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Author’s Note: A version of this post was publish on Raging Chicken Press under the title, “Slow Train to Destruction of Public Higher Ed in PA?: Defund then Divide-and-Conquer,” on Saturday, Feb. 22. 

PASSHE Freedom to Secede SQUAREIf the fall 2013 semester saw the term “retrenchment” – the elimination of faculty, programs, and jobs – become part of daily conversations on campuses of Pennsylvania’s state-owned universities (PASSHE), during the next several months we may witness the birth of the next phase in the slow destruction of public higher education in the Commonwealth. This past fall, PA Senator Robert “Tommy” Tomlinson (R – 6th District) and Senator Andy Dinniman (D – 19th District) began working in earnest on legislation that would allow individual PASSHE universities to secede from the state system and become a state-related university – or even completely privatize. On Thursday, PASSHE’s new Chancellor, Frank Brogan, seemed to be laying similar groundwork during his testimony before the PA House Appropriations Committee. And, after three years of austerity policies stemming from Gov. Corbett’s slashing PASSHE’s funding and the System’s “shock doctrine” accounting schemes, there just might be the appetite in the legislature to begin the process of dismantling the 14 university PA State System of Higher Education.

The Tomlinson/Dinniman Alliance: 

Senator Tomlinson is by all accounts taking the initiative in drafting this legislation, but according to sources at WCU, Tomlinson said publicly that Senator Dinniman is so interested in the legislation that he will introduce it if Tomlinson does not. To understand why Senator Tomlinson, a Republican, and Senator Dinniman, a Democrat, would join forces in supporting legislation that would allow individual PASSHE universities to secede, you need only understand that both Senators have strong ties with West Chester University and that West Chester University is growing and thriving. Tomlinson serves on West Chester University’s Council of Trustees and is a WCU alumnus. Dinniman spent well over three decades as a professor at West Chester. Both Senators represent districts in which the university has a strong presence. West Chester University is the second largest PASSHE university, right behind Indiana University of Pennsylvania and is on pace to become the largest in the system in the near future.

In the late fall, West Chester University’s president, Greg Weisenstein, began holding meetings with small groups of “campus leaders” to make his case for why he thinks secession legislation is a good idea. The meetings continued at the beginning of the spring 2014 semester and the same pitch is expected to take place at WCU’s next faculty senate meeting on March 7th. According to  sources at West Chester University, the university’s Council of Trustees has asked President Weisenstein to put together proposals concerning the viability of the university breaking ties with PASSHE.  The rationale for breaking ties with PASSHE echoes attempts by Governor Corbett and the PA Republican leadership to privatize the Wine and Spirits stores, sell off the lottery, and take the first step to break public unions through Paycheck Deception legislation: it’s an argument about “burdensome regulations” and the “lack of flexibility,” especially in terms of the faculty union’s contract.

Senator Tomlinson Response

At this point, Tomlinson and Dinniman are keeping details of their draft legislation close to their chests. Over the past week and a half, I have made repeated attempts to reach Senator Tomlinson and Senator Dinniman, but they have not replied to my inquiries – unless you count the automated response from Senator Tomlinson’s office. Repeated emails to West Chester’s public relations department asking for comment on the draft legislation has been met with similar silence. Despite their refusals to respond to my inquiries, sources at West Chester and in Harrisburg have helped piece together an outline of Tomlinson’s draft legislation.

Outline of PASSHE Secession Legislation

According to sources at West Chester and in Harrisburg, the version of PASSHE secession legislation that is being shopped around includes the following:

  • Applies to PASSHE universities with 7,000 or more students
  • A university that chooses to secede would become a state-related university (presumably a part of the Commonwealth System of Higher Education – the system that includes Penn State, Temple, Pitt, and Lincoln)
  • A PASSHE university that desires to secede would have to present a business plan showing that the university would be viable as a state-related university
  • A PASSHE university that secedes would have to pay the state back for real estate and buildings; they would have 30 years to do so.
  • There are no provisions for faculty continuing their current relationship with the Association of Pennsylvania State College and University Faculties (APSCUF) or any other union. Faculty would have to conduct a new union drive IF they decided that was a direction they wanted to go.

And while Tomlinson and Dinniman have refused to respond to inquiries about their legislation, cracks in their silence are beginning to emerge.

On Friday evening, Senator Dinniman issued a press release, “Dinniman Wants to Give WCU, Other State Schools, Freedom to Succeed,” making public his alliance with Tomlinson on PASSHE secession legislation (and you’ve got to love his use of “succeed” instead of “secede” to frame the message):

Dinniman, a former West Chester University professor, also raised concerns about universities being bogged down by the system’s “centralized bureaucracy.”

Senator Robert Tomlinson, Vice Chair of the Senate Appropriations Committee, said universities need the freedom to work independently to meet their financial needs and those of potential students in their regions. He pointed out that some PASSHE universities have been forced to wait two to three years to update curriculum or institute popular new programs.

“What can we do to help schools meet these challenges, either by right-sizing or by giving schools, such as West Chester University, that are in demand the freedom to pursue these changes?,” asked Tomlinson, a West Chester University alumnus and current member of the West Chester University Council of Trustees.

“It is no secret that I have been working on some legislation to free up some of these things,” he added.

Dinniman has been working hand-in-hand with Tomlinson on such legislation, which would greatly benefit West Chester University.

That closing sentence points to the motivation for this legislation and the beginning of an open divide-and-conquer strategy for dismantling public higher education in Pennsylvania.

“I can hire one half of the working class to kill the other half”

That statement, attributed to Jay Gould, the American financier and robber baron, has long stood as one of the most brazen statement of “divide-and-conquer” in American history. It was not long ago that Gould’s statement was a reminder of what things used to be like. You know, way back in the 1880s. But the days of the robber barons are back – and they are pursuing the same divide-and-conquer strategy with much more sophisticated tools.

The overt violence of the 1880s has been replaced by billionaire funded organizations such as the American Legislative Exchange Council (ALEC), Americans for Prosperity, Crossroads GPS, Students First, and FreedomWorks just to name a few. These organizations are united in their relatively innocuous names, their desire to privatize everything, their hatred of unions, and their seemingly endless supply of money. And if Jay Gould has become history’s symbol of the robber baron, today’s icons are the Koch Brothers. The Koch Brothers helped bankroll the assaults on working people and public sector unions in Wisconsin, Indiana, Ohio, Michigan, and Florida, but they have been relatively quiet in Pennsylvania. Until now, that is.

During the December/January legislative recess the Koch brothers brought their road show to Pennsylvania. While Pennsylvania Republicans are not seeking out the spotlight to discuss what the Kochs had to say, privately they are saying that the Kochs are promising boat loads of cash for the 2014 elections if they get behind several pieces of anti-union legislation. And if state Republicans want to say “no thanks” to the Kochs…well, the Kochs are threatening to fund primary challenges to those who won’t play ball.

So, is the point that Tomlinson and Dinniman’s legislation is a Koch funded “model bill?” No. I have no evidence that would suggest that. But to separate their proposal from our current context in which we are seeing the systematic dismantling and defunding of all things public, will ensure the slow death of affordable, high-quality higher education in Pennsylvania.

I’ve Got Mine, Screw the Rest of You

The success of Tomlinson and Dinniman’s proposal to allow individual PASSHE universities to secede hinges on getting faculty, staff, and administrators at a select number of state-owned universities to focus on their perceived immediate self-interest and disavow their commitment to the broader mission of PASSHE. The mission of PASSHE is spelled out in ACT 188, which established the State System of Higher Education:

The State System of Higher Education shall be part of the Commonwealth’s system of higher education. Its purpose shall be to provide high quality education at the lowest possible cost to students.

The importance of Act 188 for Pennsylvania citizens is that by law PASSHE is charged to make high quality education accessible for most if not all Pennsylvanians. That is not the case when it comes to “state-related” universities of Lincoln, Penn State, Pitt, and Temple. These universities are “state-related” only insofar as they receive financial appropriations from the State in exchange for providing tuition discounts for students from Pennsylvania – essentially a tax-payer funded coupon. Each of the state-related universities is, however, a separate and private entity.  So, for example, tuition at Penn State (not including housing, fees, or other costs) is just over $16,000/per year  for PA residents (for the first two years, then it goes up to $18,000+).  Out-of-state residents pay $28,000+/year.

Tuition at PASSHE universities is $6,622/academic year for Pennsylvania residents. While state-dollars go to Penn State to discount tuition for PA residents by $12,000, whether or not a student and their family find $16,000 to be “affordable” is a different kind of question. The fact is, accessibility is not the mission of the state-related universities. Their mission does not ensure working class and poor students access to higher education. By contrast, PASSHE’s mission echoes Article III, Section 14 of Pennsylvania’s constitution:

The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth.

PASSHE Funding 30 YearsThere is no question that Pennsylvania legislators have been abdicating their responsibilities to adequately fund PASSHE universities for year. Both Republicans and Democrats have slowly bled PASSHE dry since the 198os and shifted more and more of the burden onto the back of students and their families. That is not, for sure, a trend confined to Pennsylvania. It’s been a slow walk-away from a commitment to public higher education.

The defunding of public higher education has corresponded to a growing disdain for the work of educating the next generation. Over roughly the same period of time, we have seen a flip-flop in the percentage of higher education faculty who have tenure/tenure-track jobs versus those who work on a part-time and/or contingent basis.   According to the American Association of University Professionals (AAUP),

 In 1975, only 30.2 percent of faculty were employed part-time; by 2005, according to data compiled by the AAUP from the Integrated Postsecondary Education Data System (IPEDS), part-time faculty represented approximately 48 percent of all faculty members in the United States.

When you include the shift away from tenure-track appointment to contingent or short-term appointments, nearly 75% of today’s faculty are working in part-time or contingent positions. Such a shift would not have been possible, were it not for the increasing tendency to portray professors as lazy, greedy, unethical, radicals…you know the drill. And that development has its own sordid history that Glenn Richardson wrote about a year ago in Raging Chicken Press. If you can get the public to demand education but hate the educator, then you’ve got yourself a recipe for turning education into an assembly line.

One response to all these developments is to organize, ban together, and demand full funding of public higher education and to hold our elected official accountable for trying to sell out our future for their short-term gain.

Another response is for faculty and university officials to look for a way to make sure they get theirs and be damned with the whole commitment to public higher education. There is a long history of more privileged faculty members willing sell out the next generation of academics as long as they get to keep their privileged positions. Just recall, for a moment, that during a graduate student union drive at Yale University in the 1990s, many faculty members – even “progressive” or “radical” faculty members – often worked to suppress the organizing efforts. In a 1996 interview, Cynthia Young, one of the graduate student organizers, recalled the response from many faculty this way:

There’s this paternal talk about how we’re going to be the best and the brightest. But the graduate student strike and everything leading up to it showed that we are thought of as an expendable labor force, convenient to have but not worth compensating adequately.

And when push came to shove, Yale faculty and administration were quite prepared to trash people’s careers over this. Graduate students’ faculty advisors warned them they wouldn’t get letters of recommendation, meaning they’d never get jobs.

One of the big arguments was: You’re not workers, you’re going to be “professionals.” Yet when we went on strike they were very willing to collapse those categories — not just take away your wages but threaten to refuse recommendations, even to expel you. That’s the biggest lesson for me from the strike.

The fact is, the cushy life of many of the “best and the brightest” faculty at Yale – just like every college and university in the U.S. – is built on the back of temporary, contingent faculty – that is,  low-wage academic workers.

If Tomlinson and Dinniman are successful, the stage will be set for an “I’ve got mine” free-for-all, in which those PASSHE universities that have so far avoided the budget-crises seen at so many of their sister institutions seek to get out while the gettin’s good.

West Chester University’s President already seems to be thinking along these lines. According to sources at the university, part of President Weisenstein’s argument for supporting secession legislation is that if the current trend of “flat-funding” of PASSHE continues – which seems likely – West Chester will deplete its reserves in about 3 years. Add that to the perception that there is too much “red tape” being part of PASSHE and that full professors at West Chester are barely making what public school teachers in the district are making, secession can seem like a way out. And it’s a convenient way out of a union contract too.

And the Adjuncts Come Marching In

If PASSHE secession legislation passes and West Chester or any other PASSHE university is successful in seceding, be prepared for the flood of ads for minimum-wage style teaching jobs to flood local newspapers. During the last contract negotiations between the faculty union, APSCUF, and the PASSHE administration, management showed their cards early on – they wanted to turn a large percentage of the faculty into part-time, low-paid workers. APSCUF’s contract sets a 25% cap on the number of “temporary” faculty – in other words, the faculty union’s contract is the only thing that ensured that the overwhelming majority of faculty are tenure-track or tenured. If you can find a way to get rid of that provision in the contract – or the contract altogether – then you can send the tenured and tenure-track faculty out to the football stadium and have them compete in Hunger Games’ style for a handful of full-time, permanent positions.

But, even more importantly for those who would like to dismantle PASSHE altogether, as the number of “financially sound” universities leave PASSHE, the remaining universities will be weakened by retrenchment, declining enrollment, and bad publicity. That will increase the power of management to impose whatever draconian measures they wish in future contract negotiatons and will provide state legislators with powerful ammunition to dismantle the state-system altogether.

So, while Tomlinson and Dinniman (and their allies in Harrisburg and PASSHE) may not be intending to destroy PASSHE and they may have little love for their Koch Brothers’ funded colleagues, they are playing their part in the slow train of destruction of public higher education in the state.

And don’t think the Koch Brothers and their allies aren’t watching with anticipation.

The Chancellor’s Hand

During the PASSHE House Appropriations Committee hearings on Thursday, the state system’s new chancellor, Frank Brogan, got his first crack at making a case for adequate funding. And while few would contest that he was smooth as silk and that he’s a good politician, his testimony should concern supporters of vibrant and accessible public higher education. It may be too soon to tell if Brogan would support the kind of legislation Tomlinson and Dinniman are drafting, but his testimony sounds like he’s had his share of lunches with the two Senators. Here’s how his testimony was reported in Capitolwire:

He [Brogan] said from an outsider, and now an insider, perspective, “although I don’t pride myself as a grenade launcher, this probably would be a good time for Pennsylvania to begin a broader look at how we are organized as a state as far as how all things higher education are concerned.

“We’re competing with ourselves, in the PASSHE system, in many ways; we are competing with the state-relateds, who not only have their obvious main campuses, but a large number of branch campuses around the Commonwealth of Pennsylvania which are clearly competing with PASSHE schools and serving students that many times – and allow me that generalization, you shouldn’t say ‘always’ and ‘never’ – are going to, say, the Penn State campus instead of the PASSHE school which is right down the road and acquiring a high-quality education there. Throw in the private institutions and the for-profit institutions and it gets very, very difficult to figure out, as they used to say in the movies, ‘who’s on first.’”

Rep. Jake Wheatley, D-Allegheny, whose questions prompted Brogan’s comments, himself expressed similar concerns about the current system.

“We have this hodgepodge, in my estimation, system of educating, or providing education: we have state-related [universities], and we have the state system, and then we have these independent colleges and community colleges.”

And it’s that system, said Brogan during PASSHE’s afternoon budget hearing before the Senate Appropriations Committee, that’s contributing to the demographics problems experienced by PASSHE’s schools, 12 of which saw their enrollments decline last year.

“Trying to treat all of those [schools] with a one-size-fits-all approach is impossible and unsustainable, that is both from a system side and state side,” said Brogan, to which he got an “amen,” from Senate Education Committee Minority Chairman Andy Dinniman, D-Chester, who asked about the growing demographic concerns, as well as the state funding situation.

The State Senate will return to session on March 10th. It is unclear whether Tomlinson and/or Dinniman will have legislation ready to introduce. We will be watching this story closely and we hope to have more details in the coming weeks.

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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: On Monday of this week I posted an article about plans to cut 40 jobs, including 22 faculty members at Clarion University of Pennsylvania. Earlier today, I posted another article on the situation at Clarion on Raging Chicken Press. This article features an interview with the President of the Clarion chapter of the faculty union, APSCUF. An excerpt is posted here. You can continue reading the entire article by clicking the link at the bottom or go there now

In the wake of the devastating cuts proposed by the Clarion University administration and President Karen Whitney, it took a few days for faculty, staff, and students to shake off the initial shock and disbelief. Shock and disbelief has given way to a mobilization effort to save the three programs slated for immediate cuts and to prevent the firing of 22 faculty and 20 staff members. On August 15th, shortly after students learned of the cuts, a “Save the Clarion Department of Music” facebook page was created by students to “join music education and music business students past and present, and all who participated in performing organizations at Clarion University, so together, we can unite to Save the Department of Music.” Shortly afterwards, Clarion University alum, Jed Millard, started an on-line petition to urge Whitney to put a halt to the cuts. As of this posting, the petition already has 2,021 signatures.

Faces of Retrenchment Day 1 - Leah ChambersYesterday, faculty launched a “Faces of Retrenchment” campaign, as a way to highlight the fact that President Whitney’s “bold, ambitious workforce plan” has direct, material consequences for real people with real families. Many of the 22 faculty slated to lose their jobs have been at Clarion for years – some for decades. In the next several days and weeks, Clarion University’s campus will be bustling with activity and not just from the annual arrival of thousands of students on “Move-In Day.” Clarion University will be bustling with the sounds of organizing.

What the Hell?

If Clarion President Whitney’s slash-and-burn workforce plan shows a disdain for the academic mission of the university, the process by which this plan became known to the university community is down-right sickening. I wanted to know more about how people first learned about Clarion’s new workforce plan, so I called Beth MacDaniel, Chair of the English Department and President of Clarion’s chapter of the faculty union, APSCUF. What MacDaniel told me should set off alarm bells for anyone who gives half a damn about shared governance and democratic process.

When I asked MacDaniel if Clarion’s administration had given any indication that such drastic cuts were on their way, MacDaniel said:

Absolutely none. In fact, a couple of weeks ago we were at State APSCUF for a State meet and discuss [regular meetings between leaders of APSCUF and PASSHE administration in Harrisburg]. They didn’t give us a single clue that it was going to be anything like this. It was…it was…it blew my mind.

MacDaniel did not learn of the university’s “bold, ambitions workforce plan,” until the morning of August 15th when she and leaders from all the other unions on campus were called to special meetings with the university President and Provost ahead of a previously scheduled meeting.

The president has what she calls “university governance meetings,” where she meets with the leaders of different unions on campus. That was set for 1 o’clock this past Thursday. She was told that contractually she ought to meet with the leaders of each of the unions prior to that so they could see specifically what was happening with their bargaining unit members. And so, at 9 o’clock in the morning I met with the President, the Provost, the HR guy, and the financial guy. I had asked two other APSCUF leaders to go with me…I figured it wasn’t good for me to go by myself.

We were given copies of the workforce plan – that’s the first we saw of it. And then we were asked if we had questions.

We [APSCUF] went at 9, AFSCME went at 10, and SCUPA went at 11. At 1 o’clock in the afternoon, all of us met together with the President and Provost at the meeting that had already been set up. People who hadn’t received the workforce plan were given copies of it and then they asked for questions. People were pretty much still in a state of shock.

If you have not checked out the actual workforce plan yet, you should. It’s a 32-page document filled with charts and graphs and a fair share of inconsistencies. And, there is some rather oddly placed happy talk. For example, on page 5  just before the plan calls for the elimination of Academic Enrichment – the department that runs academic support for students who may need tutoring or mentoring – it says, “the plan is intentionally broad and shapes the workforce across all areas of the university in order to ensure the unique culture of learning at Clarion where we believe in the potential of every student, and strive to help our students achieve their academic and career goals.” Really? Really!?!?!?!?

Or, how about this gem on page 12. The administration identifies the BS in Music Entrepreneurship as a potential growth area. Clarion does not have a BS degree in Music Entrepreneurship and the “proposed program” has not made its way through the university’s curriculum bodies. That’s a BS degree for sure, just not one you can get a job with – especially given that the plan calls for cutting actually existing music classes.

“They couldn’t have come up with this overnight,” says MacDaniel. That’s not to say that the administration had not expressed concerns about “budget shortfalls.”  It was no mystery that Clarion, like most of the other 14 universities in the PA State System of Higher Education, was hit hard by deep cuts in State funding thanks to a Governor and right-wing Republican dominated state legislature seemingly hell-bent on destroying public education from kindergarten through higher ed. In an upcoming article on Raging Chicken Press, I will report on some of the root causes of PASSHE’s “budget crisis” that raise troubling questions about how seriously the Board of Governors, University Trustees, and university presidents are taking their fiduciary responsibilities. MacDaniel and other members of the union’s local meet and discuss team had been trying to have frank conversations about the President’s plans for dealing with a projected $8 million budget deficit.

Well, I think that this President and Provost have a particular idea, a vision of what they think the university should be. We kept asking at local meet and discuss, “what’s your vision. What’s your vision.” And all they did was parrot back the vision and mission statements of the university posted on the web page. They had to have had an idea all along…for several months at least…about how extensive they wanted this to be. And they didn’t give us a clue. They kept on saying, “we don’t know the numbers, we don’t know, we don’t know, we don’t know. Clearly they knew.

And it seems President Whitney was committed to keeping anyone outside of her inner circle in the dark. In an August 8 prepared statement, Clarion Provost Ronald Nowaczyk delivered the smoke-and-mirrors:

The university is still reviewing any cuts in personnel or related actions, and no decisions have been made.  President Karen Whitney confirmed the changes that will be made will not impact students who attend Clarion this fall.

While the university’s prepared statement indicated that the Provost had “met with state APSCUF leadership, along with the associate vice president for finance and administration and members of the chancellor’s Office of Labor Relations, to discuss the status of the university’s workforce plans, as required by the collective bargaining unit,” no one in that room on the faculty side left that meeting with any indication that Clarion was about to drop a bomb.

When asked whether he had any indication that Clarion was about to see a 10% cut in its faculty and over 40 jobs lost, APSCUF Vice President, Ken Mash said no way. “We were really blindsided,” he said. “We were not sure that they were going to have to retrench at all. Nobody saw 22 coming. It’s not like we’re stupid. They were at meet and discuss and they did not give any indication that they were looking at anything quite like this.”

Give credit where credit is due, however. Clarion’s president was not hiding the fact that she had no interest in hearing from faculty, staff, or students as she was preparing her “bold, ambitious workforce plan.” The administration was pretty clear in that August 8 prepared statement that it was going to issue changes by decree:

Leaders of the various employee bargaining units have not been involved in the process, but Nowaczyk said they are being advised on the status of the process via regular meetings with the president.

Presumably, “advising” means parroting back the vision and mission statements from the university’s web page.

Read the entire story on Raging Chicken Press

Hear Beth MacDaniel, Clarion-APSCUF President on the Rick Smith Show

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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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APSCUF President Steve Hicks issued a letter to students on Wednesday: NO STRIKE this semester. Here is the full text of the letter:

Faculty know you are worried that your professors will go on strike. We know you are concerned about the impact a strike would have on your classes, your finals, and your tuition dollars. After thoughtful deliberation and consideration about how a strike at this time would affect our students, we have decided to postpone consideration of a strike for the rest of this semester.

APSCUF (Association of Pennsylvania State College and University Faculties) and PASSHE (Pennsylvania State System of Higher Education) leaders have negotiations sessions scheduled for December. However, there is still a gulf between your faculty and the Chancellor. He still wants a separate pay scale for some temporary faculty.

He is still proposing increases in payments for reduced health care benefits. He wants to cut our retirement health care and stop offering those benefits to new faculty. He wants to stop payments for distance  education, but has not addressed our concerns about growing class sizes. The Chancellor continues to demand more concessions from your faculty than the Governor asked from our campuses’ hardworking secretaries, groundskeepers and custodians. These negotiations remain about simple fairness.

All of the outstanding issues have a direct effect on the quality of education we provide, as all will impact who is in the classroom and the type of classes that are offered. We know that you understand that the conditions under which faculty work are the conditions under which you learn. We know that you want your university to continue to attract and retain the quality faculty you deserve.

We have done our best to try to avoid a strike. We waited over a year and a half before even uttering the word. We gave the Chancellor several opportunities to settle a fair contract, including a two-year extension proposal and the offer of binding arbitration. We offered to pay more for health care and suggested ways for Chancellor to save hundreds of thousands of dollars in health care costs. He rejected them all.

We do not want to go on strike. We want to educate our students. However, the core meaning of “union” is one, and we cannot accept the Chancellor’s unsubtle attempts to divide and exploit segments of our faculty union.

The interests of our students are always on our minds. It is why we have waited and hoped that with time we could convince the Chancellor to be fair. With higher education comes the understanding that there are times when people must stand up for themselves. If the only way we can convince the Chancellor to be fair is to go on strike, then we must stand up for ourselves. It is what we would expect of you in the pursuit of fairness. But know that your faculty will only strike as a last resort. You can count on us to continue do all we can to reach a fair agreement.

The last two years, faculty and students worked together to turn back Governor Corbett’s historic budget cuts for our universities. We held rallies and met with legislators who know the value of public higher education. We have stood together for quality education. We can now use your help to avert a strike.

Please write to the Chancellor at jcavanaugh@passhe.edu and tell him to settle a fair contract with the faculty. You do not have to argue our side. Just tell him to be fair. The more he hears from you, the more likely he is to change the proposals even he knows APSCUF cannot in wisdom accept. We appreciate your support.

Steve Hicks
APSCUF president

 


Text APSCUF to 68398 for up-to-date info about negotiations. Like the Facebook page http://www.facebook.com/PAStudentsVoiceand follow it all on Twitter at @PAStudentsVoice.

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