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This originally appeared in Raging Chicken Press on October 21, 2013. It is a fairly long article detailing changes in PASSHE policies regarding new buildings and capital projects. I am including Part 1 of the article here with brief excerpts from other parts. To read the complete article, click “READ THE FULL ARTICLE” at the bottom of the post or go to the original right now by CLICKING HERE

This past July, eight of the fourteen PA State System of Higher Education (PASSHE) universities sent letters to their faculty and staff warning of the possibility of deep cuts, layoffs, and program elimination (what they like to call “retrenchment”). University presidents at California, Cheney, Clarion, Edinboro, East Stroudsburg, Kutztown, Mansfield, and Slippery Rock all shouted “crisis” and warned that unless they resorted to strict austerity measures, the end, would indeed, be near.

Clarion University led the PASSHE austerity train, announcing on August 15th that it would slash over 40 jobs – including 22 faculty jobs – and eliminate a number of academic programs. On September 10th, Edinboro University joined the party announcing it would cut 40 faculty, 9 staff members, six managers and a host of academic programs. Two weeks later, on September 25th, Mansfield University announced it intended to eliminate nearly 20% of their 170 faculty members. That same day, East Stroudburg University indicated that it was slowly marching toward retrenchment. Two PASSHE universities, California and Kutztown, were spared a similar fate this academic year. California University miraculously found that it did not, after all, have an $11.8 million dollar budget deficit as it had reported in the spring. Instead, Cal U is looking at a $5.8 million surplus. Ooops! Kutztown University’s president, Javier Cevallos, announced that Kutztown would be putting off the most painful cuts until next year: “Current estimates project a $10.3 million deficit for 2014-15, which will be addressed through a combination of base budget cuts and one-time funds,” he wrote in an October 2nd “Presidential Update.” And, as I reported last week, Slippery Rock’s provost is seeking a “third way” austerity plan – and if faculty do not agree to departmental transfers by Thursday, October 24, the ax may fall there too. The fate of the remaining PASSHE universities is still unclear. However, university presidents are rapidly approaching an October 30 deadline for reporting their intentions to eliminate any tenured faculty members.

To say it’s been an “interesting” start of the academic year for the 100,000+ students and 6,000+ faculty and coaches at PASSHE universities is an understatement. Left hanging in the balance are people’s current and future livelihoods. As I recently wrote on Raging Chicken, PASSHE’s mantra is that faculty and staff salaries and, more recently, a decline in enrollment are the reasons for the deep budget shortfalls. However, despite their continued proclamations, the numbers have never added up. My most recent post on PASSHE’s budget deceptions, “PASSHE’s Austerity Magic: Save Your Despair for Better Days,” highlighted the significant increases in spending on capital projects – buildings – at Kutztown University. As I suggested in that article, the pattern at Kutztown is not limited to that PASSHE university. In fact, it points to a much more widespread practice that has gone virtually unnoticed until the recent ouster of California University of Pennsylvania president, Angelo Armenti, Jr. (more on that in a little bit).

The budget “crisis” at PASSHE universities has its roots in a long-term defunding of public higher education in PA, Wall-Street-esque risky investment schemes, and a virtual lack of oversight.

Part I: How (Not) to Fund the College Experience

PASSHE Appropriations v ENGPennsylvania vies for the top spot when it comes to the size and cost of its state legislature. PA also has the lowest percentage of public workers in the United States. In the best of times, that scenario might lead to excellent representation and efficient government. More recently, however, it has meant a right-wing Republican Party intent on destroying the public sector and a shrinking number of public employees to handle the work of cleaning up their messes. Anyone paying attention to what’s happened in PA since the 2010 mid-term elections, knows the story all too well. Newly elected governor, Tom Corbett, put public education – K-12 and higher ed – on the chopping block from day one. In his first year as Governor, K-12 schools were cut by $1 billion; PASSHE universities were cut by 20%. The trend has continued. There is no doubt that Corbett’s shock doctrine policies for public education have hit PASSHE universities hard. However, Corbett’s cuts were really a more extreme version of what had been happening for decades. In 1983-84 State appropriations accounted for almost 65% of PASSHE’s budget, while tuition and fees amounted to just over 35%. In 2011-12, State appropriations amounted to just over 25% of PASSHE’s budget, with tuition and fees reaching nearly 75%.

For more than three decades, the “free market” mantra of right-wing think tanks and policy makers, have eroded investment in all things public. However, as Dina Ransor made clear in a 2011 article for Truthout, their claims don’t match their outcomes:

This belief that the “free market” will always do better than the government at any task has increased over the years until each president since Reagan has taken it as a given.

Even Bill Clinton pushed to shrink the federal employee workforce by “outsourcing” the work to supposedly cheaper contract workers to save money during his “reinventing government” effort. This craze to outsource as much of the federal government as possible hit its height during the second Bush administration. Saving money was always the reason given, but there was very little actual proof that this was true.

The situation in Pennsylvania was no different. Over the past three decades, Pennsylvania state legislators of both political parties slowly abandoned investments in public higher education as a public good. Instead, higher education became a “service” or a “commodity” that students – now “customers” – bought. Politicians and policy makers from both political parties gradually, but decidedly, drank the free market Kool-Aid instead of reenergizing efforts to invest in Pennsylvania’s State System of Higher Education.

While the steady decline in State appropriations significantly contributed to the current “budget crises” at several PASSHE universities, several under-the-radar policy changes at the top-levels of PASSHE’s administration during the last decade have continued to drain the universities’ already diminished “Education and General Fund,” or “E&G” budgets. One of the most devastating came during the tenure of former PA Governor, Ed Rendell. Yes, the Democrat.

Part II: Of Bonds and Balance Sheets (Down the Rabbit Hole)

Until 2000, PASSHE had a fairly centralized process for initiating new building projects on any of its 14 universities and the official guidelines were pretty murky. The one Board of Governor’s policy that addresses planning for new buildings (Policy 1995-01-A), “Facilities Projects Contract Compliance Program” had more to do with ensuring compliance with Act 188’s Nondiscrimination Policy (Section 20-2014-A) with respect to the awarding of state contracts, than it did with laying out a process for making decisions about where to build and why. Under Section E, “Program Administration Responsibilities,” Policy 1995-01-A stated:

The Chancellor of his/her designee shall serve at the program authority to administer a System-wide uniform Contract Compliance Program. Each university president shall be responsible to the Chancellor for implementation of the Nondiscrimination and Equal Employment Opportunity Program at his/her institution. The president may designate and delegate responsibility to a qualified contract compliance officer and other staff as necessary to implement the program.

There is not a single mention of how the Chancellor, Board of Governors, or anyone else for that matter, decides when new buildings need to be built. The one thing this old policy does establish is a centralized process of communication and compliance. That is, it is clear that the Chancellor’s office is where the authority initiates. Administrators at each PASSHE university comply with “orders” issued by the Chancellor’s office.

Policy 1995-01-A was “repealed by the action of Board of Governors on July 13, 2000 and replaced with Board Policy 2000-02, “Capital Facilities, Planning, Programming, and Funding,” on that same date. Board Policy 2000-02 is much more extensive; it lays out the process for making decisions about new buildings. Three parts of the new policy are significant for my purposes here.

1. Decentralize New Building Planning …

2. Privatize Funding for New Buildings and Capital Projects Incrementally …

3. Finance New Building from University Education and General Funds …

***

Part III: Talking to the Taxman about Poetry above the Sounds of Ideologies Clashing so We Can Help Save the Youth of America

Keep in mind that under the current PASSHE Board of Governor’s policy 50% of the funds for new building projects have to come from “alternative funds,” primarily funds raised from external sources. In the post-collapse environment, those “alternative funds” were hard to come by, but the bills were still coming in and universities had to find ways to pay “bond expenses including fees, debt service, and principal” that they had agreed to pay at the beginning of the process. So, universities are forced to dip into their financial reserves and E&G funds to make their bond payments – funds that should have been used for educational purposes.

So, naturally, PASSHE’s Board of Governors stopped approving new building projects in the post-collapse environment, right? I mean it would be irresponsible to issue additional debt for universities who were now struggling to make their existing bond payments, right? Wrong.

Check out this table compiled by the faculty union, APSCUF, based on PASSHE’s 2008-2012 audited financial statements. The top part of the table shows new capital purchases – that is, new buildings and the like – for each of the 14 PASSHE universities over those years. The bottom part of the table shows the interest and/or principle payments toward each of the universities’ debt for those same years.

Capital Debt and Payment

***

Part IV: Smoke and Mirrors Budgeting: There’s More than One Way to Sink a Ship

Do you remember Enron? Here’s a little refresher from Wikipedia:

Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 20,000 staff and was one of the world’s major electricity, natural gas, communications, and pulp and paper companies, with claimed revenues of nearly $101 billion during 2000.[1]Fortune named Enron “America’s Most Innovative Company” for six consecutive years.

At the end of 2001, it was revealed that its reported financial condition was sustained substantially by an institutionalized, systematic, and creatively planned accounting fraud, known since as the Enron scandal. Enron has since become a well-known example of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations in the United States and was a factor in the creation of the Sarbanes–Oxley Act of 2002. The scandal also affected the greater business world by causing the dissolution of the Arthur Andersen accounting company.[2]

Enron Stock TankEnron’s finance people used a whole slew of “off-balance sheet” accounting practices that allowed the corporation to omit significant liabilities – debts – from their official books and filings. Enron, for sure, went far beyond these legal, if not quite ethical, accounting practices and committed numerous acts of fraud. And, the fact is that “off-balance sheet” financing schemes were all the rage when Enron went down in flames.

“Off-balance sheet” financing schemes were especially popular U.S. colleges and universities as a way to finance new building projects in the absence of significant endowments. It was part of the “public-private partnership” (PPPs) craze of the early 2000s that I discussed above. In a 2010 National Association of College and University Business Officers article assessing the impact of the financial crisis on “off-balance sheet” building projects at colleges and universities, Roger Bruszewski, Sam Jung and Jeffrey Turner note that many colleges and universities entered into PPPs “through the university’s existing foundation, a newly developed university-affiliated foundation, or a collaboration with an unaffiliated national foundation that partners with institutions.”  One of “benefits” of this model was that these projects were treated as “off-credit, off-balance sheet transaction[s] that preserved institutional borrowing capacity and balance sheet integrity.” That is, bond rating companies did not consider debt from “off-balance sheet” projects as part of a school’s liabilities. As the authors note, “many of the Pennsylvania State System of Higher Education (PASSHE) schools have continued to utilize this approach.” However good these schemes looked initially, the authors warn:

Over the past several years, however, the off-credit, off-balance sheet transactions have come under considerable scrutiny from lenders, rating agencies, and accounting standards boards because of the direct or indirect ties between the project and institution. Over time developers and universities learned that a project can meet the qualifications to be off-balance sheet and still be included in an institution’s debt profile. These initial on-campus project financings were completed without any developer equity and as 100 percent “project-based” debt. Typically, a not-for-profit entity owned the improvements (subject to a ground lease) and the developer was paid a fee to complete the project. The capital markets determined that because of the absence of equity, the high loan-to-value ratio, the project-based nature of the debt, and the lack of any meaningful developer commitment to the project, an institution was the only logical backstop in the event of trouble. “This ‘moral obligation’ resulted in potentially negative implications for an institution’s debt capacity,” states Bill Bayless, president and chief executive officer at American Campus Communities.

And, it turned out, these warnings bore fruit. In 2012, the bond rating agency Moody’s downgraded PASSHE’s credit rating from Aa2 to Aa3 (click here for explanation of Moody’s ratings) in part because of increasing debt and off-balance sheet projects. Under “Challenges” for PASSHE, Moody’s listed:

  • High balance sheet leverage from substantial increase in debt since FY 2004, with total pro-forma debt rising to nearly $2.36 billion, driven largely by privatized student housing debt issued for replacement student residences on State System’s university campuses.
  • Debt structure of member university foundations to fund replacement student housing includes variable rate debt requiring bank support or direct bank placement adding risk of liquidity demands of the foundations’ own modest resources and expectations of PASSHE to step in to fund or assume management or ownership of the housing facility

***

Remember the backdrop we’re all working with here. PASSHE university presidents across the state are screaming about budget shortfalls and the need to make deep cuts to faculty, staff and academic programs – and not just at the universities that are most immediately under the budget ax. The new PASSHE Chancellor, Frank Brogan, had made it clear that the cuts will continue, remarking In October 10 during a media briefing, “Make no doubt about it, retrenchment is here.” And the story from PASSHE’s administration continues to be that the “problem” comes from “rising costs” from faculty and staff salaries – no matter how clear the data is disproving that claim.

In reality, the costs of more than a decade of irresponsible building projects and sketchy oversight will be borne by faculty, staff and students. And, like the Wall Street fraud that led to the Great Recession of 2009, the people who gambled with our money – with the money that we expected to be responsibly invested in our future and the future of our children – will walk away, pointing their fingers at all of us.

READ THE FULL ARTICLE on Raging Chicken Press

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Mansfield M Slasshing

Reposted from Raging Chicken Press

Earlier today, administrators at Mansfield University informed the local chapter of the faculty union, APSCUF, that they are planning on cutting approximately 29 of their 170 permanent faculty members – just over 17% of the permanent faculty. Like the recent announcements at Clarion and Edinboro —  two other Pennsylvania State System of Higher Education (PASSHE) universities  — the cuts at Mansfield look to be deep and across the campus.

According to the information received by Raging Chicken Press, Mansfield University’s administration is seeking to cut permanent faculty in Applied Social Behavior; Biology; Business and Economics; Chemistry and Physics; Communications; Education; English; Geography; History, Philosophy, and Political Science; Math; Music; Psychology; and, the Library. As of this post, we have not seen a full copy of Mansfield’s workforce plan, so we are not yet clear when and if the administration will share such a plan with the public.

Faculty, staff, and students at Mansfield University should be aware, however, that the university’s Council of Trustees is meeting at 2pm today in the North Hall 6th Floor Community Room on the Mansfield University Campus. Presumably, the university president, Francis L. Hendricks and members of his administration will be presenting their plan for approval.

Meanwhile, about 2 1/2 hours away, East Stroudsburg University president, Marcia Welsh, indicated that her administration is marching toward retrenchment as well. In an email sent to the university community on Monday, Welsh said:

At this time, seven departments are in discussions regarding full or partial retrenchment:  Modern Languages, Music, Movement Activities and Lifetime Fitness, Chemistry, Physical Education/Teacher Education, Physics, and Counseling and Psychological Services. Another seven academic departments are in discussion regarding potential changes to tracts or concentrations that are currently under enrolled, and other options such as reducing elective courses, that could also result in possible retrenchment.  Please note that 26 departments are not involved in these discussions.  It is also important to note that if decisions are made to eliminate programs or majors, it means that new students will not be enrolled in those programs.  Currently enrolled students in any major under discussion will continue in their program and will be able to graduate from ESU in their major.  Students will NOT be forced to leave ESU…

…More on the strategic planning process can be heard on Wednesday at 2pm in the SciTech Niedbala Auditorium [that’s today!!!!] where I will explain what has already happened in the strategic planning process, and how you can get involved in this important discussion.

That’s right…2 1/2 hours away at the same time that Mansfield’s administration will be presenting its plan to cut 29 faculty to its Council of Trustees, ESU President Marcia Welsh will be making her austerity argument on ESU’s campus.

Those of you who care about public higher education near the Mansfield and ESU campuses  just might want to make your voices known today…loud and clear. For the rest of us, back to work trying to stop the austerity madness.

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Note: This is the second article in a series on the incoming PASSHE Chancellor Frank Brogan I am writing for Raging Chicken Press. The first article, “New Chancellor for PA State Universities Comes Complete with Right-WIng Baggage,” focused on Brogan’s times as Florida’s Commissioner of Education and as Lieutenant Governor under Jeb Bush. I’ve included an excerpt below. To read the full piece, click “CONTINUE READING” at the bottom of this post, or go to the full article now

Last month, the Board of Governors of the Pennsylvania State System of Higher Education (PASSHE) lifted the veil of secrecy and announced that they had chosen Frank Brogan to help write the next chapter of the 14 state-owned universities. Brogan comes to PASSHE fresh off his gig as chancellor of Florida’s State University System. PASSHE Board of Governors chair, Guido Pichini, sang the praises of Brogan in a public relations piece released following the announcement:

He has had an impressive record of success throughout his career. He understands the many complexities and challenges facing public higher education and the vital role public universities play both in preparing students for a lifetime of their own success and in ensuring the economic vitality of the state.

However, as I reported in my first article on the in-coming chancellor, Pichini’s words could not be judged on their merit. He and PASSHE’s Board of Governors forced search committee members to sign confidentiality agreements to not disclose any information about the search process – including the names of the candidates. Given that PASSHE and public education in general has been under assault by Governor Tom Corbett’s administration, we at Raging Chicken Press thought we should get up to speed on who this guy is.

My first article in this series focused on Brogan’s background as a right-wing education “reformer,” who served on George W. Bush’s education transition team in 2000 (helping to usher in No Child Left Behind and high-stakes testing); his close ties with anti-union and anti-public education organizations such as the far-right Center for Education Reform;  his time as Florida’s Lieutenant Governor under Jeb Bush in which he pushed for the rapid expansion of vouchers and charter schools; and his advocacy for using high-stakes testing to shut down “failing” public schools.

In this article, we’ll take a look at Brogan’s time as the President of Florida Atlantic University. If you’re looking for some good news, you might want to stop reading now.

CONTINUE READING at Raging Chicken Press

 

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Earlier today I posted this to AAUP’s Academe Blog. Here’s the first few paragraphs. If you want to read the full article, click on the link at the bottom of this post. Or, go to the full article now by clicking here

At my monthly department meeting yesterday, the department’s representative to our University Senate gave his report on their last meeting. As part of his report, he told us some of the concerns our university president, Javier Cevallos, expressed about a recent drop in enrollment. Cevallos’s remarks before our University Senate echoed a statement he released in October 2012 in order to explain another $3 million shortfall:

Budget Shortfall 

This fall semester, Kutztown University is facing a problem of serious magnitude.  For the second straight year, the university has experienced a drop in enrollment.

Almost 300 students have made the decision not to come back to KU to continue their education for this fall semester. While we realize many of our sister institutions and private universities within our region are facing the same situation, the drop we are experiencing this year is much larger than we have had in the past.

Upon learning of this, we immediately identified the students and called them to determine their status and/or reasons for not returning.  Although we are still evaluating the information we have gathered, it is evident that we need to become more effective at retaining our students.

As I stated at our opening day gathering, each student we lose seriously impacts our budget.  With only 20 percent of funding coming from the commonwealth, and with our operating budget based on our year-to-year enrollment, the student body is our lifeblood.

As a result of this enrollment loss, we face a shortfall of $3 million on top of the reductions we have already made.  I have decided to cover this gap with carry over funds on a one time basis to meet the deficit in the current year.  Although this is only a temporary solution, it will provide us with time to thoughtfully consider base budget reductions, beginning next year, in the context of our mission.

I want to stress the importance of our role in student retention. We all need to go above and beyond to assist our students in persisting and graduating from KU.   It is crucial to the future of our university and the region.

I urge you all to put our students first, and do whatever you can to make KU a place they will take great pride in.   It is really going to take each and every one of us to help KU overcome this challenge in the future.

This story of “fiscal crisis” has been the norm at Kutztown University for most of the ten years I have worked here. Cevallos’s latest visit to the University Senate was ostensibly, in part at least, to report the university’s findings after gathering information about the reasons why students did not return to Kutztown University. He reported that most of the students who did not return were from Philadelphia and most of those were African-American and Latino students. Not only has the loss of students impacted KU’s budget, Cevallos expressed concern that the loss of these particular students has also hurt the university’s diversity – which has been a focus of his administration as well as a “performance indicator” that figures into the PA State System of Higher Education’s funding formula. Two key reasons Cevallos offered for the decline in enrollment were 1) the possibility that West Chester University – a sister institution located closer to Philadelphia with train service from the city; and, 2) a drop in the amount of financial aid students were receiving. Funding crisis. Diversity crisis. Sister-university-stealing-our-students-crisis.

Read the full article here

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Last night — actually, VERY early this morning — I was searching to see if there were any videos posted by media or individuals of APSCUF’s protest at the PASSHE Board of Governors meeting yesterday. One of my searches brought up a video interview I did for a project some of my colleagues did a couple years back: Union Stories: Kutztown. I did the interview on October 14, 2010, back when we were still working under our previous contract. Now, more than two years later and 19 months without a contract, the story I told in that interview still holds up…for the most part. After two rounds of deep budget cuts, having to fight like hell to prevent our local administration from gutting programs and faculty, and little promise that we can expect anything different for the near future, I hear the edge in my voice when I tell the short version of the story in the 2010 interview. I have a creeping feeling that I am trying to convince myself of something…or that my narrative no longer matches my experience. That’s hard to write, actually.

Coming across this interview was good timing in one respect at least. I was having a conversation with someone a week or so ago who wanted to know why having a union contract was so important to me. I got asked a version of that same question by a FOX 43 reporter yesterday at the APSCUF protest in Harrisburg: “What’s the big deal with working without a contract?” I’ve had versions of this conversation with scores of people over the 10 years I’ve been at Kutztown University. I can’t even begin to count the number of people that wondered why the hell I was going to take a job at Kutztown when I had other offers with lower teaching loads and, in one case, a significantly higher starting salary and in the city I lived in at the time. I had then and have now several reasons. But, one reason stands out above all the rest. I took the job at Kutztown because of the union, because of APSCUF. If Kutztown did not have a unionized faculty, I would have never taken the job. Period.

I’ve tried to make the case for several years that if our contract continues to erode, if our working conditions deteriorate even more, or if we strip away protections and quasi-equity for temporary faculty, then Kutztown – PASSHE as a whole – will not be able to hire AND KEEP quality faculty. We will go elsewhere. That’s sad and infuriating to me. It’s an injustice to the student body we teach and to the mission of the 14 universities that make up PASSHE. But that’s the game that the Chancellor, the Chair of PASSHE Board of Governors, and PASSHE as a whole is playing. They want to strip away quality and leave in its place a degree factory – a State-owned version of ITT Tech or the University of Phoenix.

When I watch my “Union Stories” video now I am keenly aware of why I chose to come to Kutztown, why I am fighting like hell to protect and secure a good contract for ALL faculty, and why I may ultimately end up having to leave. But the game is not up yet and the fight is not lost yet. So, back to work. Here’s the video:

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I ran the numbers a different way and turns out the news just gets worse. This time, I did the graphic with percentages. APSCUF members are now in the 16th month without a contract. As each month rolls by, our paychecks buy less. What does that look like in the real world? It means a 5.2% pay cut every time we go to the store.

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APSCUF members are now in the 16th month without a contract. As each month rolls by, our paychecks buy less. Like many faculty, I live with the constant worry of a furnace breaking down or an unexpected car repair bill. I hadn’t imagined that 10 years into my tenure at Kutztown, I would still be living paycheck to paycheck.

I wanted to know more about what it means concretely to continue to go without a contract, no cost-of-living increases, no steps. I did some research and put together a little graphic that helps to demonstrate the persistent erosion of our economic conditions. So, here it is: Let’s Go Grocery Shopping!

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