The Pennsylvania Legislative Budget and Finance Committee, a committee of the Pennsylvania General Assembly, sponsored a RAND Corporation study to identify options that would improve the long-term sustainability and viability of the universities in the Pennsylvania State System of Higher Education in the coming years. This report outlines the five alternatives that RAND researchers developed.

Cover: Promoting the Long-Term Sustainability and Viability of Universities in the Pennsylvania State System of Higher Education
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Promoting the Long-Term Sustainability and Viability of Universities in the Pennsylvania State System of Higher Education

by Charles A. Goldman, Rita T. Karam, Mark Stalczynski, Katheryn Giglio

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Research Questions

  1. What are the most-promising options to help the universities in the State System become more sustainable and better able to manage the allocation of scarce state financial resources?
  2. What are the strengths, weaknesses, implementation requirements, and challenges of the most promising options?
  3. How could a new or restructured state entity exercise responsibility for policy coordination and leadership across all postsecondary institutions in the commonwealth? What benefits does such an entity offer to the commonwealth and its institutions?

The Pennsylvania Legislative Budget and Finance Committee, a committee of the Pennsylvania General Assembly, sponsored a RAND Corporation study to identify options that would improve the long-term sustainability and viability of the universities in the Pennsylvania State System of Higher Education (State System) in the coming years. The State System was established in 1982 and is the largest provider of higher education in the Commonwealth of Pennsylvania. Today, the State System faces considerable challenges that threaten the sustainability of its operations and the provision of accessible, affordable, and relevant educational programs to students. RAND researchers developed five alternatives to address sustainability: These options range from keeping the broad State System structure with a few improvements to merging the State System universities into one or more of the state-related universities as branch campuses.

Key Findings

State System universities face significant challenges.

  • Enrollment is likely to be reduced because youth population is projected to drop in most of Pennsylvania. Students are paying a greater share of costs because state appropriations are limited and have declined. Opportunities to change are hindered by state regulations, inflexible faculty labor relations, and governance that is reportedly bureaucratic and places politics above system needs.

Challenges will continue to affect universities and students.

  • System enrollment has declined 13 percent between 2010 and 2016. As of 2016, 11 of the 14 State System universities are operating in deficit (although some of this effect may stem from 2015 changes in accounting rules for retiree pensions). Given the projected decline of the state's youth population, student costs could continue to rise, while services may continue to be curtailed or downsized.

Instead of university closures, there are five possible options for change.

  • Several of these options could affect the missions of the universities, accessibility and costs for students, and the sovereign immunity that currently protects the State System from lawsuits.
  • Several of these options could affect the missions of the universities, accessibility and costs for students, and the sovereign immunity that currently protects the State System from lawsuits. Option 1 is to keep the broad State System structure with improvements. It upgrades the existing system by modifying the governance structure to reallocate authority across the various system levels and freeing institutions from some state requirements.
  • Option 2 makes the changes in Option 1 and also consolidates the current 14 universities into a smaller number — perhaps five to eight — by merging State System universities in each region of the state and including at least one fiscally viable university in each merger.
  • Option 3 would eliminate the State System structure and convert the universities to state-related status. This option would be applied to the stronger universities or to weaker universities that could be merged with stronger ones prior to independence.
  • Option 4 places the State System and all its institutions under the management of a large state-related university, building on their strong performance, possibly for a defined period of time such as ten years.
  • Option 5 merges the State System universities into one or more of the state-related universities as branch campuses.

Recommendations

  • Understand the seriousness of the challenges and plan for major changes. Do not seek to close universities, but increase flexibility and responsiveness through one or more of the five options. Option 1 is unlikely to address long-term challenges; Options 2 to 5 may be more difficult to implement, but they are more likely to strengthen financially weak institutions and match staff size to enrollment trends.
  • Seek to develop a new structure with state-related universities. Pursue either Option 4 or 5 if large, state-related universities are willing.
  • If a new structure with state-related universities is not feasible, pursue other options, starting with Option 2 or 3. If those cannot be implemented, pursue Option 1.
  • Do not establish a statewide coordinating body, unless it is needed to implement a specific option. Most of the options probably do not justify establishment of a new statewide higher education body.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Challenges Arising from External Factors

  • Chapter Three

    Challenges Arising from the System

  • Chapter Four

    Consequences of Internal and External Challenges for State System Universities and Students

  • Chapter Five

    Options to Address Challenges

  • Chapter Six

    Conclusion and Recommendations

  • Appendix A

    Study Approach

  • Appendix B

    Detailed Tables and Graphs

  • Appendix C

    Response of the State System's Interim Chancellor

The research described in this report was funded by the Pennsylvania General Assembly's Legislative Finance and Budget Committee and conducted by RAND Education.

This report is part of the RAND Corporation Research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

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