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Higher Education Must Change To Thrive: The Case Of Consolidation In The Pennsylvania State System

The higher education model is broken and colleges all over the United States are working hard to develop models that will encourage increased enrollment, increased student success, and economic efficiency to ensure institutional sustainability.

Recently I wrote about a new initiative undertaken by a group of small liberal arts colleges to share courses and expand their curriculum in a cost effective way. Many state systems of higher education are looking to follow the example set by Georgia beginning in 2013 when it consolidated eight of its 35 institutions into four universities and has continued to reduce the size of its system to its current 26 institutions. We now hear about consolidation proposals in Vermont, Oregon and Connecticut and expect more to follow.

This week I’m writing about the efforts of the Pennsylvania State System of Higher, (PASSHE), a group of 14, four-year regional comprehensive universities which have been losing enrollment since 2010 and since that time have spent an average of $40 M of their reserves annually, which according to an analysis conducted in 2018, will bankrupt the system by 2027. Dan Greenstein, Chancellor of the System, said the State System is “bleeding cash.” As Greenstein looks to the future, he’s focused on reinventing PASSHE to not only be financially viable, but most importantly meet the needs of all students.

“Our goal is simple,” said Greenstein. “It is to ensure that Pennsylvania’s public higher education system sustainably provides affordable, quality, career relevant education to all students irrespective of their zip code; to continue vibrant educational activities that communities depend upon at each of our universities; and to evolve to meet the ever-changing needs of our students and their employers.”

The proposed solution, which the Board of Governors will vote on this July 14-15th, is to reduce the number of schools in the system from 14 to 10 by integrating three of the schools in the West– California, Clarion and Edinboro – and three of the schools in the Northeast– Lock Haven, Mansfield and Bloomsburg – into two new regional universities. The decision on which schools to consolidate was driven by the data and included their geographic proximity, financial health, financial projections and mission alignment. They wanted the integrated schools to be partners rather than hierarchical and they wanted the leaders of the schools that were being integrated to be able to work together. Planning efforts have been supported by Baker Tilly, a leading advisory CPA firm whose higher education practice has worked alongside 400+ clients throughout the U.S.

“The student of today is wildly different than the student of 10 years ago,” said Christine Smith, managing director for Baker Tilly. “While efficiencies and economies will definitely occur, the real opportunity lies in redesigning approaches and leveraging best practices across campuses to truly put evolving student needs first.”

The aspirational goals for this new configuration are centered around driving access and success for students. To help achieve this, by 2026 the system plans to be able to reallocate enrollment and achieve administrative savings of about 20% or $24 M as compared with the current enrollment and expenditure levels at these six institutions. Other aspirational goals include reducing the cost of undergraduate degree attainment by 25% primarily by reducing the time to get the degree, growing enrollment, increasing student body diversity, growing career aligned pathways and more.

These results are predicated on curricular integration among the schools to offer more program choices for students by broadening the curriculum and offering additional options which are responsive to workforce demands which will appeal to students beyond the traditional age as well as streamlining the general education curriculum. This integration will allow the preservation of many small programs which are currently under-enrolled on each of the campuses but can be maintained when shared among all the students in the new universities. In addition, the new entities are expected to offer certificates and stackable credentials.

Beyond the curricular initiatives, much time and effort is being devoted to reducing administrative costs. The new entities will go from having three presidents and three sets of vice presidents to having only one for each new university. Efficiencies also will be realized from shared services which the new entities will enjoy from consolidating financial operations, human resources, and institutional research. These efficiencies will also include integrating IT systems in most areas. Surveys among students, faculty and staff at the six institutions indicated that beyond the areas mentioned above, the Northeast region also identified career services and the West identified the registrar as operations that could be administered centrally. The plan is to reinvest the savings in initiatives to enhance student success such as student interventions, academic advising, tutoring and mentoring programs, which should increase retention and thus further contribute to enrollment gains at the institutions.

Getting here was not easy and began with a comprehensive review of the State System in 2016 which led to a system redesign with three key tenets: ensuring student success; leveraging university strengths, and transforming the governance/leadership structure which has ultimately resulted in this plan.  The key integration criteria ensured the plan was responsive to local economic development needs and had the potential to serve more students and grow into new markets. In developing the two new universities, there were the following seven integration assumptions:

1. One leadership team

2. A single faculty and staff

3. A single program array

4. A unified enrollment management strategy

5. A single, combined budget

6. Maintenance of the six physical campuses

7. One accredited institution with one reporting relationship through the Chancellor to the Board

The process has been labor intensive with more than 250 total working groups and the involvement of all constituencies and thousands of people. Baker Tilly helped to manage the process as well as provide many of the critical analyses around economic impact, degree pathways and online degrees, athletics impact, and more.

The process has been guided by intended outcomes/metrics and looks to have been extremely transparent although this assessment is not shared by some in the system as noted in many of the comments.  Looking at the PASSHE website, one can find all of the key documents, metrics and comments received during the process.

Despite the consultative process in getting to this point, there are still objections to this proposal. In listening to the special Board of Governor’s workshop on June 30th and reading many of the comments which have been posted on the PASSHE website, there are four overall themes to the objections: there are those who do not want change and believe that any financial shortfalls can be solved by having more state resources; there are those who do not want anything to change until everything is specified in great detail; there are those who do not want these changes because some people will lose their jobs; and there are those who oppose the fact that the expansion of curricular opportunities will involve the provision of some courses and programs online. Higher education is continually challenged by the strong forces that oppose change and are unwilling to take the risks that accompany change; we need to overcome this if our industry is to thrive and change is certainly needed for this system if it is to be financially viable moving into the future.

Is this the right solution; does it do enough to provide the best educational opportunities for the students in Pennsylvania? One can start by asking does Pennsylvania need three higher education systems – the Community College system, the state-related system made up of the University of Pittsburgh, Penn State, Temple University and Lincoln University, and PASSHE? Probably not but watching the challenges with making these changes within just one system certainly points to the difficulty with considering much larger changes, although there certainly could be a more rational system with a lower price tag for the state as a whole. Just looking at the PASSHE system, do these changes go far enough? Why isn’t there integration of all back-office functions across all of the schools in the system? Why isn’t there curricular integration in at least some areas across all of the schools? Let’s hope that this is the first step towards increased rationalization of the processes in the system and a broadening of opportunities for students.

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