This past Tuesday, I joined a handful of Kutztown University faculty and students on a trip to Harrisburg for the NAACP’s “Children’s March to Save PA Public Education.” [to hear my take on the rally, check out my postmortem discussion on The Rick Smith Show]. The nice thing about going to Harrisburg is that you tend to run into folks from APSCUF (our state headquarters is just a short walk from the Capitol building) and lots of other activists from around the state. Not only do you get to network with other activists, but you tend to learn things that you might not if you weren’t there to hear it for yourself.
Shortly before I was scheduled to speak at the rally, I found out a bit of information about a recent PASSHE Board of Governors’ meeting that sent all sorts of veins popping out on my forehead. First, let me give you a little background before I drop the bomb.
Over the past couple of years our local APSCUF-KU leadership–particularly our Meet and Discuss team–has been probing Kutztown University’s books and accounting practices. When President Cevallos decided that he was going to retrench faculty this past year, we were given even greater access to the university’s financial data as required under Article 29 of our contract.
For at least two years we have been chipping away at a simple problem: how is it that Kutztown University has been in a perpetual budget crisis when it has seen a nearly 20% increase in enrollments since 2002, has seen class size explode, and has the lowest faculty cost in the State System? Every time we ask the Provost or the Administration and Finance people this question, we’re treated to rather vague explanations about “increasing costs.” But we have never been satisfied with that explanation.
Recently, former APSCUF-KU vice president and Meet and Discuss member, Ken Ehrensal, spearheaded a team that did a long-term analysis of Kutztown’s budget and expenses using publicly available PASSHE data. The key part of their analysis was that they adjusted for inflation. All of the numbers that the university has been using in their “budget presentations” have neglected to adjust for inflation, resulting in flawed data that presented a skewed picture of the university’s finances. The most striking finding of Ehrensal’s team was that the faculty salaries and instructional costs have declined by about 10% and 20% respectively since academic year 1994-1995. Put another way, the academic division of Kutztown has already taken significant cuts and is operating at a high level of efficiency already. I would encourage everyone to check out Ehrensal’s team’s full presentation here:
SHOW US THE MONEY! – APSCUF-KU Presentation
The analysis in “Show Us the Money!” only furthered our questions about what the administration has done with all the money. Every time we’re shown budget data including KU’s reserves — or “rainy day fund” — they appear to show that the university is, indeed, struggling financially despite HUGE cost savings over the past decade. But, I’ve had a nagging feeling that the money is somewhere and that we’ve been presented with a ruse.
Fast forward to Tuesday’s NAACP rally. We may have just opened the first major crack in that ruse. Let me cut to the chase.
At an April 6th Board of Governors’ budget meeting an Assistant Vice President for Finance presented a slide containing new budget projections based upon a 30% cut in PASSHE funding and a 10% increase in tuition. As part of that presentation the Assistant Vice President for Finance presented a slide listing all 14 PASSHE universities’ “Unrestricted Net Assets Available” and the funds needed to cover a budget gap caused by a 30% budget cut over the next two academic years.
The interesting number here is the “Unrestricted Net Assets Available” column since it represents the actual funds each university has at its disposal to spend. These funds are defined by a Board of Governors policy on “University Financial Health”. According to the policy, “Unrestricted Net Assets” are defined as follows:
Unrestricted Net Assets – This category of net assets includes funds that the Board or University trustees have designated for specific purposes, auxiliary funds, and all other funds not appropriately classified as restricted or invested in capital assets. It represents all funds over which the University can exercise discretion and may be used to meet the general financial requirements of the institutions. For the purposes of this policy, the following unencumbered unrestricted net asset designations will be included: Educational and General Activities, Life Cycle Maintenance, Retirement of Debt, and Plant. The following unrestricted net asset designations will be excluded: Educational and General Encumbrances, Plant Encumbrances, contractually required Health Care Reserves, Auxiliary net assets, and the unfunded net asset balances attributed to postretirement and compensated absence liabilities (Board of Governors Policy 2011-01).
Got that? Unrestricted Net Assets refer to “all funds over which the University can exercise discretion and may be used to meet the general financial requirements of the institutions.” In other words, these are funds that the Kutztown University administration can use to cover its costs. So, given that KU just went through retrenchment and has declared a budget crisis just about every year I’ve been here (2002), you would assume that KU would have very limited Unrestricted Net Assets, right?
Dead fracking wrong.
As it turns out (and this is where my head exploded), Kutztown University has THE [SECOND] MOST UNRESTRICTED NET ASSETS IN THE ENTIRE STATE SYSTEM. Do you want to take a stab at how much money the Kutztown University administration has at its disposal to meet its general financial requirements?
Not even close.
West Chester tops the list with $36.1 in Unrestricted Net Assets. Kutztown University has $29.1 million in Unrestricted Net Assets. Bloomsburg University is a distant second with $20.8 million. Don’t believe me? Fine. Here’s the slide [sorry for the errors in my initial post. Thanks to Bilbo (see comments) for the assist]:
So, there you have it folks. It’s OK. Screaming out loud is a rational action at this point. I am looking forward to our next Meet and Discuss. We must never forget that this administration proceeded consciously and deliberately to close programs, retrench faculty–temporary, tenure-track, and tenured, and force all of us to question the future of our institution. And they did so crying poverty from the top of their $29 million pot of gold.
Excuse me now, I need to go throw up.
Christina J. Steffy
Kevin Mahoney
Amy LB
APSCUF-KU xchange 
Holy shit.
I notice in these slides that “cost” and “salary “seem”, and I stress the word seem, since I have not asked the author to be used almost interchangeably. However, “cost” would have to include salary & benefits, while salary is a much lower figure including only the cash paid employees.
As benefit costs at our university included health care, an amazingly comprehensive health care plan at that, and as healthcare costs have risen at pace steadily outpacing inflation for a long time, then it is not inconceivable to me that “costs” would rise whether nominally or adjusted for inflation while salaries would have declined as adjusted for inflation.
The essence of the slides may be true, however the way these terms are defined would likely result in differing orders of magnitude in terms of the divergence between administration and union figures.
According to the slide, West Chester has the most at $36.1 million, followed by Kutztown at 29.1, Slippery Rock at 27.8, Millersville at 23.6, Shippensberg at 21 and THEN Bloomsberg at 20.8. Not that this doesn’t anger me, but please report accurately.
Bilbo,
Thanks for the close read. My early draft of this post was based upon my notes from conversations in Harrisburg. I only received the slide with the actual numbers last night. I noticed the discrepancy and intended to make the corrections, but in my haste to get this out this morning I neglected to make the changes. I am making the changes.
This is the beauty of social media…thanks for the participation!
Kevin
I’m wondering if this revalation presents any legal liability. To produce documents based upon an untruth is repugnant. To leave untenured faculty afraid of losing their jobs and forcing us to choose between loyalty and survival is unconscionable. I’d like to retire from KU someday. This is where I’ve wanted to be years before I was hired. I turned down six other jobs to take this one and now wonder the validity of that decision. I type this in fear of reprisals, but have stood silent far too long. I shake my head in not only disgust , but also in sadness for all of those who have lost their jobs and for all of us untenured faculty shaking in our boots as we consider the slow job market awaiting us in the next 13 months. Good job Dr. Mahoney! You are the Tim Russert of APSCUF and I appreciate you. . .
It’s incredible to see the numbers. Anyone who has been paying attention to KU and it’s supposed budget woes over the last decade could tell something was wrong with the stories the people were getting. The jump in enrollment combined with the low faculty costs, the glaringly obvious problem of not enough faculty, the fact that tuition dollars pay for fewer and fewer services on campus yet tuition continues to increase. What amazes me is how it has always seemed like most of the other PASSHE schools that face the same funding dilemma as KU are still managing to handle it better than KU. And to see these numbers makes it even more appalling that KU can’t handle this. Is it any wonder that KU students, staff, and faculty don’t have the administration backing them?
Kevin, this is great information. We (Kutztown faculty) have a meeting with State Senator Jeff Piccola’s office during the week of May 9th. What we have here is a good cause for the state government to open up KU’s — and PASSHE’s– books.
Did you ever wonder why our administration had a comptroller assigned to our campus last year?
Mike,
That’s exactly the kind move that has left me with a deep skepticism regarding the info we have been getting from the administration. Comptroller. The fact that the VP of Admin and Finance “left” KU followed not long by the Foundation head. We all know that KU administration has been gracious to its departing administrators…instead of “firing” them, KU has allowed them to bow out gracefully and move on to other jobs. The problem with that approach, of course, is that the administration attempts to keep a lid on the reasons these administrators “left.” My guess there is a very, very interesting story to be told about those departures. Maybe we’ll get to hear that story in the not too distant future.
Would KU APSCUF consider “presenting” this info to the Trustees at their Tuesday, May 3rd meeting?
Beth…We’re working on it. I don’t think I will be able to be there, but I am hoping to find someone to go.
[…] about the sound financial health of the university, you need to read Kevin Mahoney’s post, I Went to Harrisburg, and My Head Exploded. I’ve known Kevin for a long time now and know that he’s often motivated to fight […]
I dear god. I hope the news outlets will run with this. Has APSCUF-KU considered having a press conference?
[…] the Rick Smith Show]. While there I learned a bit of information that led me to title a post, “I went to Harrisburg and my head exploded,” on my KU XChange blog. As I recounted on the […]
[…] KU’s $29.1 million is unrestricted net assets (if you want the background story, check out my post from April on the XChange or my article, “Kutztown University, Shock Doctrine, and Snake Oil Tales,” from the […]
[…] in its case in Harrisburg and at other PASSHE universities. On April 28, 2011, I wrote the post, “I Went to Harrisburg and My Head Exploded,” upon my return from a rally resisting Governor Corbett’s deep cuts in education. […]
[…] as first reported in the blog APSCUF-KU XChange, the administration’s claims that it was in a deep budget hole turned out to be specious as […]