Financially strapped state universities are asked about their assets

Oct 10, 2015 by

Are the 14 state-owned universities in Pennsylvania — some of them, at least — so battered by state aid reductions, enrollment losses and other cost pressures that they are on the verge of running through their last reserves?

Or are they sitting on more than half a billion dollars in untapped net assets that easily could be used to keep tuition prices in check?

A debate that once attracted little interest outside budget and policy circles increasingly is in the public eye as efforts by those universities to shore up finances through price experiments run head-on into fears that Pennsylvania’s lowest cost option for a four-year degree is pricing itself out of the market.

At meetings Wednesday and Thursday, State System of Higher Education board of governors members, including chairman Guido Pichini, used terms such as “financial distress” in discussing the system and its schools. One board member, state Rep. Matthew Baker, R-Tioga, warned that Mansfield, California and Clarion universities are in danger of joining Cheyney University in depleting their financial cushion.

They “are going to be running through their reserves very soon,” he said.

Mr. Baker said giving those schools greater flexibility to depart from system wide prices that are set in Harrisburg — even if it means some students pay more — is key in helping those campuses rebound.

What Mr. Baker and others refer to as “reserves” actually are unrestricted net assets, State System spokesman Kenn Marshall said Friday. He said he could not confirm that any school would run through the last of those assets soon, but he also said what some view as a vast pool of ready-money is in reality largely tied up.

As of June 30, the 14 universities collectively held $532.7 million in unrestricted net assets associated with their education and general budgets, a pool that could be tapped for operations if necessary, Mr. Marshall said. By campus, the amounts range from $130 million at West Chester University to $7.3 million at California University of Pennsylvania.

Cheyney, which has borrowed millions from the State System, actually has a deficit of about $10 million.

An additional $304.2 million in assets from auxiliary operations such as dining halls, dorms and student unions legally can be used only to support those facilities, Mr. Marshall said.

“The vast majority of unrestricted net assets are encumbered — there are specific projects for which they are committed, such as planned building maintenance, construction or renovation, future retiree health care and pensions,” Mr. Marshall said in a statement.

He said it also would be unwise not to have money set aside for emergencies.

Nevertheless, faculty representatives and others have argued for years that more of those funds could be used to offset tuition or avoid cutting programs and faculty.

Source: Financially strapped state universities are asked about their assets | Pittsburgh Post-Gazette

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.