Advocates want more state oversight of university finances

Advocates urged lawmakers Monday to increase oversight of public college finances after fiscal mismanagement forced layoffs at one state school and threatened to shutter another.

During a special hearing on higher education, a bicameral group of lawmakers was told lax state oversight and shifts in enrollment spurred by the pandemic threaten to shove more public universities onto shaky financial footing.

“We’ve heard about William Paterson. We’ve heard about Jersey City. And I’m sitting here telling you: Within 12 to 36 months, there are going to be more institutions on that list,” said Donna Chiera, president of the American Federation of Teachers of New Jersey.

William Paterson University made broad layoffs in late 2021 after amassing a $30 million budget deficit. New Jersey City University in June declared a financial emergency, and a subsequent series of cost-cutting measures only managed to trim its deficit to just under $11 million. Gov. Phil Murphy in August urged the state comptroller to investigate NJCU’s finances.

In each case, the schools’ flailing finances came as something of a shock, but advocates said the state might have been better equipped to identify and respond to universities’ fiscal woes. 

New Jersey, they said, should look to enhance state-level oversight of public universities, arguing oversight already provided by the federal government and degree accreditors isn’t enough to keep schools from running off a fiscal cliff.

Federal oversight is “just a financial assessment of how the institution is doing and whether they have cash on hand, essentially,” said Tiara Moultrie, a fellow at progressive think tank the Century Fund.

Lawmakers late last year introduced a series of bills that would require universities to annually report their finances to the state, to post some financial information publicly, and to increase the frequency with which governing boards are trained on financial management.

None of those bills have reached a committee hearing in either chamber.

Some said the state should create a higher education department to better oversee universities. While New Jersey has a higher education office, Chiera argued that the office lacks the tools for proper oversight.

“We have a secretary of higher ed who does not have the staff, the oversight, or the authority as a commissioner. It is a home-rule system in higher ed,” she said.

Some argued that, while the pandemic accelerated some universities’ fiscal problems, profligate capital spending responding to needs that may not have existed had already set schools on their course, like by undertaking dormitory construction divorced from enrollment growth.

“The pandemic did not cause this. We were heading down this road. We just hit the barricade right here and now,” Chiera said.