Letter to the Editor: Halpern contests ‘facts’

Having just read the front-page story on Sunday in The Trenton Times (and the Star-Ledger) on enrollment at private colleges and universities in New Jersey and particularly at Rider University, I feel the need to comment. I have already written to the story’s author, but since many members of the Rider community also read those papers, I thought it appropriate to write you as well.
What I found most striking in the article was  the dramatic difference in response to a dip in enrollments by the other institutions mentioned in the article and the response of our administration. Emblazoned on the front page were the following statistics tracing enrollments from 2009 to 2015.
“The College of Saint Elizabeth -35 percent, Georgian Court University -24 percent, Centenary College -21 percent, Drew University -21 percent, Rider University -12 percent.
What is telling is that while Rider had the lowest drop of this set (by a significant margin), it is the only school where the administration thought it wise to slash programs and lay off faculty. The comparison with Drew is particularly worth noting:
“At Drew University in Madison, there were plans to cut academic programs due to declining enrollment when new president MaryAnn Baenninger arrived 15 months ago.
“Instead of making the cuts, Baenninger decided to revamp the 2,100-student school’s admissions and marketing departments to try to attract more students and retain the ones already enrolled.
“This fall, Drew’s enrollment was up and the number of early applications for 2016 looks promising.”
At Rider, where the drop in enrollment was dramatically less than at Drew, our new president decided within three months of arriving to slash 17 academic programs and lay off 14 faculty members. He made these decisions without any consultation beyond the very small circle of upper administration.
And he did this when not only are the reported numbers better than at these other schools, but where the so-called “facts” provided by the administration for this article are at best out of context and at worst simply wrong. The two most problematic are the claim of a 12 percent enrollment decline since 2010 and the claim by President Dell’Omo that “Rider just didn’t have enough students to cover its bills.”
Rider’s full-time undergraduate enrollment hit a peak in 2010 when it had the largest full-time undergraduate student enrollment in its history of 4,074. From that historic high, full-time undergraduate enrollment has declined to 3,749. That is a reduction of 325 students or 8 percent.
But to really understand what actually happened, we need to take a longer view. In 2005, the full-time undergraduate enrollment at Rider was 3,604. So, Rider’s present full-time undergraduate enrollment is 145 students (4 percent) above its 2005 benchmark. In other words, Rider’s enrollment after a short period of extraordinarily high numbers has returned to about where it was 10 years ago. The anomaly is not our present enrollments, but rather the enrollment during the mid-period of those 10 years.
As for the claim by President Dell’Omo that the university took in less money than it spent (“Rider just didn’t have enough students to cover its bills,”), I can only say that this is untrue. In 2013-14, the university’s audited financial statement showed a net positive operating cash flow of $12.944 million and preliminary data provided by the university show $12.594 million in operating cash flows in 2014-15. In simple terms, the university took in $12 million more than it spent in operating the institution in both these years.
When the university points to a deficit, it is pointing to “Net Increase (Decrease) in Net Assets from Operations.” For the first time, the university showed a small deficit ($747,000) in this in 2015 after having an accumulated increase in this line item of the Audited Financial Statements of $51.5 million since 2005.
More importantly. a deficit in net assets does not mean the university is spending more money than it is taking in. How this can be is best explained in the following quote from Rudy Frichtenbaum Ph.D, in Economics, who carried out an analysis of the university’s financial situation.
“Remember that even when net unrestricted revenue is negative that this calculation includes depreciation, which is a non-cash expense. In theory, an institution could continue to meet it obligations for years even if revenue is less than expenses as long as the deficit is smaller than the depreciation expense. In other words, they could still pay all of their vendors, pay for the utilities and employees while running an operating deficit,” Frichtenbaum said.
“What is most important for operations is cash. And when you look at Rider’s cash flow — its operating cash flow — even if you subtract interest payments, it is positive and healthy.”
Needless to say, Rider’s paper deficit is smaller than its depreciation expense.
I will end with one question that seems to have gone unanswered in all of this. If a negative number in this line item is a real deficit, then a positive number must be a real surplus; what exactly happened to the $51.5 million surplus that the institution showed over the last 10 years?

—Jeffrey Halpern, Ph.D.
Contract Administrator/Rider University AAUP

 

Printed in the 11/11/15 issue.

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