Daniel Greenstein is excited, grinning, talking a mile a minute. As chancellor of the Pennsylvania State System of Higher Education, he’s days away from unveiling the details of a plan to consolidate six of the system’s 14 public universities into two new, combined institutions. Over the past nine months, the system has held hundreds of meetings to gauge the possibilities for how the new entities might function and hash out the details. The resulting document will be presented to the system’s Board of Governors for initial approval on April 28.

It’s not surprising that the prospect of reimagining public colleges might spike Greenstein’s adrenaline, or that he would face resistance to his plans. In 2018 he came to the system, known as Passhe, from the Bill & Melinda Gates Foundation, where he spent six years as director of postsecondary success, doling out grant money to try to encourage bold thinking around higher education. He arrived in the Keystone State with the mandate to apply some of his experience to a system that has lost nearly 21 percent of its enrollment since 2011 as many of its campuses slid toward insolvency.

Greenstein is energized by the chance to rethink how a system works beyond laying off a few administrators and merging back-office functions. At the same time, he also faces the task of trying to solve a tangle of problems that many other public-college systems face, including a dwindling number of high-school graduates, increased competition for those that remain, ebbing financial reserves, and a fraught relationship with state government. The future of Passhe may hinge on whether or not the plan succeeds.

Consolidations are an increasingly popular strategy among state systems looking to improve efficiency or save money, though the actual benefits of such maneuvers remain modest, even elusive. But Passhe has run short of appealing alternatives.

During a videoconference interview, Greenstein shares data from the pending report that lay out the system’s dire finances. “There’s a lot of red on the slides,” he says. Several of the system’s institutions have been struggling financially for years. The National Association of College and University Business Officers recommends that institutions maintain a 2 to 4 percent annual operating margin, a ratio involving operating expenses and revenues. In fiscal-year 2016, five Passhe universities failed to meet that standard. By fiscal-year 2020, 11 failed.

Greenstein zeroes in on Mansfield University of Pennsylvania, which lost $7 million on its academic programs last year, and nearly $2 million on its auxiliary services — prior to Covid-19. The university has lost 47 percent of its enrollment since 2010 and “has too many programs for the 1,500 students it has,” he says. “It doesn’t have enough students in the dorm to pay the debt service on the dorm buildings.”

The financial difficulties of one institution belong to all. Passhe’s finances operate as one big bank account, Greenstein says. For years, system campuses that have enjoyed enrollment growth, such as West Chester University, have subsidized the financial losses of campuses that have been shrinking. But such cross-subsidization isn’t sustainable. If one train car falls over a cliff, Greenstein says, “it pulls harder on all the other trains.” If nothing changes, he adds, the system’s financial reserves will be completely exhausted by 2027.

Last summer, Greenstein won approval from the system’s board to begin exploring the possibility of merging several of the system’s most-troubled universities. By fall, the plan had coalesced around combining two groups of three Passhe campuses — Edinboro and Clarion Universities and California University of Pennsylvania in the western end of the state, and Mansfield, Lock Haven, and Bloomsburg Universities across the northeast. In the broad strokes, each new, combined entity would share accreditation, leadership, and academic programs while maintaining their own names and local identities. In the finer details, Greenstein hopes that the consolidated institutions can offer students more options for majors and better supports.

On one hand, Greenstein, the former postsecondary technocrat, sees an opportunity to improve how public higher education can work, and maybe even implement some of the ideas he tried to foster at Gates. On the other hand, he’s trying to effect a major change under trying circumstances in a state that has often had a hands-off relationship with public higher education, says Joni E. Finney, the former director of the Institute for Research on Higher Education at the University of Pennsylvania and now an adjunct professor of education: “I think his back is against the wall.”

Dissolving the System?

The high stakes around Passhe’s fate have grown tense recently, sometimes because of Greenstein himself. He found himself under fire last month for suggesting during a hearing of the state Senate’s Appropriations Committee that if the system couldn’t consolidate the six institutions, he would recommend to the board that it dissolve the system entirely.

Greenstein’s remark was “a cherry on top” of months of stress and concern for professors across the system, says Jamie S. Martin, a professor of criminology at Indiana University of Pennsylvania and president of the Association of Pennsylvania State College and University Faculties, the faculty union. More than 40 professors have already received notice that they may lose their jobs as part of the consolidation, and the possibility of dissolving the system introduced more uncertainty into an already anxious situation. Many professors heard it as a threat, Martin says: “He’s telling us if we don’t get on board, we’re going to be the cause of what happens next.”

Martin and her colleagues weren’t the only ones a little taken aback. “It was shocking,” says Lindsey M. Williams, a Democratic state senator who represents the Pittsburgh area. “When you say something like that, it puts a lot of fear into students that are attending those institutions, parents who are looking to send their students to Passhe institutions.” She adds that Greenstein doesn’t “have the friendliest audience in the state legislature to begin with.” Republican majorities in Pennsylvania’s General Assembly over the years have not prioritized investing in higher education, “so we have to be careful about how we just say things like that in a hearing.”

Greenstein has no intention of dissolving the system, but his remark wasn’t just a Swiftian modest proposal. It was one of the possible paths — a “risk framework” — considered by system leadership and presented to the Board of Governors as an option last summer. If you’re going to exhaust the resources of your universities, “aren’t you better off springing them to allow them to go native into the higher landscape and maybe survive?” he says. When system leaders gamed out that scenario, West Chester and Slippery Rock Universities and a few of other Passhe institutions whose operations have been sustainable over the past decade would survive, and likely even thrive. Many of the rest would quickly close, putting thousands out of work, diminishing access for students, and hollowing out communities. “It would be a horrible thing,” Greenstein says.

Another option called for further reducing the size of the universities that are already shrinking. But “right-sized” institutions would have fewer programs, fewer services, and even less allure for prospective students. “They continue to compress and compress and compress,” Greenstein says, “and what’s happened to Cheney and Mansfield and Clarion is that this has a continuing negative effect on enrollment.” Regional public campuses are also critical providers of skilled workers for their areas. Local health-care facilities don’t need just the one kind of physician assistant that the local college can afford to train, for example. They need them all.

The system could do nothing and maintain the status quo, but keeping the 14 universities at their current sizes and configurations would require massive additional funding to keep the lights on — funding that is unlikely to materialize, observers say. The system could try to close foundering universities, but closing a public campus is a notorious political poison pill, and successful attempts are vanishingly rare. Any individual Passhe campus closing would devastate its surrounding community economically, and closing several Passhe campuses could devastate the system’s finances, too. Greenstein estimates closing one medium-sized Passhe campus would cost at least $250 million, in part due to absorbing the campus’s debt, and calls it “the quickest way to exhaust our reserves.”

Raising the idea of dissolving the system publicly was valid, maybe even necessary, says Karen M. Whitney, a former president of Clarion and interim chancellor of Passhe who currently serves as interim chancellor of the University of Illinois at Springfield. “The question is, in any system in higher ed, what’s it good for? What’s the benefit of coming together versus going it alone?” she says. “He was laying it at the feet of his audiences: Are we better off together, or are we better not together? That is a serious question that should not be just reacted to in a moment.”

‘The Toughest Place to Lead’

Over the past nine months, Greenstein and other system leaders have orchestrated a process aimed at determining what a reimagined Passhe might look like. More than 200 working groups drawn from the six campuses that will be consolidated met repeatedly to figure out not just how the new, combined entities will function but also how they could improve.

The committees were charged with determining what essential functions needed to be in place on move-in day in August of 2022, but they were also encouraged to “take an opportunity to really design around the student of the future,” he says. “Let’s use this opportunity to selectively integrate the best-of-breed kind of stuff.” The final plan should retool the institutions’ operations in their academic, administrative, and student-support functions.

Greenstein acknowledges that it hasn’t been easy. “It’s hard at an emotional level — they’re often maybe designing themselves out of their roles.”

The Passhe-consolidation process has been notable for being more collaborative and upfront than most such processes, says Robert E. Anderson, the president of the State Higher Education Executive Officers Association. Often when a state or public system consolidates, it involves “agreements between the parties who have to sign off on having this move forward, and then most of the details taking place with trained professionals behind closed doors between the institutions that are involved,” Anderson says. “What I’ve seen here in Pennsylvania is them being very transparent, as far as meetings with all of the different entities.”

Martin, the union president, says that the process hasn’t been transparent or collaborative enough, and she’s concerned about the number of faculty jobs that may be lost. Greenstein arrived at Passhe determined to cultivate a better relationship with its unions than his predecessors, and made some strides, successfully negotiating a new “phased” retirement program and a new contract with the faculty union. But the consolidation effort has changed things, Martin says. “It just seemed as if it was this pretty dramatic shift away from working together to solve problems to, ‘I’ve decided this is how it’s going to be,’” she says.

A survey conducted last month by the union shows widespread unease. Among nearly 1,500 professors surveyed at the six universities, less than 8 percent were supportive of consolidation, and only 7 percent of respondents believed that the process had been a transparent one.

Greenstein realizes that this is a difficult process and people are anxious. “These are real, human responses,” he says. “I understand it at an intellectual level, but also at a compassionate level.” But, he adds, since September, he has had at least one meeting a day about consolidation with students, faculty, staff, General Assembly members, and others, and met with union representatives at least 80 times. “So I just disagree,” he says. “I understand where the narrative comes from. If you don’t like the outcome, you attack the process and the people.”

This is what the gritty work of transformation actually looks like, says Whitney, the former Clarion president. The work Greenstein embarked on when he arrived three years ago, is “past the bright, shiny, hopeful imagining stage,” she says. “And then it’s not yet done to where you can say, See, you all, this is what we accomplished. It’s in the middle. And that is the worst place; that is the toughest place to lead through.”

A Statewide Problem

One of the biggest challenges Passhe, and Greenstein, face is Pennsylvania’s laissez-faire handling of its public colleges. Pennsylvania State University, Temple University, the University of Pittsburgh, the commonwealth’s community colleges, and Passhe all function as separate entities, with no state-level coordination. That has led to decades of internal competition rather than cooperation, with proliferating campuses cannibalizing students and resources from the others with no holistic approach or goal in sight.

That’s one of the main reasons why Passhe found itself in the hole it has, and why it has found it necessary to try to climb out on its own.

“The problems of Passhe cannot be solved within Passhe,” says Finney, of the University of Pennsylvania. “This is a statewide problem, and Pennsylvania is not treating it like a statewide problem.”

The commonwealth’s laxity regarding the status quo isn’t a matter of mere oversight. It’s also a question of will. “There is no executive or legislative appetite to take it on,” Finney says. “Everybody wants to maintain a campus [in their district], and nobody wants to go up against the behemoth of Penn State University,” the de facto flagship.

And Passhe has suffered, Whitney says. Penn State and other public-college systems have opened more campuses, even as the number of high-school graduates in Pennsylvania has dwindled and state support has often waned. “Passhe has been a whipping post that’s allowed other organizations to just skate by, and that’s not right,” she says.

If there’s anything that both system and union leadership agree on, it’s that Passhe is underfunded. Over all, Pennsylvania ranks 48th in the nation in public support for higher education as a percentage of state revenue, according to an analysis by the State Higher Education Executive Officers Association, known as Sheeo. Gov. Tom Wolf, a Democrat, has overseen spending increases for public higher education, including an additional $65 million for Passhe since he came to office in 2015. But Pennsylvania’s overall per-student state appropriation in 2019 was still $4,661, 57 percent of the national average, according to Sheeo data.

In 2019, the General Assembly formed a Higher Education Funding Commission to reexamine the formulas by which public colleges receive public support in Pennsylvania, though the commission has no legislative oversight. It met twice before Covid-19 hit, temporarily suspending its activities. “Pennsylvania does have a complicated system of higher education, and I don’t see that changing,” says Williams, the state senator, who sits on the commission. “But we have an opportunity now to make changes in terms of how we invest.”

Williams is one of thousands of Pennsylvanians eager to see the details of the consolidation plan. She’s particularly interested in how the academics will work. Greenstein says that the consolidated institutions will offer students twice as many programs as the individual universities did before. But will the tradeoffs be worth it if those additional programs are online, Williams wonders? “I had one student leader tell me that, if it was prior to the pandemic, they might have been more excited about the opportunity,” she says. “But after having a year of virtual classes, they want their major classes to be in person, on campus.”

If the Board of Governors adopts the plan at its July meeting, Greenstein’s work isn’t over. There are two key policy options in public higher education, he says. First, public colleges need restructuring. Second, public colleges need more money. In Pennsylvania, as in many other states, what often happens is that neither approach wins over the other, so neither happens. For Passhe to succeed, ultimately, “both of these things need to be true — we need to transform ourselves,” Greenstein says, “and the state needs to invest in us.”

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