3 percent (one of PASSHE’s three highest) and a six year graduation rate of 64.8 percent. College Factual puts the six year figure at 20 percent above their projected graduation rate based on the academic preparedness of enrollees. Other schools with graduation rates much higher than expected include Slippery Rock at 19 percent, California University at 17 percent and Millersville and Mansfield, both over 14 percent.  All other PASSHE schools except Cheyney have graduation rates higher than anticipated ranging from 5 percent at West Chester to 11 percent at Kutztown.

College Factual also ranks 94 Pennsylvania colleges and universities offering four year degrees based on heavily weighted factors including student readiness for college as measured by SAT and ACT scores, freshman retention rate, six year graduation rate, student loan default rate and on other factors with lower weights including; faculty salaries, starting salary by major compared to national figure (cost of living adjusted), and the institution’s expenditures per student. Thus, some private schools that do not make data available for all categories of evaluation factors were not included in the 94 ranked schools.

The ranking procedure was not kind to PASSHE schools. West Chester at 32nd was the highest ranked and Cheyney at 91st was the worst. Millersville ranked second best at 49th followed by Slippery Rock at 52nd. Unfortunately, seven schools besides Cheyney ranked 70th or worse with three of those at 80th or lower. Three others were in the range of 54th to 67th.      

The average ranking of the 14 universities out of the 94 ranked schools was 67th.  To be sure, there is a lot of tough competition with such schools as Penn State main campus at 13th and Pitt main campus at 15th.   But to be completely fair, the 26 satellite campuses of Penn State, Pitt and Temple were not ranked.  Meanwhile, many prominent private schools such as Gettysburg, Bryn Mawr, Swarthmore, Bucknell and Haverford are ranked very high. That is to be expected perhaps given their cost and ability to be very selective in accepting students. Haverford for example costs almost $50,000 per year and has combined SAT scores on reading and math 400 points above the national average.

PASSHE schools, with one exception, have seen enrollment decline, some very dramatically, over the past five years. Importantly, the enrollment drops have been accompanied by very high acceptance rates. Ten of the schools accept 80 percent or more of their applicants, with five of those accepting over 90 percent. In short, most of the schools are extremely easy to get into.

To sum up; PASSHE schools present a mixed but generally unhealthy picture with nearly half the schools facing serious difficulties.  Acceptance rates are very high (80 percent or higher) at most schools while enrollment is still falling. Faculty costs are high while class size for upper division students are low compared to the four state related schools. All this points to a need to rethink the PASSHE model.

First of all, the situation at Cheyney simply cannot be allowed to continue. The state provides over $18,000 per student in instructional support, four times PASSHE schools average per student instructional funding and far above what the state spends per k-12 student on basic education. With enrollment dropping precipitously, the university is too small and too costly for taxpayers to be sustainable. The system and the Commonwealth need to announce that no further students will be admitted and students currently attending will be allowed to transfer with all course credits and no penalty to a state owned university offering their degree major where they can complete their degree on campus or online if need be.

Alternatively, why not explore the sale of Cheyney to another predominantly African- American university or group of investors who could purchase Cheyney for a dollar and assume all responsibilities for its operation and upkeep. Current student aid programs from the federal government would remain in place and its historical role would be preserved.

Besides Cheyney, the situations at Edinboro, Clarion and Mansfield with student declines of over 20 percent are also worrisome. Indeed, four western schools (Clarion, California, Edinboro, and Indiana) account for 54 percent of the state system’s enrollment drop over the last five years. Schools with sharply declining enrollments will also have, or soon begin to see, significant reductions in the number of degrees granted, which is the basic objective of the university.

It is reasonable to say that the severe problems faced by several of PASSHE schools cannot be solved absent a large increase in the number of graduates and improvement in the academic readiness of graduates leaving the state’s high schools.  It is unreasonable to think either of those desirables will occur any time soon. Thus, it becomes incumbent on PASSHE to begin reducing capacity and/or consolidating degree programs. There is no defensible purpose in having each of the universities offering the same wide range of degree majors. It would be far more rational to have the schools use a more focused approach in degree programs and become very good and well known for their limited offerings.

Perhaps a couple of schools could become two year feeder schools for the other four year schools.

To be sure, with all the tenured faculty, alumni and entrenched interests at each school meaningful change coming from the system itself is very unlikely. Without question it is time for the Legislature and the Governor to start looking for meaningful system reforms. It will take a lot of time, so they should begin now. In fact, the state related satellite campuses that receive state funding ought to be included in the government’s study as well.

Pennsylvania’s Higher Education System’s Woes

When the Pennsylvania’s State System of Higher Education’s (PASSHE)  board of governors met in early October, the hottest topic was state funding, or more specifically, how it has been declining over the years and how they intend to request a sizeable increase from Harrisburg for the upcoming year.

 

While state funding has been weaker since 2010 and state system universities have been raising tuition and fees from students to balance their budgets, not much attention has been given to the expenditure side of the ledger.  Also, there was not much discussion of the system’s enrollment drop.  As the new school year began, it was revealed that the combined enrollment for the fourteen schools comprising PASSHE[1] was down for the fourth consecutive year.  These are clearly important issues facing PASSHE; they will be examined in detail in this Policy Brief.  Using PASSHE’s single audit (combined all school information) reports, we can look closely at the financial and enrollment problems.

 

For the 2008 academic year, PASSHE realized $637.9 million in net tuition and fees (net of scholarships, financial aid, and waivers).  In the most recent academic year available, 2013, that amount had grown to $809.3 million—an increase of 27 percent.  In fact, the annual increases were steady, ranging from a low of just under one percent in that last academic year to 8.7 percent from 2010 to 2011.

 

Meanwhile, state appropriations, after rising 4.7 percent to $532.8 million in 2009, stood at 427.1 for the 2013 academic year.  Thus, state appropriations slipped a net 20 percent from 2009 to 2013.  The largest decline occurred from 2010 to 2011 when the appropriation fell 16 percent from $504.7 million to $422.5 million during the state budget crisis. Not coincidentally the sharp increase in tuition revenue from 2010 to 2011 mentioned above was most likely necessarily done to offset this reduction in the state appropriation.  All told, tuition and fees climbed $171.4 million during the 2008 to 2013 period while the state appropriation fell by $81.8 million.

 

Investment income also struggled over this period.  In the 2008 school year PASSHE realized $35.4 million in investment income, however, by the 2013 school year it had fallen to $26.2 million—a 25 percent drop. The low point came in 2010 when investment income was only $24 million for the system.  Of course no one needs to be reminded that the great recession stunned many financial portfolios and revenue streams—including PASSHE’s as well as the Commonwealth’s—and the subsequent sluggish recovery hasn’t brought revenue back to pre-recession levels.  In fact these two categories, investment income and state appropriations, are the only two revenue sources to have decreased over the six year period.  Other line items such as auxiliary enterprises (up 18 percent or $51.4 million) and gifts, grants, and contracts also increased (19 percent or $53 million) over that span.

 

That being said, total revenues for PASSHE went from $1.772 billion for the 2008 academic year to $1.975 billion in 2013—a total increase of $203 million or 11 percent.

 

On the expenditure side, the two largest categories are instruction and institutional support.  With the exception of a small two percent decrease between the 2010 and 2011 academic years, the spending on instruction has risen steadily over these six years.  Instructional expenditures stood at $631.3 million in 2008 and came in at $721 million in 2013—an increase of $90 million or 14 percent.  Meanwhile, the expenditures for institutional support experienced no annual drop off during the period but instead moved steadily higher.  In 2008 the amount of institutional support expenditures was $240.3 million before rising to $264 million in 2013—an increase of nearly ten percent.

 

Of all the operating expenditure categories, only research and public service experienced a decline over the period and each of these were relatively small amounts ($2 million and $3.5 million respectively).  Other operating line items such as student services, plant maintenance, and auxiliary enterprises all had increases.  In all, total operating expenditures increased 12.5 percent rising $222 million from $1.754 billion in 2008 to $1.976 billion in 2013.  Adding expenses such as interest on debt and “other” brings total expenditures to $2.028 billion in 2013, which is eleven percent higher ($197 million) than the 2008 figure of $1.831 billion

 

One expenditure item that needs special attention is legacy costs.  PASSHE offers three types of pension programs, two defined benefit and one defined contribution.  Some employees are in the State sponsored Public School Employees’ Retirement System (PSERS) or the State Employees’ Retirement System (SERS) (both are defined benefit plans), while still others are enrolled in a defined contribution plan known as the Alternative Retirement Plan (ARP) administered by PASSHE itself.  Over the six years  PASSHE’s pension obligation to PSERS grew from $852,000 in 2008 to $3.9 million in 2013—an increase of 358 percent. A similar burden is being put upon the system by the SERS obligation which has spiked 345 percent from $9.77 million to $43.5 million over the time span—together, a jump of nearly $37 million.  What’s more, there is no sign of abatement as these obligations are expected to continue growing at a rapid pace and will almost certainly place even more strain on the system’s budget in coming years.  The defined contribution plan, ARP, has grown at a more reasonable pace of eleven percent, beginning at $39.6 million and ending at $43.9 million.

 

All this is happening in the midst of a system wide enrollment slide with most of the universities showing fairly substantial drops. In the fall of 2008 combined enrollment stood at 112,600 at the fourteen state universities.  Student count hit a high of 119,500 students in 2010 before the steady declines set in.  In the fall of 2011 that number slipped to 118,200 and continued to drop through the most recent count of 109,600 for the current school year—a slide of eight percent since the high water mark of 2010.  During that time only one school (West Chester) had a gain in enrollment while eight had decreases of more than ten percent.  And the sliding enrollment is not forecast to turn around any time soon.

 

Looking at the State’s Department of Education enrollment data, the number of high school seniors in the Commonwealth has been declining very slightly since 2011.  That being said, there has not been a major drop for the last couple of years and the number of high school seniors is fairly close to the count in the 2007 school year.  Thus, the pool of Pennsylvania students the fourteen universities in the State System are competing over, not only amongst themselves but with other private and public universities, has not changed much and is likely not to improve in the near future as the total number of public school students in the Commonwealth has been stagnant over the last few years.

 

On a per pupil basis, state appropriations fell from $4,520 in 2008 to $3,810—a decline of slightly more than $700 or 16 percent.  Meanwhile tuition and fee revenue increased from $5,660 per student to $7,224—an increase of more than $1,500 or 27 percent.  On the other side of the ledger, total operating expenses increased from $15,579 per pupil in 2008 to $17,638 in 2013, jumping more than $2,000.

 

The implications of falling enrollment and increasing legacy costs do not bode well for PASSHE.  While tuition hikes have carried them through the last few years, these ongoing annual hikes are probably not sustainable over the longer run.  With a sluggish economy and the State’s resources being stretched thin due largely to the enormous pension shortfalls, allocating significantly more money for the state’s university system appears to be very problematic for the foreseeable future.  Thus, PASSHE will need to take a hard look at the system as a whole and the individual schools to determine the best course of action regarding how to allocate scarce resources to best serve Pennsylvania students and taxpayers.



[1] The fourteen schools in the State System are:  Bloomsburg, California, Cheyney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock, and West Chester.

More Hypocrisy: University System Faculty Authorize Strike

Unhappy faculty at the 14 institutions of the Pennsylvania State System of Higher Education have taken a strike vote, authorizing a walkout. A walkout will depend on how negotiations go but the vote was overwhelming and faculty members say they are serious.

A professor asked about the potential strike said higher education was under attack and they would make a statement to the nation that the attack is not acceptable. What should happen of course is that anyone with tenure who leaves his/her classes should lose their tenure-at the very least.

Maybe the professor should look around at what is happening to the education system. Graduates are leaving college with massive amounts of debt and a huge percentage cannot find employment in their chosen field. What is the point of turning out millions of graduates whose education cannot be used to launch a career capable of paying off student loans and making up for the foregone earnings during the five or six years they took getting a degree?

And why do universities continue their push to offer degrees in more and more esoteric fields for which the only employment opportunities are with government or non-profit special interest advocacy groups that depend heavily on government dollars? But most importantly, why should faculty be rewarded for their heavy handed politically correct, statist views they try to impart to students? Survey after survey finds graduates in large numbers lack basic knowledge of the nation’s history and how a free economy works. Little wonder so many college graduates lean left politically and support government do-good programs and stringent regulations on the private sector.

College degrees have become increasingly less reliable as a predictor of future success as the quality of education and significance of a diploma have undergone a long and continuous process of being replaced by lack of rigor and focus as colleges have fallen under the seductive pull of the siren song of political correctness and progressivism. While at the same time there has been scant attention paid to the consequences of the deepening lack of basic discipline and abandonment of common sense.

Here’s a suggestion for the faculty so eager for more pay. Go find a job in the real world where you won’t be coddled but will instead get compensated based on the market value of your productivity. Pleading for ever more taxpayer dollars to subsidize higher education in its current form and condition should be an embarrassment rather than the manifestation of a false sense of righteous indignation it actually represents.

There is no ignoring the real world to compare to that exhibited by insulated faculty at state owned colleges. Whose taxes do they want to see raised to get the compensation package they seek? Let them answer that question.

Unionized faculties are anathema to quality education and any logical notion of how a university should be operated. One would have thought that tenure and other privileged status would be enough power vis-à-vis university management. Not so in Pennsylvania.