Pandemic Could Mean Fiscal Peril For Many State Colleges And Universities

Colleges and universities across the country will suffer financially as a result of the coronavirus pandemic — public institutions included. The question is how hard they’ll be hit.

An independent review published Tuesday found that eight of Massachusetts’ 24 state universities and community colleges would have trouble covering their own costs in the next year if enrollment numbers were to tumble by 15% and appropriations from the state were to shrink by a comparable amount.

But the review’s authors — consultants with the Boston-based firm EY-Parthenon — called that 15% drop the “pessimistic” scenario.

The firm’s baseline projection is more optimistic. Enrollment would drop by just 5%, appropriations would hold at levels comparable to the year before, and only one of the 24 institutions under study would risk financial jeopardy. The report did not name which institution would be at risk.

“We were more concerned with the [financial] health of these public institutions prior to this work… than we are after,” said Haven Ladd, a managing director at EY-Parthenon who presented the findings to the state’s Board of Higher Education Tuesday.

Ladd made clear that his team still harbors some concerns, but was relieved to find that most of the state universities and community colleges are financially sound enough to weather the “reasonable scenarios” they considered for at least one year. (The EY-Parthenon report, as commissioned by state officials back in May, does not consider the five campuses in the UMass system, which conducted its own analysis.)

In comments after Ladd’s presentation, Jim Peyser, the state’s secretary of education, also sounded a note of cautious optimism.

“We are facing a very challenging fiscal climate — but it’s not a crisis,” Peyser said. “It’s something we can manage through, and get through.”

At the same time, Peyser was frank about the state’s emergent budget for the 2021 fiscal year, which has been thrown into disarray by the pandemic and the costly measures to control it.

“We don’t know where the bottom is of all that," Peyser said. "We also don’t know what the federal government is going to do to support [states]. But we shouldn’t kid ourselves: this is going to be a very challenging fiscal year.”

In an interview with WBUR, Pam Eddinger, president of Bunker Hill Community College, said institutions like hers can’t take too many more fiscal challenges. “We don’t have a lot of staff to cut anymore. We’ve been cutting for the past ten years, because state funding has not been steady for us.”

Since 2001, the state’s annual commitment to public colleges has shrunk by nearly a third on a per-pupil basis, in keeping with a national trend.

And the state’s community colleges suffer disproportionately from that trend. In the 2018 fiscal year, they educated around 34% of all the students in public institutions of higher education but received only about 25% of the state’s appropriations for those institutions.

Eddinger and other community-college presidents argued at Tuesday’s meeting that the pandemic could be an historic occasion for institutions like theirs, which aim to take people who are underemployed and teach them to be nurses, EMTs and other “essential workers.”

“We have to make sure that we’re vibrant enough, and our operations are sound enough, so that when students come rushing back to retrain, we’re there to retrain them,” Eddinger said. But she added that if the cash-strapped state decides to “strip us to the bone,” that will be hard to do.

To advocates like Zac Bears, the projections sound like a crisis after all — with a breaking point in view. “Our public colleges were in crisis before the pandemic,” said Bears, who is executive director of PHENOM, a group that advocates for increased investment in public higher education in Massachusetts. The pandemic “just exacerbates that crisis — it means a potential disaster, to be quite frank,” he added.

Bears believes that the toll of the pandemic — both in terms of enrollment projections and state appropriations — could likely be greater than EY-Parthenon’s most optimistic scenario posits, and that “serious cuts” are on the way if the legislature doesn’t act.

We shouldn’t kid ourselves: this is going to be a very challenging fiscal year.

James Peyser, Massachusetts Secretary of Education

He pointed to an independent analysis of Forbes Magazine’s list of the wealthiest Americans. It suggests that 17 billionaires residing in Massachusetts earned around $11 billion between March of 2018 and last month. “That’s enough to cover the entire projected deficit for the year, and increase funding” for public universities, public schools and more, Bears said.

But before any of those earnings went to public programs, a wealth tax — of the kind struck from the ballot in 2018 — would have to become law in the state. The point, for Bears, is that further cuts to public colleges would be a matter of fiscal choice.

Eddinger agrees that the past ten years have borne witness to a “systematic defunding” of public higher education. But she also believes that the problem goes even deeper than the budget math. The pandemic has “highlighted all the inequities that were there before,” she said.

For example, Bunker Hill launched a food bank as it became clear that a majority of its students experience food insecurity. But when its campus closed this spring, they had to settle for mailing gift cards to students — ”$20, $30 apiece,” Eddinger said.

Under the current paradigm, Eddinger added, it feels as if she’s supposed to “act as if education is at the center of our students’ lives,” amid work, parenting and other concerns. “It’s not. It’s at the periphery of their lives.”

Normally, a recession can serve as a boon for community colleges and other short-term, affordable training programs, as people out of work, or who are earning too little, seek retraining. But it’s yet unclear whether this particular slowdown, shaped as it is by public health fears, will produce the same effect.

Eddinger said she knows that community colleges might themselves seem peripheral as the state seeks to support hospitals, repair infrastructure and vamp up public transit — all in straitened circumstances. “We’re all taking money out of the same bucket, and that bucket’s gonna be short” billions of dollars, she said.

Still, Eddinger said she has a message for state legislators: find a path to keep colleges like hers “out of harm’s way in the near future,” and they will make it work through this moment and help the state rebuild its economy: “We’re pretty good about pivoting — at being nimble. But it’s hard to be nimble when you’re too skinny.”