Other than the growing funding needs, the issues confronting Pennsylvania’s state-owned universities since its current head took over haven’t changed significantly.
But now Chancellor Frank Brogan is more than two years into the job, and pension and healthcare benefit costs continue to grow, and state funding of the 14-university system continues to lag behind the needs of the Pennsylvania State System of Higher Education (PASSHE).
Gov. Tom Corbett’s budgets level-funded PASSHE, and while legislators and Gov. Tom Wolf ultimately agreed to give the system a 5-percent increase in funding for the current fiscal year, that funding hike fell victim to the collapse of the framework agreement prior to Christmas and Wolf’s blue pen on Dec. 29. As part of his FY2016-17 budget proposal, Wolf expects a supplemental appropriation for that 5-percent increase as well as an additional $21.7 million in new funding for PASSHE.
Brogan told the House Appropriations Committee the $20.6 million that 5-percent increase represented wouldn’t have been enough, along with the system’s 3.5-percent tuition hike, to cover the system’s projected increase in costs for the current year.
The FY2015-16 money would have been nice to have anyway, said Brogan, and now the system and its universities have had to find other ways to fill this year’s $32 million hole (it grew by about $12 million due to pension costs growing by a larger amount than first projected). For the coming fiscal year, the system needs approximately $41 million just to keep up with its growing costs, Brogan said.
“We know there are only three ways to make that deficit up … you can increase tuition and/or you can receive more money in the state appropriation and/or/or you can cut your budget, proportionally, depending on how the first two are handled,” said Brogan. He told House lawmakers the system has cut $300 million and 900 employees during the last 10 years.
The system’s pension costs are expected to level off soon, but the same can’t be said for PASSHE’s growing health care costs.
Brogan said the system’s health care benefits are the best he’s ever seen, and the biggest problem with them is they are the best he’s ever seen.
“It is very, very expensive and it continues to go up,” said Brogan of the cost of the health insurance plan.
“We don’t want to throw the baby out with the bathwater – we’d like to keep it – but we’re going to need, over time – and we’ve begun to do that – to make adjustments to the participation rates in a number of the areas: copays, deductibles and those kind of things,” he said.
“The option we’ve begun to exercise thus far is to look at the contribution rate of employees, and recognize that it is virtually impossible to continue to support it as is,” Brogan told senators. “Keep the great program we have, just adjust the contribution rates, and we’ve just done that with all of our non-represented [non-union] employees as well as those members of unions considered to be ‘me too’ unions on the issue of health care.”
He said negotiations are ongoing with the state system’s faculty union – the Association of State College and University Faculties (APSCUF) – regarding health care since they are a different bargaining unit from the unions that have already had their contribution rate adjusted.
As for other costs and the continuing concern about enrollment, Brogan sounds a lot like he did when participated in his first budget hearing in 2014, after taking his current position in the fall of 2013.
At that time he told lawmakers the system needed to re-examine itself and rethink its model, even suggesting Pennsylvania’s entire higher education model – including PASSHE, the state-related universities and the state’s community colleges – would appear to be ripe for remodeling.
He told the state Senate Appropriations Committee the same thing on Wednesday afternoon, and during both his budget hearings Wednesday he said PASSHE has to evolve with the higher education market if it intends to survive.
Enrollment continues to be a problem for PASSHE, with an approximately 2 percent decline systemwide during the past year. A few schools, such as West Chester University and Indiana University of Pennsylvania, have seen continued improvement. Cheyney University and Mansfield University, while they aren’t projected to see a decline in the coming year, have experienced some of the worst enrollment issues, although Brogan said much of the PASSHE schools have experienced declines.
And that’s something difficult to combat because of demographics, Brogan said.
He there are “simply less students coming out of Pennsylvania high schools … there are just less high school student today than there were 10 years ago,” adding there are less students coming out of the high schools within the regions served by the PASSHE schools.
He said while those markets have changed dramatically, the demographics are expected to start improving soon, although he cautioned it will take years for those demographics to rebound.
“It will not be an overnight fix,” said Brogan.
But even without the demographic issue, “markets are changing in general in higher education,” Brogan told lawmakers, and that requires PASSHE “to do whatever we have to do to remain relevant.”
Pilot projects he envisioned back in 2014 that permit some universities to charge different tuition rates based on program costs, or in the case of Millersville University, per instructional credit wanted by the student, have, at the very least, had no negative impact on the schools after about one year of operation.
Brogan also said an evaluation of the academic programs offered by each of the 14 universities continues, with plans to eliminate redundancies.
“We are looking not only at what each of our universities by way of academic program array – and we’re not only looking for those new program ideas – but which of the programs can no longer survive the market,” said Brogan about programs that would be put in “moratorium,” which is essentially on hold until such time that they are again in enough demand by the student market and the employer market to warrant their resumption.
“We also look at reorganizing existing programs,” Brogan said. “Because we keep a program doesn’t mean it exactly lines up with what students have to take away for the 21st Century.”
He said they are doing all of that “with more scrutiny than ever before, not only at the institution level, but also at the system level, to look for … inefficient redundancies.” Brogan noted there can be some redundancy, due to necessity or geography.
However, first and foremost, PASSHE is trying to ensure its college degrees translate into the jobs that will be needed by Pennsylvania and its employers going forward, said Brogan, noting incorporating internships into academic programs could be one way to accomplish that. He said right now more than 80 percent of PASSHE graduates have jobs in their field of study.
He also said PASSHE is trying to partner some of its universities – such as Cheyney and West Chester – to achieve efficiencies on other operations, such as purchasing, payroll and human resources.
But things aren’t moving quickly enough to keep up with the problems confronting the system.
“The world has changed and we have to change with it, and we need to untie your hands and the hands of these [PASSHE university] presidents to be able to change with the market and what the consumers want,” said Sen. Rich Alloway, R-Franklin, who is a member of the PASSHE Board of Governors, noting APSCUF fought the Millersville per-credit program.
“We’re trying to make the system strong so that it can serve everybody, and yet we get pushed back and fought at every turn, every turn,” continued Alloway.
And responding to the concerns constantly raised about the potential for lost university jobs with changing university program offerings, Alloway said, “Tough crap.”
Reacting to Alloway’s statement, Brogan said: “As we take this new look at the system, everything has to be on the table. If we start this process by first determining what are the sacred cows, what are the traditions that cannot be changed, what are the rules and regulations that keep us from making changes that have to be preserved moving forward, you still won’t be able to change a damn light bulb in this system without asking somebody’s special permission to do so.”
“I am convinced we have to unshackle these individuals [referencing the university presidents], we’ve gotta let them organize their universities in a way to serve their student population and free them up of many of the obligations that they have been bound to for 40 years that are not only not taking us forward anymore, but they are holding us back, and in some cases driving us down,” added Brogan. “Everything has got to be on the table, or this will be an exercise in complete futility.”
A few senators suggested it might be time to think about reducing the number of PASSHE schools in order to avoid the potential of a few taking down the rest of the system. Brogan acknowledged during the budget hearings the overall system is currently supporting one failing institution, Cheyney University. However Cheyney isn’t the only school with enrollment and other issues, and if things don’t change, several other PASSHE institutions already on the margins could join Cheyney, said Brogan.
And while he didn’t say merging some of the PASSHE schools was a potential policy to be pursued, Brogan suggested the state of Georgia has decided to go that route to preserve its extensive state system of colleges, merging two schools every 18 months.
“Not just for the survival, but for the flourishing of our universities, we’ve got to engage in those sorts of conversations, and everything has to be on the table to do that,” he said.
Brogan said the changes won’t come without some unintended emotional and political pain, but someone – and he urged legislators to help PASSHE – needs to stand in support of whatever “is in the best interest of the system, and ultimately the students served by that system.”
“We’ve gotta put that emotionalism and those politics aside and do what’s right,” said Brogan. “We’ve all gotta be singing off that page.”