The State System of Higher Education has been allowing the
state-owned universities to mismanage their budgets by hiding debt in
affiliated corporations, funding new construction based on questionable
assumptions and misleading the public about their financial difficulties, says
a 165-page report released by the State System of Higher Education's faculty
union Tuesday afternoon.
The Association of Pennsylvania State College and University
Faculties commissioned Boyer & Ritter, a Harrisburg-area accounting firm,
to study the finances of the seven universities that recently announced faculty
layoffs.
East Stroudsburg University is among those analyzed by the
firm.
ESU announced the layoffs of eight faculty members, the
elimination of three degree programs, three minors and one non-degree
department in October, citing a projected $6.9 million deficit next year.
The other universities studied in the report are: Cheyney,
Clarion, Edinboro, Kutztown, Mansfield and Slippery Rock.
Fiscal years 2009 through 2012 were analyzed.
The most recent fiscal year, which ended June 30, 2013, was
analyzed to the extent information was available, says the report.
Data analyzed consisted of audited external financial
statements, internally prepared financial reports, budget reports submitted to
the Pennsylvania State System of Higher Education, full-time equivalent
enrollment figures, annual enrollment per major and tuition rates.
In every case, the accounting firm discovered that the
universities created affiliated entities or used foundations to take on debt
for new construction, said a statement issued by the union on Tuesday.
"We are extremely troubled by the findings. The
universities and the State System are mismanaging public dollars, said Steve
Hicks, president of APSCUF. "Every university is using a scheme to
transfer debt to component units, including the university foundations and student
housing associations. Money that the public believes is dedicated to academics
is instead going to these affiliates to pay for buildings."
In many cases, the affiliated entities are taking on debt to
pay for new dormitories and other lavish construction.
"Tuition, fees and state support monies are regularly
being transferred to these entities, both directly and indirectly," Hicks
stated.
The independent analysis of the seven state-owned
universities also concluded there is a lack of oversight in State System
budgeting practices.
"There appears to be minimal accountability for
budgeting at the University level with the PASSHE Board of Governors," the
report says.
"There are no common statewide budgeting practices
among universities," Hicks added.
"We are concerned that PASSHE, the State System Board
of Governors, and the individual universities' Council of Trustees have not
exercised the fiduciary responsibility to oversee how the universities spend
money," he said.
APSCUF has also commissioned Boyer and Ritter to look at the
financial statements of the other seven universities as well.
The Pennsylvania State System of Higher Education issued a
statement Tuesday afternoon on the report.
"First and foremost, the report does not fully
acknowledge the current year and future impact on the universities' operating
budgets of the seven collective bargaining agreements reached last year. The
release also fails to recognize the major pressures on our universities from
rising healthcare and pension costs, all of which are funded primarily through
a combination of student tuition and PASSHE's state appropriation," said
PASSHE spokesman Kenn Marshall.
"Neither of those two sources of funds are used to
support auxiliary operations, including student housing. Auxiliary operations
are funded solely through user fees, including room and board.
"For more than a decade PASSHE universities have
utilized a variety of public-private partnerships to help finance and construct
student residence facilities, a well-accepted practice.
"The chancellor, the Board of Governors and the
presidents of the PASSHE universities are committed to sound financial
management practices as they seek to address challenges resulting from level
state funding, minimal tuition increases and rising personnel costs."
Source: Pocono
Record
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