Campus Green: Management of Higher Education in New Jersey Part I: Senior Public Colleges

1. Campus Green: Management of Higher Education in New JerseyPart I: Senior Public Colleges Cover

2. Public Opinion Regarding Fiscal Management at American Colleges “ 6 out of 10 Americans believe that colleges mainly care about their own bottom lines instead of making sure that students have a good educational experience.” “Americans remain skeptical that colleges and universities are doing everything they can to keep costs down.” “60% of Americans believe that colleges could take in more students without hiking prices or reducing quality, and 54% agree that colleges could spend less and still maintain quality education for students.” “People are looking for innovation and productivity improvements in higher education, and they’re just not seeing them.” Squeeze Play 2010, National Center for Public Policy and Higher Education Slide 1

3. Higher Education Expert Comments “The NCHEMS President said that funding per student at New Jersey public institutions (2- and 4-year), including tuition and state and local government sources, is higher in New Jersey than in most other states, and there is room for improvement in degree productivity in all sectors.” “Many agreed that broad transformation of the institutions is necessary.” “Given this (unstable appropriations), Mr. Novak (AGBCU) says, transformation of public higher education may be a necessity. This will include administrative restrucuring……: “The new realities mean the need for: Realistic accountability measures…; Looking at possible mergers of functions internally and externally….; A different educational workforce, revisiting functions, disaggregating…” How to Fix a Broken System: Funding Public Higher Education and Making It More Productive (Policy Research Institute for the Region and NJASGU April 2010) Slide 2

4. Tuition at New Jersey’s Public Colleges Is the Highest in the United States… …and they’re getting more expensive

5. NJ has the most costly publiccolleges in the United States! National Ranking In-State Undergraduate Tuition & Fees FY 2009-10 $3648 more Source: 2009-10 Tuition & Fee Rates: A National Comparison – Washington State Higher Education Coordinating Board (April 2010). Slide 4

6. 12 Credits Towson State (MD) $5180 $2054 $ 7234 (33% less) Out-of-state $18,880 Shippensberg (PA) $5554 $1890 $ 7444 (31% less) $15,776 Delaware State U (DE) $6480 inc fees $ 6480 (40% less) $13,742 Buffalo State College (NY) $4970 $ 541 $ 5511 (49% less) $13,952 Pennsylvania Regional Comp’s • SUNY-New Paltz (NY) $4960 $1200 $6160 (43% less) $15,600 Source: New Jersey Commission on Higher Education Slide 5

7. FY2011 Budget-in-Brief Higher Education received a 7% cut while State Budget was reduced 12% Source: New Jersey 2011 Budget in Brief www.state.nj.us/treasury/ Slide 6

8. State Investigators Have Already Warned Us About Potential Abuse

9. In a 2007 report, the State Commission of Investigation found that "virtually unrestrained borrowing has saddled New Jersey's public colleges with some of the heaviest long-term debt loads in the nation." “As the findings of this and other investigations have demonstrated that some of that era has been defined by innovative forms of waste and abuse and lack of oversight, accountability and transparency. Well-intentioned though it may have been, the 1994 Higher Education Restructuring Act went too far, dismantling the entire machinery of state oversight in one fell swoop.” “Among public colleges and universities in the U.S. in 2004, five such institutions in New Jersey – New Jersey City University, Montclair State, Rowan, Ramapo and the College of New Jersey – ranked among the 15 most leveraged in the nation.” “Indeed, during the course of the past decade, the period during which the bulk of current outstanding bonded indebtedness was accumulated, annual tuition and fees charged by four-year public colleges and universities in New Jersey rose sharply – the average tuition nearly doubling from $3,091 for the 1996-97 academic year to $6,657 for 2006-07 and average fees nearly tripling from $879 to $2,573 over the same period.” www.state.nj.us/sci/index.shtm Slide 8

10. OFFICE OF THE STATE AUDITOR • Excessive fund balances • Inconsistent internal expense controls • Time reporting and scheduling • Cost and assignment of wireless devices • Reporting outside activity Office of Legislative Services State Auditor website www.njleg.state.nj.us/legislativepub/auditreports.asp Slide 9

11. How Much Should New Jersey Colleges Receive in Annual State Budgets?

12. Statement of Revenues, Expenses & Change in Net Assets(in millions) 2009 New Jersey: 9 colleges, 113,000 students, 8,800 FTE employees, $462 million approp. Pennsylvania: 14 colleges, 113,000 students, 11,600 FTE employees, $498 million approp. Slide 11

13. TUTORIAL: How to read financial statements Montclair State University Statement of Revenues, Expenses and Change in Net Assets Audit does not identify how much growth in Enrollment vs. Tuition & Fees The NJ budget appropriated $28 million more than MSU’s operating budget shortfall +$12.6 $78.2 PROFIT! Source: Montclair University 2009 Independent Audit Slide 12

14. TUTORIAL: How to read financial statements Montclair University Statement of Net Assets Where did your Tuition& Fee increase and some state appropriations end up….in unrestricted cash in the bank! +$8.9 +$19.1 =$28 Unbelievable 18% increase In 1 year! $28 million/$219 million=13% Net Source: Montclair University 2009 Independent Audit Slide 13

15. State colleges now have high levels of unrestricted assets UNRESTRICTED NET ASSETS FY2010 Approp With NO Approp. The College of New Jersey $ 72,485,000 $29.3 2.5 years Thomas Edison State College $ 31,396,584 $ 1.8 15 years Kean University $ 45,619,514 $32.8 1.4 years Montclair State University $124,873,884 $38.6 2.3 years New Jersey City University $102,776,702 $26.1 2.9 years William Paterson University $ 43,787,518 $32.7 1.3 years Ramapo College $ 29,211,000 $16.1 1.8 years Rowan University $ 64,178,829 $46.4 1.4 years Richard Stockton $ 98,102,845 $19.8 4.9 years TOTAL $539 million $243.6 2.2 years Source: New Jersey Consolidated Annual Financial Report www.state.nj.us/treasury/ Slide 14

16. Despite High Tuition and Excess Cash Reserves, State Colleges Have Still Taken On High Levels of Debt

17. Long-Term Debt is $2.16 Billion, far exceeding the average national debt ratio National Average .5 Too Low! Slide 16

18. Long-Term Debt requires $125 million annually ! (full-time tuition for 9000 students) $3 .8 Billion dollars payable on existing debt only ! *$756 million/5 years=$125 million annual debt payment/$11,000 tuition & fees=9,000 students Slide 17

19. High Tuition, State Appropriations and Borrowing Are Not Increasing Instruction and Student Services

20. Statement of Operating Expenses Slide 19

21. Higher Education Enrollment 2009 CC C 23,399 328,616 10,954 More than 1/3 part-time? Source: New Jersey Commission on Higher Education Slide 20

22. New Jersey Schools Are Overspending on Administration and Capital Assets

23. Pennsylvania: 5040 544 1953 344 1692 588 1410 11571 Remember, Pennsylvania’s appropriation is $498 Million, New Jerseys $463 Million Source: NJ Commission on Higher Education www.state.nj.us/highereducation/statistics/index.html Slide 22

24. Example: OMB SALCALC submitted by each institution Thomas Edison State College • Total 2009 Salary Budget was $18.2 million • Of 263 Total Employees, 86 are Managerial (33%) • Although Managerial accounts for only 33% of employees, Managerial $8.6 million in • salary base is almost as large as the other 66% of employees ($2.6 and 7.0 million) • Average by Bargaining Unit: Managers ($100,000), AFT ($62,000), and CWA ($41,000) • Managers received $335,000 in salary increases, or $3,900 average (4% salary increase) • Pension Tapes: 45 employees earn more than $90,000 per year Slide 23

25. Example: OMB SALCALC submitted by each institution Kean University 140 Managers out of 1,197 employees Managers $10.2 million out of Total $61.2 million salary Managers average $72,857 each Managers account for 16% of salary expenditures Thomas Edison Sate College Average manager salary $100,000 Managers account for 46% of salary expenditures Slide 24

26. Example: Who’s watching compensation? TESC Employee Montclair Employee Governor’s Office 265 Employees 1,600 Employees 70,000 employees $47 Million Budget $260 Million Budget $30 Billion Budget President President Governor $285,000 + Contract Bonus(2009) $325,00 + Contract Bonus (2009) $175K + no bonus (2010) VP Finance VP Finance State Treasurer $183,800 (2009) $150,000 (2009) $141,000 (2010) Director of Human Resources VP Human Resources Governor’s Director of Staff $131,300 (2009) $139,000 (2009) $130,000 (2010) Director of Facilities Director of Facilities Director State Div Prop & Mgmt $120,800 (2009) $119,000 (2009) $114,102 (2008) Assoc VP & Treasurer Executive Dir of Budget OMB Director $140,400 (2009) $128,000 (2009) $133,507 (2009) Pennsylvania: President $207,000, Provosts $168,000, Vice Presidents $154,000 and Deans $137,000. Slide 25

27. Example: Who’s watching compensation? TESC Employee Montclair Employee Governor’s Office 265 Employees 1,600 Employees 70,000 employees $47 Million Budget $260 Million Budget $30 Billion Budget VP & Provost VP & Provost Governor $194,000 (2009) $210,000 (2009) $175K + no bonus (2010) Vice Provost Instruction Vice Provost Instruction State Treasurer $142,000 (2009) $176,000 (2009) $141,000 (2010) VP & College Dean Dean College of Arts Governor’s Director of Staff $165,000 (2010) $176,000 (2009) $130,000 (2010) Director of Org Development Director of Org Development Director State Div Prop & Mgmt $95,000 (2009) $102,000 (2009) $114,102 (2008) VP Student Services VP Student Services OMB Director $165,000 (2009) $125,000 (2009) $133,507 (2009) Pennsylvania: President $207,000, Provosts $168,000, Vice Presidents $154,000 and Deans $137,000. Slide 26

28. $3.5 Billion in Capital Assets…are we getting ‘max’ utilization? Note: TESC buildings are leased from State for $0 annually Slide 2 Slide 27

29. Bachelor Degrees Awarded 2009 by Major Area / STEM Area CIP Code & Area Slide 28

30. We support the following think tanks’ work on higher education productivity and many others…….. Slide 29

31. Thank You for reviewing this presentation. Please visit our website for several upcoming presentations on higher education, K12 education, and county/local government performance END