State universities look to cut costs through retrenchment

Faced with declining enrollments, Dan Greenstein, Chancellor of the state system of high education, has been encouraging schools in the system since the beginning of the year to find ways to achieve sustainability through retrenchment, which is essentially the reduction of costs or spending to alleviate a financial problem.

As part of the retrenchment process two local universities, Lock Haven and Mansfield are both faced with staff reductions by the end of this fiscal year.

“A letter of intent for retrenchment was issued in May, which is accordance with the APSCUF (Association of Pennsylvania and State College and University Faculties) collective bargaining agreement and serves as notice that retrenchment is under consideration due to fiscal exigency,” said Lock Haven University President Robert Pignatello.

He noted that individual letters have to be sent by Oct. 30 notifying staff that their employment if being terminated by June 30, 2021.

According to Pignatello, the majority of universities, including Lock Haven, “are dealing with the consequences of extended enrollment loss, need for additional state support, increasing labor and other costs while trying to keep a degree affordable and accessible.”

“Most of the costs are represented through by what we spend of personnel. It is the nature of higher education,” he added.

Pignatello detailed some of the ways Lock Haven is looking at costs both instructional and non-instructional.

“We have already enacted efficiency measures to reduce administrative costs and will do more of that too,” Pignatello said. “We are seeking ways to collaborate with other universities in PASSHE to share and combine services and take advantage of economies of scale,” he said.

These measures include reducing discretionary budgets and spending, participating in system-wide shared services and possible outsourcing of services, hiring pauses and suspensions and collaborating with other universities in the system on academic program offerings.

Of Lock Haven’s budget for fiscal year 2019-20 of over $69 million, salaries, wages and benefits account for almost $57 million. The total enrollment for that year, at the university of full-time equivalent students was 3,068 and the number of employees, including 219 faculty members, was 486, according to PASSHE budget figures.

Part of the Chancellor’s directive is that the universities reduce the student faculty ratio to 2020-11rates.

“The student to faculty ratio was 19.2 in 2010-11 when we had 5,400 students,” Pignatello said. “Today with about 3,000 (students) the ratio is 14. This demonstrates that we employ more faculty than needed for the enrollment we now have.”

“Very small class sizes that are just not justifiable have resulted from that. The misalignment between revenues and expenses creates financial deficits and gaps that must be closed,” he stressed.

Pignatello noted that even with the pandemic enrollment at Lock Haven had stabilized.

“We have excellent faculty and excellent programs. But, these programs need to be more efficiently staffed and some may need to be discontinue or modified to meet changing demands and employment trends…Spending must be reduced across all of our cost centers to do so,” he said.

Prior to the pandemic, a directive from Greenstein had initially ordered plans be in place in five years, but due to the health crisis, that timeline has been accelerated to three years.

Guidelines that had been issued in February included curtailing use of temporary faculty, elimination and consolidation of low-enrolled program, restricting hiring emphasizing role elimination and consolidation, which would include cross-campus consolidation.

Mansfield University also was one of the ten PASSHE schools to submit letters of retrenchment as part of the collective bargaining agreement.

“That allows us to formally engage in meaningful discussions about how we meet financial sustainability and also to discuss alternatives to possible retrenchment,” stated Ryan McNamara, director of communications and marketing at the university.

McNamara noted that the retrenchment process is not specific to the integrations that PASSHE is proposing where two universities would be integrated in order to share resources. One proposal has Lock Haven and Mansfield universities integrating.

“We’ve submitted the letter and discussions are ongoing,” he said, adding that in terms of faculty furloughs, “there has been no determination if we’ll need to do that or how many.”

He said that Mansfield had submitted letters of retrenchment in the past and that the university has not needed to follow through with the process.

“Just because we submit the letter doesn’t necessarily mean that those actions will need to take place,” he said.

McNamara stated that Mansfield feels that the best way to meet PASSHE’s goal of student to faculty ratios at the rates a decade ago is to grow enrollment. He added that Mansfield has seen an increase in enrollment.

“We’ve done that the past three semesters. That continues to be the plan to reduce financial distress,” he said.

Initially Greenstein had directed universities to achieve cost savings in five years but citing the impact of the pandemic, that timeline was shortened to three years.

“Student now and tomorrow depend on both quality education at a State System university as well as an affordable one. That’s our responsibility to the Commonwealth,” said Dave Pidgeon, director of public relations at PASSHE.

“We’ve been on a pathway toward meaningful reform, including taking a hard but necessary look at financial sustainability for our institutions,” he continued.

“We’re challenging the status quo, holding ourselves accountable, and striving to adapt to the higher education landscape as it is, not how we wish it to be, because students and communities where our universities have existed for more than a century are depending on us,” Pidgeon said.

Jamie Martin, president of APSCUF which represents the state universities’ 5,000 faculty members, questioned why PASSHE is urging the return to 2010-11 faculty student ratios by fiscal year 2021-22.

“That was when we had the highest moment in the state system’s history,” she said.

She estimated that at that time there were just under 119,000 students at state-run schools. Enrollment figures for the last fiscal year show under 85,000 students enrolled.

“So the student faculty rate at that point, given the number of faculty we had was pretty high,” Martin said.

Martin herself was in the classroom at Indiana of University of Pennsylvania during that time.

“It was not a good time. Class sizes were huge. I taught a class with 125 freshmen in the class, so the notion that ratio was a panacea is just not true,” she asserted.

Enrollments had actually grown between 2000 and 2010, but since then they have dropped driven largely in part because of the changing demographics of high schools, which Martin said was expected.

She said that it’s not clear to what extent the integration plans with Lock Haven and Mansfield, Clarion and California and Slippery Rock and Edinboro are beginning to play a role in retrenchment.

“I know from conversations with colleagues at Lock Haven, the questions they have are things like, if we’re planning to integrate and hoping to grow enrollment, why are we now talking about reducing faculty when we very well may need those,” she stated.

Martin said that her group is interested in what’s happening across the ten universities that have said that there is a possibility of retrenchment. The next version of sustainability plans were due last Friday and she noted that APSCUF if waiting to see what those might suggest.

“So this is kind of a moving target. We’re still trying to determine why that arbitrary and capricious decision about the 2010-11 ratios and having to reach that number in two years,” she added.

Martin also argued that in the midst of a pandemic when some students are opting to take a year off because of health concerns, enrollment numbers could be further skewed. Enrollment figures for this year are not in yet and Martin said that it’s not known if they will be off as much as predicted.

“All of these plans are based on the assumptions that the universities have to work with. They have to predict what enrollments will be. Those assumptions will drive what they are predicting the student faculty ratio will be. In the middle of a pandemic is not the right time to be doing this,” she said.

She argued that the state is using the pandemic as an excuse for why the universities have to reach those ratios in two years.

“The threat of retrenchment hanging over a university like Lock Haven at the same time you’re talking about integration which is also an unknown. It leaves the faculty pretty demoralized, she said.

“If you’re trying to be creative and think of ways you could grow enrollments or come up with new programs, it’s hard to do whenever you’re thinking when am I going to lose my job,” Martin added.

Martin noted that she could never remember when ten universities had filed letter of the possibility of retrenchment.

She also contended that the state is only looking at instructional costs and not at other employee costs.

“They’re looking at student faculty ratios, but they’re not talking about the ratios between management and students,” she said.

According to Martin there has been a decline in the number of faculty over the 10-year period that the state is highlighting, but during that time there has also been an increase in the number of managers.

“They’re not talking about that piece,” she said.

Employees of universities can be faculty and non-faculty. Within non-faculty there are employees that are represented by bargaining groups such as AFSCME and SCUPA, which is a state college and university professional association. There is also a non-represented group which would include management, such as presidents, provosts and deans.

“That particular area has grown at most universities,” Martin said. “It’s not being talked about.”

At Lock Haven the non-represented category totals 60 and at Mansfield 42.

“We’re beginning to look at the instructional costs. What that makes up of the total budget and in many it’s a lot lower than people would believe,” Martin said.

“Look at the budget and what they’re spending on instructional costs, which is actually the mission of the university. If it’s 30 percent, then you begin to ask, how is it that we’re the problem,” she said.


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