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1 COMMONWEALTH OF HOUSE OF REPRESENTATIVES 2

3 APPROPRIATIONS COMMITTEE BUDGET HEARING 4 PENNSYLVANIA STATE SYSTEM OF HIGHER EDUCATION 5

6 STATE CAPITOL HARRISBURG, PENNSYLVANIA 7 ROOM 140, MAJORITY CAUCUS ROOM

8 TUESDAY, FEBRUARY 12, 2019 9 1:00 P.M.

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13 BEFORE:

14 HONORABLE STANLEY SAYLOR, MAJORITY CHAIRMAN HONORABLE MATT BRADFORD, MINORITY CHAIRMAN 15 HONORABLE ROSEMARY BROWN HONORABLE SHERYL DELOZIER 16 HONORABLE GEORGE DUNBAR HONORABLE 17 HONORABLE HONORABLE 18 HONORABLE HONORABLE 19 HONORABLE FRED KELLER HONORABLE JOHN LAWRENCE 20 HONORABLE HONORABLE 21 HONORABLE CHRIS QUINN HONORABLE 22 HONORABLE HONORABLE 23 HONORABLE HONORABLE 24 Pennsylvania House of Representatives 25 Commonwealth of Pennsylvania 2

1 HONORABLE HONORABLE 2 HONORABLE MARIA DONATUCCI HONORABLE AUSTIN DAVIS 3 HONORABLE HONORABLE MARTY FLYNN 4 HONORABLE EDWARD GAINEY HONORABLE 5 HONORABLE HONORABLE 6 HONORABLE STEPHEN MCCARTER HONORABLE BENJAMIN SANCHEZ 7 HONORABLE PETER SCHWEYER

8 NON-COMMITTEE MEMBERS PRESENT:

9 HONORABLE HONORABLE 10 HONORABLE

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1 COMMITTEE STAFF PRESENT:

2 DAVID DONLEY REPUBLICAN EXECUTIVE DIRECTOR 3 RITCHIE LAFAVER REPUBLICAN DEPUTY EXECUTIVE DIRECTOR 4 MIRIAM FOX DEMOCRATIC EXECUTIVE DIRECTOR 5 TARA TREES DEMOCRATIC CHIEF COUNSEL 6

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1 I N D E X

2 TESTIFIERS

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4 NAME PAGE

5 CHANCELLOR DANIEL GREENSTEIN, PH.D...... 7 6

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9 (NO SUBMITTED WRITTEN TESTIMONY.)

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1 P R O C E E D I N G S

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3 MAJORITY CHAIRMAN SAYLOR: We'll call

4 the Appropriations Committee to order. Our

5 first hearing this morning, I should say

6 afternoon, of course, is our Chancellor, Daniel

7 Greenstein, who's a Doctor of Education. I

8 assume that's right.

9 CHANCELLOR GREENSTEIN: History.

10 MAJORITY CHAIRMAN SAYLOR: History.

11 Okay. You know, I'm learning there's different

12 degrees of Doctors in Education --

13 CHANCELLOR GREENSTEIN: Actually, it's

14 worse. It's Social Studies.

15 MAJORITY CHAIRMAN SAYLOR: Actually,

16 Chancellor, you just went up in my thoughts,

17 you know. I love history. So if I was going to

18 get a degree in that, it would be a degree in

19 that one, in that area; so you just went up

20 higher in my esteem.

21 CHANCELLOR GREENSTEIN: Thank you.

22 MAJORITY CHAIRMAN SAYLOR: The Chairman

23 agrees with me. Chairman Bradford agrees.

24 Chancellor, would you rise and raise

25 your right hand? 6

1 DANIEL GREENSTEIN, PH.D., was duly sworn

2 to give testimony as follows:

3

4 MAJORITY CHAIRMAN SAYLOR: Thank you.

5 We skipped the testimony by our individuals, so

6 we'll go directly to questions. Our first

7 question today, unless the -- Chairman Bradford,

8 do you have any?

9 MINORITY CHAIRMAN BRADFORD: I'm good.

10 MAJORITY CHAIRMAN SAYLOR: -- is from

11 Representative Topper.

12 REPRESENTATIVE TOPPER: Good morning, or

13 I guess we're afternoon now, since we're

14 starting after lunch. Dr. Greenstein, I

15 appreciate you being here today. I actually did

16 read this cover to cover.

17 CHANCELLOR GREENSTEIN: Wow.

18 REPRESENTATIVE TOPPER: So in case you

19 wondered if anybody did, somebody did anyway.

20 CHANCELLOR GREENSTEIN: Thank you.

21 REPRESENTATIVE TOPPER: And I do have a

22 couple questions. Specifically, when we talk

23 about this sharing system that you mentioned in

24 your State of the -- the State Address or the

25 State of the System Address, could you give me 7

1 specifics? I've read, kind of, the outline of

2 what you're looking to do.

3 But when you talk about aligning

4 budgets, are we talking specifically about

5 combining administrative costs? What are we

6 looking at? Are we talking about students that

7 can transfer between universities with credit?

8 If you could give me just a couple specifics

9 about what that might look like.

10 CHANCELLOR GREENSTEIN: Yeah. So let me

11 take it on the cost and revenue side. So on the

12 cost side, you're looking at sharing, you know,

13 back-office function, could be. We already do

14 payroll; but imagine extending that into, you

15 know, data centers, financial-aid packaging.

16 There's just a whole range.

17 And I'm not, sort of, necessarily saying

18 that we'll do those things. But, you know,

19 we'll be looking at sharing out those kinds of

20 back-office functions; and it's purely a matter

21 of cost saving. You know, we don't need to have

22 14 instantiations of every business service that

23 a university needs to operate. You can drive

24 your costs down in that way.

25 On the revenue side, there are 8

1 opportunities for doing shared programming. So

2 a couple of examples: We reckon there are about

3 a million-plus adults in Pennsylvania who have

4 some college but no degree, and they need to

5 continue to come back to higher education in

6 order to reskill and upskill and to improve

7 their opportunities in the labor market.

8 There are opportunities for us to work

9 together as a system to create a program that

10 individual campuses can deliver online to those

11 adults or on ground to those adults, but it

12 becomes a collaborative effort. We're actually

13 sharing in the academic programming. There's a

14 variety of options like that, as well.

15 REPRESENTATIVE TOPPER: And you

16 mentioned that you've -- one of the things that

17 you're taking a strong look at is making sure

18 the programs that you have, the degrees that are

19 offered, are actually fitting the workforce that

20 we need here in Pennsylvania.

21 I think at one point I read that you've

22 begun 32 additional academic programs, but that

23 you've cut something like 300.

24 CHANCELLOR GREENSTEIN: Correct.

25 REPRESENTATIVE TOPPER: Could you give 9

1 me some examples, not all 300, but a few of

2 those that you feel, you know, can go and then

3 maybe some of the ones that will help as we move

4 forward?

5 CHANCELLOR GREENSTEIN: Right. So the

6 programs that are listed there, there's 32

7 programs there that pretty much all

8 master's-level programs, graduate-level

9 programs; and they will be in areas of STEM,

10 business, etc., specific areas in particular.

11 Actually, just today, we had a

12 conversation about a doctorate in social work.

13 We had a conversation about physician

14 assistantships. These are high-need areas in

15 various different regions, so those are the kind

16 of new programs.

17 On the programs that have been retired,

18 you know, we've seen a decline, for example, in

19 education, demand for education; although, we

20 expect that to be an uptick coming forward, so

21 you're seeing some contraction there; and you're

22 seeing contraction in other areas, which are

23 just not high enrollment.

24 REPRESENTATIVE TOPPER: What other areas

25 might -- 10

1 CHANCELLOR GREENSTEIN: I'm going to

2 have to pass and get back to you, because that

3 list is not in my head.

4 REPRESENTATIVE TOPPER: Okay. All

5 right. Well, I guess what I'm trying to get to

6 is, do you believe that we will have the ability

7 to actually measure, when we're talking about

8 students graduating and, A, whether staying in

9 Pennsylvania; B, and if not, are able to

10 graduate, get jobs in their field at a certain

11 amount of money, you know, do you feel we can

12 set markers that we can hit when evaluating

13 whether we're doing the job or not, whether

14 we're actually getting the bang for our buck

15 when it comes to students graduating, getting

16 jobs in their field, and jobs, quite frankly,

17 that pay?

18 Because if you're getting a doctorate in

19 social work or something and then you're making

20 30,000 in that field, that's not really helping

21 in terms of that student's financial future.

22 CHANCELLOR GREENSTEIN: Yeah. So the

23 good news is, we can already do those

24 measurements, right? We have been doing that

25 for some years, and we're getting better. I 11

1 mean, one of the reasons, frankly, that I chose

2 to come to Pennsylvania to the State System was

3 because it actually has incredible data

4 resources, which enable us not to fly blind in a

5 very difficult and challenging higher-education

6 marketplace.

7 Our workforce and education alignment

8 data and our wage data are actually really good.

9 We do not yet have goals. That is one of the

10 things you'll begin to see emerging in the

11 course of this redesign, is that we will be

12 developing specific goals for student success, a

13 variety of indicators that get at the extent to

14 which our students are achieving the kind of

15 outcomes that we want to see them achieving, and

16 university success which really gets to the

17 financial health of our universities in our

18 system.

19 REPRESENTATIVE TOPPER: That student

20 success component --

21 CHANCELLOR GREENSTEIN: Yes.

22 REPRESENTATIVE TOPPER: -- is something

23 I'm very interested in; that when you develop

24 that, as we develop that together, or as the

25 Board, Governor looks at it, I really would like 12

1 to see those be measured. And to the point that

2 in some states, and I'll close with this,

3 they're moving to a system where they're

4 actually -- the funding from the Legislature is

5 affected based on that, so it's performance

6 based. So at the end of the year, we look at

7 the metrics and say, okay, you know, you've hit

8 your goals, so now you will get X amount of

9 dollars increase; and if you don't, then you

10 won't.

11 So it's something that I'm very

12 interested in. And I'm not sure if you're

13 interested in that part of it, but I think it

14 could be very helpful.

15 CHANCELLOR GREENSTEIN: Okay. Great.

16 REPRESENTATIVE TOPPER: Thank you.

17 Thank you, Mr. Chairman.

18 MAJORITY CHAIRMAN SAYLOR: Before we

19 proceed, I thought I'd give you a chance,

20 Chancellor, to introduce the university

21 presidents that are with you today. I forgot to

22 ask you to recognize those that are here.

23 Of course, I know the president of IUP,

24 the greatest one of the whole system.

25 CHANCELLOR GREENSTEIN: Fine. He's a 13

1 fine gentleman. That's correct. Do you want me

2 to just introduce by name as we go?

3 MAJORITY CHAIRMAN SAYLOR: Yes, if you

4 would.

5 CHANCELLOR GREENSTEIN: Immediately on

6 my right, we have Bill Berry, who's at Slippery

7 Rock. This is a test. We have Marsha Welch,

8 who's at East Stroudsburg. We have Jerry Jones,

9 who's at California -- don't tell me -- we have

10 Ken -- I know your name.

11 MAJORITY CHAIRMAN SAYLOR: I'm sorry,

12 Chancellor. I put you on the spot.

13 CHANCELLOR GREENSTEIN: Ken Huggins is

14 at -- I know; it's Kutztown. We have Peter

15 Fackler, who's interim President at Mansfield.

16 That guy over there, Mike Driscoll, I think,

17 from IUP. And in the back, we have Bashar

18 Hanna, who's at Bloom. We have Dale Pehrsson,

19 who is at -- I know it -- don't tell me --

20 Clarion. And we have Dr. Laurie Carter, who is

21 at Shippensburg.

22 MAJORITY CHAIRMAN SAYLOR: Very good.

23 CHANCELLOR GREENSTEIN: Whew.

24 (APPLAUSE.)

25 MAJORITY CHAIRMAN SAYLOR: You passed 14

1 the test. I mean, you were good, I'll tell you.

2 I'm sorry to put you on the spot.

3 CHANCELLOR GREENSTEIN: Oh, that's good.

4 I needed that.

5 MAJORITY CHAIRMAN SAYLOR: Also, I

6 wanted to recognize our Chairman of the House

7 Education Committee, Curt Sonney, who's here

8 with us, as well; and also Representative Tom

9 Murt is here, who's Chairman of our Aging

10 Committee.

11 With that, we'll move on to

12 Representative Donatucci.

13 REPRESENTATIVE DONATUCCI: Thank you,

14 Mr. Chairman; and welcome, Chancellor.

15 So whenever we have a change in

16 leadership, we have a chance to re-examine

17 things with a fresh perspective. In your

18 first months as chancellor, what is your view on

19 the greatest strength of the State Higher

20 Education System, and what do you think are

21 their weaknesses?

22 CHANCELLOR GREENSTEIN: So our great

23 strengths are really in the quality of the

24 education that we offer. It's really -- I've

25 defined it as -- or I talk about it in terms of 15

1 it's a very high-touch education, a great deal

2 of faculty and student engagement.

3 It's almost like the kind of education

4 you'd find in a liberal arts college, but it's

5 available at a public university price; and we

6 make that available to students for many of whom

7 would have no other options for a

8 higher-education pathway, so that's a really

9 kind of a cool and a beautiful thing actually

10 when you see it at the universities.

11 We are increasingly aligning our program

12 with workforce needs. We've been doing that for

13 a while, and I think that's also good; and our

14 campuses are very distinctive, so I see those as

15 three strengths.

16 Our greatest challenges, they are the

17 challenges of higher education across this

18 country. We are seeing increasing price to

19 students, cost to students, which is challenging

20 them. That's a tough thing to do. We're in a

21 very highly competitive market.

22 Pennsylvania has more higher education

23 than there are high school students to fill the

24 places; and we're seeing a contraction in the

25 high-school-leaving population, right? All 16

1 those things bode poorly for a system which was

2 built in a way to be available to a growing

3 market of students.

4 That causes an enormous amount of

5 financial pressure, and it puts pressure on the

6 nature of our instruction.

7 REPRESENTATIVE DONATUCCI: Okay. So

8 that brings me to the next part of the question,

9 which is that on Monday, the Independent Fiscal

10 Office talked about how demographics are

11 changing in the state; and, of course, higher

12 education is one of the areas where changing

13 demographics can really be seen. I mean,

14 there's 18 percent less students now than in

15 2010.

16 CHANCELLOR GREENSTEIN: Yeah.

17 REPRESENTATIVE DONATUCCI: One school

18 saw an increase; the other saw serious declines.

19 So what ideas hold the most promise for

20 stabilizing enrollment and what can we, the

21 General Assembly do, to help address this

22 problem?

23 CHANCELLOR GREENSTEIN: So couple

24 things: One of them is on page 10. You'll see

25 the demographic projections going forward. 17

1 There's a demographic challenge that's coming in

2 2025. That's nationally. This is

3 Pennsylvania's picture, where a

4 high-school-leaving population contracts even

5 further; so we're really trying not only to

6 address today's problems, but protect ourself

7 against that future.

8 And the question, again, was, What can

9 the Assembly do to help?

10 REPRESENTATIVE DONATUCCI: What can we

11 do to help?

12 CHANCELLOR GREENSTEIN: So I think

13 there's a couple things. I see this as a

14 partnership between the Pennsylvania State

15 System and the Legislature, and actually the

16 State Government.

17 I think right now, frankly, I think the

18 burden is on us. We have three things that we

19 need to do, and we know we need to do them. One

20 of them is control tuition, right? There is

21 evidence that, as tuition goes up, we're

22 beginning to become less available to students

23 that we're set up to actually serve.

24 MAJORITY CHAIRMAN SAYLOR: Chancellor,

25 if you would speak more into the mic. 18

1 CHANCELLOR GREENSTEIN: Oh, sorry. Yes,

2 of course.

3 MAJORITY CHAIRMAN SAYLOR: The TV might

4 not be able to pick up your voice.

5 CHANCELLOR GREENSTEIN: That was the

6 intention. Oh, sorry.

7 (LAUGHTER.)

8 CHANCELLOR GREENSTEIN: So getting

9 control of our costs. You know, our costs are

10 not aligned with our enrollment; and we have to

11 actually manage the low enrollment. We have a

12 number of low-enrolled universities. They are

13 particularly challenged, and we have to manage

14 that issue.

15 And I think we're on a track to do that.

16 I think you will see progress this year against

17 those things. We have to become more

18 accountable and transparent to the Assembly.

19 And we have to begin to become accountable

20 towards real outcomes and goals, and I think you

21 should hold us accountable for doing that.

22 At the same time, as we begin to make

23 progress in that direction, I think we would

24 love to be able to come back as part of this

25 partnership and have a number of conversations 19

1 with the Legislature.

2 One of them is about investment in

3 public higher-education infrastructure, right?

4 Generally, but also in the Pennsylvania State

5 System; this shared system is not something we

6 can cut our way into. It is a capital

7 reinvestment. And then the second thing is a

8 conversation around legislative and regulatory

9 issues, which basically cost us money. And so I

10 look forward to coming back in October and

11 having a list of, Here are a number of

12 regulatory and legislative issues that we're

13 challenged by, and here's the ROI of their

14 relaxation; so that we can at least have a

15 conversation of where legislation and regulation

16 is costing us, and ultimately our students,

17 money.

18 So I see this very much as a

19 partnership. But right now, I'd like to think

20 the burden is on us.

21 REPRESENTATIVE DONATUCCI: Okay. I look

22 forward to working with you in the future.

23 Thank you.

24 CHANCELLOR GREENSTEIN: Thank you.

25 REPRESENTATIVE DONATUCCI: Thank you, 20

1 Mr. Chairman.

2 MAJORITY CHAIRMAN SAYLOR:

3 Representative Fritz.

4 REPRESENTATIVE FRITZ: Much appreciated,

5 Mr. Chairman. Chancellor, thank you for being

6 here this afternoon.

7 Chancellor, citing the System's Fast

8 Facts 2012 through 2016 document, shows that

9 during that same time, that snapshot in time,

10 2012 to 2016, nearly every System school, with

11 the exceptions of West Chester and Slippery

12 Rock, saw a decline in total enrollment.

13 So that naturally prompts a couple of

14 questions: The first being, What explains this

15 decline? And if that declining enrollment trend

16 continues, will the closure of a university be

17 inevitable?

18 CHANCELLOR GREENSTEIN: So let me go to

19 the causes of the decline. The actual

20 by-university-enrollment trends are available on

21 page 9 of the submission 2010 to 2018. Overall

22 it's 18 percent. That's larger than the decline

23 in the high-school-leaving population, and the

24 high-school-leaving population makes up 90

25 percent of our students; so it cannot be a 21

1 product of demographic change in and of itself.

2 I think there's, obviously, a number of

3 things going on. One of them is, we've been

4 through a period of economic strength. The

5 education industry is countercyclical. People

6 go into the workforce when the workforce -- when

7 there are jobs available, and they come back

8 into education when there's a recession. So I

9 think that's certainly part of it.

10 And, yeah, I think price will

11 increasingly play a role, not just in the

12 Pennsylvania State System, but elsewhere across

13 the state, as you begin to -- as it becomes more

14 expensive to pursue a higher education. I think

15 all those things are factored in.

16 REPRESENTATIVE FRITZ: So I'll just

17 drill into that a little bit further. If that

18 stark reality continues, would you foresee

19 possibly the closure of a school?

20 CHANCELLOR GREENSTEIN: So I -- we

21 looked at -- we took the RAND and actually the

22 NCHEMS report, but certainly the RAND report,

23 very seriously. We evaluated it through a task

24 group that we convened, from which this vision

25 of a sharing system emerged. 22

1 Closure does not make great economic

2 sense, for a number of reasons. If you put

3 aside the socioeconomic dislocation of the

4 region that's affected by the impact, I mean

5 remember, many of these universities are the

6 number 1, 2, 3, 4, 5 employers in their region;

7 and that data are presented also in the book.

8 If you put aside the socioeconomic

9 dislocation and the actual cost of running down

10 -- or the cost of closing a university is a

11 large one-time -- is a large, one-time amount;

12 and you're still left with the inherited debt

13 obligation, which is returned to the state, the

14 pension cost, etc., which would then be picked

15 up by the state. So economically, closure

16 doesn't make a lot of sense.

17 Educationally, again, with respect to

18 the communities that we serve, in many of the

19 communities where there are low-enrolled

20 schools, you know, you're looking at the most

21 reliable pathway into and beyond the middle

22 class as provided by that university.

23 So taking that educational pathway away

24 from those communities doesn't just have

25 economic impact; it has impact on the 23

1 surrounding population.

2 Having said that, the sharing system,

3 and there are other strategies that are being

4 looked at, are being designed in part to address

5 the needs of the low-enrolled schools. And I

6 cannot imagine a future where several of them

7 look very much like they do today, as they

8 sustain themselves in a valuable way in

9 contributing to the state.

10 But closure doesn't seem to me to be

11 either a cost-effective or an educational

12 option.

13 REPRESENTATIVE FRITZ: I appreciate your

14 fortitude.

15 Taking a step back and continuing that

16 theme, looking not just at the 14 State System

17 universities, but also the many Penn State

18 branch campuses and the other state-related

19 universities and even the numerous private

20 colleges and universities, do you feel as though

21 Pennsylvania has an overcapacity problem, given

22 our current demographic realities?

23 CHANCELLOR GREENSTEIN: Yes. There's an

24 overcapacity and alignment program, yeah.

25 REPRESENTATIVE FRITZ: Okay. Those are 24

1 my questions. Thank you.

2 MAJORITY CHAIRMAN SAYLOR:

3 Representative Kinsey.

4 REPRESENTATIVE KINSEY: Thank you, Mr.

5 Chairman.

6 Good afternoon, Mr. Chancellor. Mr.

7 Chancellor, thus far, you've talked about the

8 sharing concept; you also talked about the

9 strengths and weaknesses of the system. You

10 talked about declining enrollment. What is the

11 strategy to address the things that you've

12 talked about thus far? For instance, you know,

13 my colleague just mentioned the 14 state

14 universities, some are in closer proximity than

15 others; some are doing much better than others,

16 as well.

17 But the overall, I guess, the overall

18 scope, the overall vision, how do you foresee

19 this? I mean, even as we look at it at from a

20 recruitment standpoint, we know that Cheyney and

21 West Chester are close to Philadelphia, the

22 largest-populated county in the Commonwealth.

23 But what is the strategy to attract,

24 whether it be first-time students, whether it be

25 returning students, whether it would be the 25

1 older populations going back to school, what is

2 the goal and what is the vision; what is, you

3 know, or how are we -- the strategy to attract

4 learners to these institutions?

5 CHANCELLOR GREENSTEIN: Yeah. So we've

6 talked about shared services on the cost side.

7 Again, on the revenue side, there's two ways to

8 grow enrollment. One is to do better with the

9 students you have, right? We have a 60-percent

10 graduation rate, which means 40 percent of the

11 students that we're enrolling, first-time

12 freshman, are not graduating from our

13 universities.

14 Every student that stays, the university

15 retains their revenue; so we're investing

16 significantly in retention through better

17 advising, better counseling, better supports for

18 students, generally.

19 The sharing system idea, which is

20 outlined in the book, enables our universities

21 not to work individually on these very hard

22 problems where there is some real progress being

23 made nationally, but to work together with one

24 another and, in fact, accelerate and amplify

25 their time to impact around a handful of very 26

1 well-known retention strategies.

2 In terms of enrollment growth, the

3 growth is unlikely to be, in my view, in the

4 high-school-leaving population in the State of

5 Pennsylvania. The growth is going to be in

6 serving that adult population which requires

7 reskilling and upskilling in order to take

8 advantage of the changing nature of work in the

9 state.

10 Referred to our data before, we have

11 exceptionally good, not just we, the

12 Pennsylvania State System, but the entire state

13 of Pennsylvania because spent rates to the top

14 money very well, I think, has incredibly good

15 workforce data; so we can be pretty precise in

16 predicting where there's going to be high need

17 and orienting programs to serve those needs and

18 to serve those populations.

19 REPRESENTATIVE KINSEY: Thank you for

20 that. So my colleague just asked you directly

21 about the potential of closing universities, but

22 do I interpret your answer was that, you are

23 not looking to close any of the 14 state-related

24 universities; is that correct?

25 CHANCELLOR GREENSTEIN: I don't think 27

1 closure makes viable sense, economically or

2 educationally.

3 REPRESENTATIVE KINSEY: Who makes that

4 determination? Who makes that decision? I'm

5 sorry.

6 CHANCELLOR GREENSTEIN: Ultimately, it

7 would be the decision of the Legislature, as I

8 understand, Act 188.

9 REPRESENTATIVE KINSEY: This body.

10 CHANCELLOR GREENSTEIN: This body. A

11 board could -- I believe within its authority, a

12 board could agree to not continue to fund one of

13 its universities by allocating state

14 appropriation.

15 REPRESENTATIVE KINSEY: I'm sorry. You

16 said who could --

17 CHANCELLOR GREENSTEIN: I believe a

18 board could make an allocation -- an

19 appropriation allocation decision, which would,

20 in effect, not allocate funds to a single --

21 just in terms of technical options, I believe

22 that's an option.

23 REPRESENTATIVE KINSEY: Okay. But it's

24 your recommendation not to close?

25 CHANCELLOR GREENSTEIN: I think for 28

1 different reasons, if we go university by

2 university, yeah, that would be my

3 recommendation or opinion.

4 REPRESENTATIVE KINSEY: Okay. I think I

5 have a little bit more time. So you've been

6 Chancellor for, roughly, how long now?

7 CHANCELLOR GREENSTEIN: About five

8 months.

9 REPRESENTATIVE KINSEY: Five months?

10 (LAUGHTER.)

11 CHANCELLOR GREENSTEIN: There's not been

12 a huge amount of sleep in that time.

13 REPRESENTATIVE KINSEY: Okay. Five

14 months. Throughout that duration of time, what

15 is the -- in your opinion, you know, I know that

16 there are many issues because you have 14

17 individual universities.

18 But, in your opinion, what is the

19 toughest challenge that you see right now? And

20 I'm asking this question, because again, we know

21 that some of the universities are doing well.

22 CHANCELLOR GREENSTEIN: Yeah.

23 REPRESENTATIVE KINSEY: You know, I went

24 to West Chester; and West Chester's doing well,

25 not because I went there, but it's doing well. 29

1 But there are challenges, nonetheless,

2 throughout the system. So what do you see as --

3 CHANCELLOR GREENSTEIN: So I mentioned

4 three before. I'll add one. The three I

5 mentioned before is, we have to deal with

6 tuition. We just can't keep pulling tuition

7 levers as hard as we have been, and that's going

8 to impose significant constraint on our

9 universities and their ability to deliver

10 against their mission; so tuition is one.

11 We have to get our costs aligned with

12 our enrollments. That's going to require a

13 number of very difficult decisions, and we're

14 going to have to deal with some of our

15 low-enrolled school problems. I mean, those are

16 just -- those are --

17 REPRESENTATIVE KINSEY: I'm sorry. What

18 was that?

19 CHANCELLOR GREENSTEIN: Dealing with the

20 challenges of our low-enrolled schools.

21 REPRESENTATIVE KINSEY: Oh,

22 low-enrolled. Okay.

23 CHANCELLOR GREENSTEIN: To the questions

24 that you've been asking, I think one of the

25 biggest issues that we face is that, in effect, 30

1 we're looking at universities that are between

2 120 and 180 years old. And for the duration of

3 that period, they've operated very well

4 independently of one another.

5 In effect, as a state single-corporate

6 entity, they share a single bank account; and

7 that as weaker universities begin to get weaker

8 still, they tug on the corporate body, which

9 means that our universities are going to have to

10 work together in ways they never have.

11 I mean, we do work well in a variety of

12 ways now; so don't take that in an extreme form.

13 But we're going to have to work collaboratively

14 more than we have ever worked collaboratively

15 before; because the success of any one

16 university is tied directly financially to the

17 success of the others.

18 REPRESENTATIVE KINSEY: Great. Thank

19 you for your answers. I see my time is up, but

20 thank you.

21 Thank you, Mr. Chairman.

22 MAJORITY CHAIRMAN SAYLOR:

23 Representative DeLozier.

24 REPRESENTATIVE DELOZIER: Thank you, Mr.

25 Chairman. Thank you, Chancellor, for being 31

1 here. I'm going down a little bit of the same

2 path that we've kind of talked about already.

3 But within the State Sytem, we're very proud of

4 our State Sytem and the schools that we have

5 included in there.

6 We understand, as you used the word

7 partnership a lot, understand that partnership

8 between funding and their success and want our

9 students to be well educated and stay here.

10 So that being said, at this point in

11 time in looking at the numbers here, we have, as

12 has been mentioned, a falling number of

13 enrollments. We have an increased number of

14 state dollars going to the school for less

15 students.

16 So we have less students that we're

17 educating. We have more online classes, as

18 well, with distance learning. We have many more

19 students starting out in community colleges to

20 cut costs, which is a smart way to go. We have

21 a very strong community college system.

22 As we move through all of this -- and

23 we've also had the conversations and we'll have

24 that again this week with Labor & Industry, of

25 workforce development and options to college. 32

1 Not every student is cut out for college.

2 My question directly to you is the fact

3 that when we negotiate the budget and we have,

4 and we've gone up in a 5-percent increase,

5 3-percent increase, 2-percent increase, in the

6 last 4 years, one of the negotiation

7 conversations that's had is that the State Sytem

8 will hold equal to give the benefit of the doubt

9 and not raise tuition.

10 Because I hear in my district here in

11 Cumberland County, the fact that, well, you need

12 to give the State System an increase so that the

13 in-state tuition will stay the same and I can

14 get those benefits.

15 I'd like to have your perspective on the

16 fact that we, as the state, continue to give

17 funds. And then last year, overtop the 3

18 percent, you also increased tuition by 3 percent

19 on the parents in Pennsylvania.

20 CHANCELLOR GREENSTEIN: Yeah. So

21 there's a couple things. Can I maybe refer to

22 pages 24 and 25? Because, in effect, it

23 establishes context for a lot of the

24 conversation we're having; and please don't take

25 this the wrong way. I'm just presenting the 33

1 data.

2 So if you look at what we show on pages

3 19 and 20, are the relative balance of funds for

4 any student that's enrolled; and we're comparing

5 what's happening in Pennsylvania with what's

6 happening nationally.

7 And Pennsylvania chooses to invest 27

8 percent of -- a total cost of the student FTE

9 comes from the state, and the remainder is made

10 up in student tuition. The average across all

11 states is 54 percent.

12 Okay. And again, those are education

13 public policy choices; they're funding choices.

14 A lot of the things that we're talking about are

15 driven to a certain extent by the choices that

16 have been made.

17 A different graph shows the situation

18 specifically. That's Pennsylvania, as a whole

19 different graph with the same data, but the

20 Pennsylvania State System is available elsewhere

21 in the document; and I'll find it in a second,

22 but -- in Appendix B(2). They look very

23 similar. So that's background, and that's

24 context.

25 And so the tuition increases that are 34

1 happening are happening, in effect, in response

2 to that changing environment. There's other

3 things going on, obviously. But if you're

4 looking at the macro level and the biggest

5 driver of tuition increases, that's what it is.

6 REPRESENTATIVE DELOZIER: But in taking

7 a look at other states, and I recognize where

8 other states are as we've seen over the years,

9 Pennsylvania is where it has been for a number

10 of years; so that situation hasn't drastically

11 changed in the fact of how much funding is out

12 there and what our student body looks like and

13 what we are to expect.

14 I guess, I know the parents that came to

15 me were extremely frustrated with the fact,

16 because that's their argument when they come to

17 see us and say, please, you know, look at the

18 increase to the State System because we need to

19 keep our in-state tuition lower.

20 CHANCELLOR GREENSTEIN: Yeah.

21 REPRESENTATIVE DELOZIER: And then we

22 agree to that; we make the decision; and the

23 budget moves forward. Fine, on that pretense.

24 And then when the Board makes the decision, and

25 I recognize that it's the Board as a whole, 35

1 makes the decision to then on top of the 3

2 percent, do another 3 percent.

3 So that was extremely frustrating to

4 those of us that we thought the agreement had

5 been that it would be a level playing field and

6 level from last year and no tuition increase.

7 Do you see that need of a tuition

8 increase this-coming year?

9 CHANCELLOR GREENSTEIN: So I think we

10 need to be super careful, in two ways. First of

11 all, I think we don't have anywhere near the

12 head room we used to. Because again, if you

13 look at the data and --

14 REPRESENTATIVE DELOZIER: I'm sorry. We

15 don't have any more --

16 CHANCELLOR GREENSTEIN: Anywhere near

17 the kind of headroom we used to have with

18 tuition. If you look at the data in the book,

19 and I'll find the page in a second, where we

20 look at a decline in enrollments from families

21 in different income categories, the families

22 from incomes in our core group -- it's on page

23 29 -- the families who are earning less than

24 110,000 are leaving us more quickly than our

25 overall enrollment decline. So that suggests to 36

1 me that we're reaching the top.

2 Now, it plays out differently on

3 different campuses; but that suggests to me that

4 we're beginning to reach the top of where we can

5 go with tuition increases. So, ideally --

6 REPRESENTATIVE DELOZIER: So it's based

7 on those students' income that you're looking

8 at? Is that what you're saying; that depending

9 on how much the family makes, determines --

10 CHANCELLOR GREENSTEIN: If you're

11 looking at indicators of market sensitivity to

12 price, which is what this is about, then I would

13 look at data like these (indicating) to say, Oh,

14 my goodness, if we have student populations who

15 are leaving us more quickly than the overall

16 enrollment decline, that suggests that price may

17 be an issue.

18 Thing one, we've got to be super careful

19 about tuition increases. Thing two, I don't

20 think you want us to be leaving money on the

21 table. There may be high-demand programs; there

22 may be high-earning populations who have some

23 headroom and some ability to pay more, so I

24 think we need to be super careful in our tuition

25 setting, which is why as part of the sharing 37

1 system, we're looking at more flexible

2 approaches to tuition setting and tuition

3 discounting, which are widely available in the

4 industry but not available to the Pennsylvania

5 State System.

6 REPRESENTATIVE DELOZIER: Do you see the

7 need for a tuition increase on top of any

8 dollars coming from the state this year?

9 CHANCELLOR GREENSTEIN: I would advise

10 the Board, because it would be in the Board's

11 decision in the way that I've just described to

12 you, to be extremely careful with tuition

13 setting because we don't have anything like the

14 headroom that we've had in the past.

15 And I would also advise the Board to be

16 very careful not to leave dollars on the table

17 from particular target populations.

18 REPRESENTATIVE DELOZIER: Is that a yes?

19 (LAUGHTER) Just kidding. Thank you, Mr.

20 Chancellor.

21 MAJORITY CHAIRMAN SAYLOR:

22 Representative Gainey.

23 REPRESENTATIVE GAINEY: Good afternoon.

24 Thank you for being here.

25 I just have a couple questions. One is 38

1 on affordability. One of the problems that

2 we've had, particularly in areas like -- I'm

3 from the City of Pittsburgh -- is the fact that

4 you have a lot of kids, particularly when you

5 look at the decrease in enrollment, you have a

6 lot of kids that would like to go to school but

7 they don't want to take on the heavy debt load.

8 And secondly, the affordability is

9 already -- is there a strategy over the next

10 10-year period to talk about how we make

11 college, particularly from our State Systems,

12 affordable for people that may have a difficult

13 time getting into them?

14 CHANCELLOR GREENSTEIN: Yeah. So, I

15 mean, I think there's a number of things. One

16 of them is -- obviously, getting control of our

17 costs is going to be critical. I think the

18 partnership we just talked about a moment ago

19 with the state is going to be absolutely

20 critical.

21 I think there's greater flexibility in

22 the use of tuition and tuition discounting,

23 which is so widespread elsewhere in the

24 industry, and is going to be absolutely

25 critical, so we can give help to the students 39

1 that need that help.

2 If you look at -- again in the book, if

3 you look under the section on affordability, we

4 show a line which identifies the rising cost to

5 students of university education against the

6 available aid from both federal and state

7 sources, Pell and PHEAA.

8 And Pell and PHEAA aren't actually

9 increasing at a rate which is as quick as the

10 rate of the total cost to student. So being

11 able to support those students with

12 institutional aid, i.e., taking money out of

13 your operating revenues and then targeting it to

14 individuals who are in need is a very important,

15 significant strategy across higher education and

16 not adequately available to us, because we've

17 been limited in that flexibility.

18 REPRESENTATIVE GAINEY: That should be a

19 strong strategy going forward of how we really

20 begin the conversation of how we make college

21 more affordable.

22 Again, I'm very happy with the State

23 System. My daughter graduated from Cal U. I

24 know Dr. Jones, and he's done a fantastic job

25 with my daughter; so I'm very happy. 40

1 But in regards to when we talk about

2 increasing tuition into our State Systems, the

3 second question is in marketing. How do we do a

4 better job from the state perspective in

5 marketing our State System?

6 Not only marketing, meaning internal to

7 the State of Pennsylvania, but also external.

8 It seems to me, wherever you market your brand,

9 your brand becomes receptive to people coming to

10 your university.

11 And one of the things that I've always

12 wondered is, what is the strategy we have for

13 really marketing our systems of higher learning

14 so that the people around the state and outside

15 the state know what great institutions we have

16 inside the State of Pennsylvania.

17 CHANCELLOR GREENSTEIN: Yeah. And I

18 think, you know, there is a great product out

19 there. I was actually blessed to be able to

20 visit each of our universities in my first

21 couple of months here, and I've now been to

22 several of them several times.

23 It is a remarkable education that's on

24 offer. It's not unique, but it's rare in the

25 public sector. And it is extremely -- it's a 41

1 jewel in the crown. So one way to market them,

2 obviously, is to promote that better as a

3 collective; and our universities do a great job

4 in marketing themselves.

5 Another way, and this is an ask in terms

6 of partnership, conversation about closures and

7 consolidations isn't helping. It's just -- it

8 is a pervasive meme.

9 The narrative around the Pennsylvania

10 State System, the things that were so remarkable

11 to me in my visits, was that they kept sort of

12 -- I was experiencing stuff which did not accord

13 with the narrative I had been hearing, that our

14 work is not workforce aligned. That's not the

15 case.

16 I mean, experientially, it's not the

17 case, that our universities are all the same.

18 That's, experientially, also not the case; that

19 the education that we're offering is somehow not

20 a high-quality education, also experientially

21 and data driven, not the case.

22 So, you know, I think focusing on those

23 aspects of this vital component part of public

24 higher education, the challenges are here; and

25 we can talk about those all day. They are real. 42

1 They are present. But we have those. We will

2 manage our way through them, in partnership

3 obviously, with the state.

4 But changing that narrative about who we

5 are and what we do, which I see as a

6 collaborative opportunity, is something that we

7 need to work on together.

8 REPRESENTATIVE GAINEY: What is the

9 (inaudible) narrative is important. And that's

10 why I asked about how do we market our great

11 product inside and outside the State of

12 Pennsylvania?

13 Second, the last thing I just wanted to

14 comment on was, I'm so glad to hear you talking

15 about not closing universities; because the

16 reality is, we have a great education product

17 and there's no question about that.

18 But, secondly, that's just as important,

19 to close some of these universities in some of

20 those municipalities would be destructive to

21 that municipality. The jobs that they create,

22 the service providers that they create, the

23 contracts that come from them, if we close some

24 of these schools in some of these

25 municipalities, we would damage the State of 43

1 Pennsylvania.

2 So I agree, in terms of a partnership,

3 but what we have to do is find the narrative of

4 how we market these universities and not how we

5 try to tear them down for the overall good of

6 the Commonwealth.

7 MAJORITY CHAIRMAN SAYLOR:

8 Representative Dunbar.

9 REPRESENTATIVE DUNBAR: Thank you, Mr.

10 Chairman. And not to one-up my good friend,

11 Representative Gainey and his one daughter, I

12 have two daughters that have graduated from

13 Slippery Rock, one just recently in December, so

14 -- and is gainfully employed, so she's off my

15 payroll. Thank you for that.

16 And, also, following up with

17 Representative Gainey talking about

18 affordability, and that is a big deal. As a

19 parent who's written the checks for the last

20 several years, affordability is a big deal.

21 And some of your comments earlier,

22 Chancellor, I wanted to follow up on, in

23 response to Representative Fritz about closures,

24 and since Representative Gainey had brought that

25 up as well. 44

1 You had mentioned about something that

2 maybe prohibited closures may have been debt.

3 And help me, because I really don't know the

4 answer. Is the State System's debt the System's

5 debt or the individual college's debt or the

6 Commonwealth's debt? Because I'm not exactly

7 sure of that. I know we have $5 billion on our

8 books.

9 CHANCELLOR GREENSTEIN: So my

10 understanding is that the obligations of the

11 System are first and foremost the System's

12 obligation. But if we go out of business, I

13 think we hand some of that debt off to you.

14 REPRESENTATIVE DUNBAR: And I appreciate

15 that. But at the same time, and I'm not

16 advocating for closures, but just the accountant

17 in me always wants to see things. Have we ever

18 analyzed closures to the point of, yes, it's

19 going to cost some money? We understand it's

20 going to cost some money. There's no doubt

21 about that.

22 CHANCELLOR GREENSTEIN: Yeah.

23 REPRESENTATIVE DUNBAR: But the

24 continual bleed that may be happening by some of

25 these colleges or universities, have we ever 45

1 done that comparison?

2 CHANCELLOR GREENSTEIN: So the answer

3 is, yes, we have analyzed the cost of closure;

4 and I'm happy to share those data.

5 REPRESENTATIVE DUNBAR: I would

6 appreciate that.

7 CHANCELLOR GREENSTEIN: And I think I

8 said earlier that, you know, some of our small

9 schools, while I do not believe closure is the

10 viable thing to do, either educationally,

11 financially, or frankly, politically, I also

12 said that some of our universities are going to

13 have to change transformatively, fundamentally.

14 I think I said they cannot look in four or five

15 years anything like they look today, in order to

16 address the issue that you just raised.

17 REPRESENTATIVE DUNBAR: And I would

18 appreciate if you could share that information.

19 Moving on to another question that

20 Representative Fritz had asked you about

21 capacity, I appreciate your answer that we have

22 a capacity issue in the Commonwealth.

23 And the issue I'd like you to comment on

24 is because not only do we fund the State System

25 schools, we also fund the state-related schools. 46

1 CHANCELLOR GREENSTEIN: Yeah.

2 REPRESENTATIVE DUNBAR: And now it seems

3 like we've gone from a transition of serving

4 different potential clientele to competing with

5 each other.

6 CHANCELLOR GREENSTEIN: Yep.

7 REPRESENTATIVE DUNBAR: When you talk

8 about a shared system amongst yourself, has

9 there ever been any discussion about a shared

10 system, since we're funding both? And I almost

11 feel bad that I'm funding my own -- people

12 competing against each other and driving up the

13 cost.

14 CHANCELLOR GREENSTEIN: Yeah. So this

15 is a major education public policy issue. I

16 know there are members of the House and the

17 Senate who are interested in taking it up.

18 Maybe it can be addressed through education

19 finance. It can be addressed through education

20 public policy, rationalization, stuff they did

21 in California in the 1960s.

22 I think it needs to be done in the State

23 of Pennsylvania. I say that as a newcomer and

24 as an education public policy guy. And I think

25 you'll find that leaders in the sectors are 47

1 willing to engage in that conversation. I think

2 it's a very important one to all of us.

3 I would just add into the mix that it

4 isn't just through appropriations that you're

5 supporting a variety of different institutions.

6 It's also through the use of PHEAA dollars;

7 because they're spread across, as you know, all

8 sectors. Yeah.

9 REPRESENTATIVE DUNBAR: Yeah. And is

10 that the legislative issues you were referring

11 to earlier, legislative changes you would need

12 to see or --

13 CHANCELLOR GREENSTEIN: So, no, the

14 legislative changes that I was referring to

15 earlier are the ones that would specifically

16 affect the Pennsylvania State System.

17 REPRESENTATIVE DUNBAR: Okay.

18 CHANCELLOR GREENSTEIN: There are others

19 that -- you know, there are two different

20 conversations. One of them has to do with what

21 I would call master planning for state of higher

22 education workforce alignment, which is a

23 multisector, cross-sector activity which is

24 designed, in effect, to align education supply

25 with workforce demand and demographic need. 48

1 On the other hand, there's a bunch of

2 legislative and regulatory issues that affect

3 the efficient operation of the State System and

4 its universities and those were the issues -- it

5 was those legislative and regulatory issues that

6 I was addressing previously.

7 REPRESENTATIVE DUNBAR: Well, I hope

8 going forward that there can be a robust

9 discussion in regards to that. It just seems

10 like we're competing with ourselves at times and

11 driving up the cost of education for all.

12 So I wish you luck.

13 CHANCELLOR GREENSTEIN: Thank you.

14 MAJORITY CHAIRMAN SAYLOR:

15 Representative Fiedler.

16 REPRESENTATIVE FIEDLER: Thank you, and

17 thank you for being here.

18 The benefits of our State System

19 obviously extend even beyond the benefits to

20 individual students and their families and the

21 communities. I understand it generates about

22 $11 in economic activity for every dollar that's

23 received through the annual appropriation.

24 Can you talk about that economic and

25 employment impact for the Commonwealth? 49

1 CHANCELLOR GREENSTEIN: Yeah, sure. It

2 rolls up to $6.7 billion. That's the number

3 that's swirling around in my head, and I hope

4 some of these numbers begin to leak out of my

5 head eventually so they're not so crowded in

6 there.

7 But, you know, which is a huge benefit.

8 Look, the challenge of workforce development, as

9 I understand it, from the data on Pennsylvania,

10 is not actually a challenge of having enough

11 people educated to a postsecondary level.

12 As this gentleman raised, it's an issue

13 of alignment. The graduates that we're

14 producing don't have the skills they need in the

15 high-demand areas; and, of course, the work is

16 changing. And so tightening up that alignment

17 is super important.

18 There's other benefits though that come

19 out of higher education, as you know. People in

20 higher education have an 84-percent wage premium

21 over those -- people with a BA degree, earn 84

22 percent more over the course of their life than

23 someone with a high school degree; so it has

24 salary implications; it has health outcomes

25 tracked directly with higher education, 50

1 participation in civic events, exposure to

2 unemployment.

3 All those things track directly with

4 educational attainment levels, so there's a

5 variety of benefits.

6 REPRESENTATIVE FIEDLER: Thank you. I

7 appreciate all those benefits. And I want to

8 also ask you one other thing. Yesterday, in

9 this Committee, we heard testimony about a

10 possible recession that we could face in the

11 coming years.

12 I think it's troubling to contemplate

13 that; but I think on behalf of our constituents,

14 we need to think about that possibility. And I

15 wondered, based on your past experience and in

16 best practices elsewhere, if you have any

17 thoughts on what we can do as a legislative body

18 to ensure that our State System is prepared to

19 face a possible economic downturn?

20 CHANCELLOR GREENSTEIN: So this exercise

21 is -- I've said it publicly elsewhere, so I'll

22 say it again. Look, we're not tweaking this

23 system. We are fundamentally transforming it.

24 That's where we are. We're not just doing that

25 because we need to in order to address our 51

1 current circumstances. We're doing that to

2 future-proof the system. Not because it's about

3 the System and its universities, but it's about

4 the people of Pennsylvania.

5 It is about continuing to meet the

6 workforce need of the state in an ongoing way,

7 recognizing that the demographics of the state

8 and the needs of its employers are changing

9 rapidly.

10 You know, I've said it publicly

11 elsewhere; I'll say it again: We really need to

12 be engaged in operation, which is fundamentally

13 changing everything we do in order that we can

14 continue to pursue that same historic mission in

15 a way that's relevant to the 21st century.

16 REPRESENTATIVE FIEDLER: Thank you.

17 CHANCELLOR GREENSTEIN: Thank you.

18 MAJORITY CHAIRMAN SAYLOR:

19 Representative Brown.

20 REPRESENTATIVE BROWN: Thank you, Mr.

21 Chairman; and thank you, Chancellor. So, in

22 government, we have funding formulas,

23 transportation funding formulas, K through 12

24 formulas, formulas for our higher education.

25 And so, last year, the appropriation of 52

1 15 million was a 3-percent increase for PASSHE.

2 But with that, there's the assumption, I think,

3 that every school is going to increase by 3

4 percent in their funding, which is not really

5 the case.

6 The Board of Governors, as you mentioned

7 a little bit earlier, has the ability for

8 appropriations among each of the 14

9 universities.

10 CHANCELLOR GREENSTEIN: Yeah.

11 REPRESENTATIVE BROWN: My concern there

12 is, I have seen vast inequities as far as that

13 funding formula among our universities. And

14 with the good work I know you are trying to do

15 in coming in and basically overhauling and

16 trying to really improve our system, I'd like to

17 know what you think about that formula, maybe

18 the facets that create that formula, and also

19 what changes you may be looking at --

20 CHANCELLOR GREENSTEIN: Yeah.

21 REPRESENTATIVE BROWN: -- with that

22 formula, that I would hope would ensure that

23 there is equality among these different

24 universities.

25 CHANCELLOR GREENSTEIN: Yeah. So it's 53

1 interesting, presidents are obviously meeting

2 over the last couple of days for apparently

3 annual winter retreat; and this is a big issue.

4 It's part of our System redesign. And it is

5 really -- we're basically rebuilding.

6 We will be back here next year. It

7 won't be perfect next year, but it will be

8 better. We will be back here next year, having

9 gone through a very different internal budgeting

10 process.

11 I'll get to the allocation in a second.

12 It's a budgeting process which is designed to

13 enable us to say, for these amount of dollars,

14 we will expect the following kinds of outcomes

15 and we will also expect to hold ourselves and

16 have you hold us accountable to those outcomes

17 at that cost.

18 On the allocation specifically, I think

19 the allocation is imperfect. I think my

20 colleagues would agree that it's imperfect. I

21 think it is not designed for a system of

22 universities which have to work collaboratively

23 together, in which every university's success is

24 reliant upon the success of the others.

25 We are going to have to invent, and we 54

1 haven't done it yet, a fiscal policy, very much

2 like a fiscal policy that you might see in, you

3 know, tax or other public sectors, which

4 incentivizes growth amongst those who are

5 wealthy and able to grow and allows us also to

6 support those that are in weaker circumstances

7 so they can get stronger for the good of the

8 whole.

9 That kind of collaboration, that's not

10 just collaboration, that's fiscal policy; and

11 that is ultimately going to affect the way we

12 allocate funding. It has to. I'm just now

13 going to manage expectations, having raised

14 them.

15 We will not -- we will use, I think we

16 decided, we will recommend to the Board that it

17 uses the current allocation formula this year

18 for one last time.

19 And the rationale is predictability on

20 the part of the universities in terms of their

21 funding and give us time to actually work out

22 what will ultimately be a much more complicated

23 allocation procedure, yeah.

24 REPRESENTATIVE BROWN: Yeah. I think

25 those details are very important. I've watched 55

1 funding formulas really cause major havoc --

2 CHANCELLOR GREENSTEIN: Yeah.

3 REPRESENTATIVE BROWN: -- among our

4 education system and other issues:

5 transportation, and trying to get ahead of them

6 and make sure that we don't have any further

7 problems; but I would love to see what that

8 formula is.

9 CHANCELLOR GREENSTEIN: Me, too. Do you

10 have one?

11 REPRESENTATIVE BROWN: No. Can I --

12 oftentimes, it's very hard with formulas for

13 everyone to know the details; but I would like

14 to see that. I would like to know what that

15 current formula is, if possible, to get that

16 from you, that we will be relying on this year.

17 CHANCELLOR GREENSTEIN: Yeah.

18 REPRESENTATIVE BROWN: And then be

19 looking at what maybe some of those changes

20 would be for the future to ensure that we're not

21 creating winners and losers and fighting, again,

22 within ourself the incorrect way.

23 CHANCELLOR GREENSTEIN: Yeah.

24 REPRESENTATIVE BROWN: I do have one

25 other question, and we'll see how we do with 56

1 time.

2 At last year's hearing, your predecessor

3 spoke of a disconnect between the negotiation of

4 labor contracts and finding the money to pay for

5 them. The current faculty contract expires on

6 June 30th; so you are currently negotiating a

7 contract for at least the next fiscal year,

8 correct?

9 CHANCELLOR GREENSTEIN: Correct.

10 REPRESENTATIVE BROWN: Okay. Are there

11 any other changes besides salary that you will

12 be seeking in this contract and any changes that

13 will help this system hold down expenses maybe

14 and operate more efficiently and effectively?

15 If so, what would be those changes?

16 CHANCELLOR GREENSTEIN: The great beauty

17 of system redesign is that there's nothing we're

18 not trying to change, but certainly the

19 relationships with the faculty union in

20 particular is something that we know we need to

21 change; and we're working very closely with

22 leadership of that union in order to take a more

23 collaborative approach to the success of this

24 system and its universities and ultimately our

25 students. 57

1 As part of that, we've made a number of

2 steps, sharing in the exploration of our data;

3 so we can come to some shared understanding of

4 what our fiscal condition is and what the

5 condition of our students is.

6 We are taking an interest-based

7 bargaining approach, which is different than the

8 normal positional bargaining. Positional

9 bargaining, parties come to the table, each has

10 a position, they throw the positions down --

11 tell me if I'm getting this wrong -- and then

12 they negotiate.

13 In an interest-based bargaining, the

14 parties get together and they agree together

15 what are the issues they want to work on

16 together in the interest of the common good. So

17 that's the approach we're taking.

18 It's early days, but I'm optimistic.

19 REPRESENTATIVE BROWN: Okay. More to

20 come. Thank you, Mr. Chairman.

21 MAJORITY CHAIRMAN SAYLOR:

22 Representative Bullock.

23 REPRESENTATIVE BULLOCK: Thank you,

24 Chairman. Good afternoon, Chancellor. How are

25 you? 58

1 CHANCELLOR GREENSTEIN: I'm good,

2 thanks. Thank you.

3 REPRESENTATIVE BULLOCK: Great. Welcome

4 to the State System. I had a few questions for

5 you. I would just like you to paint a picture

6 of what our State System looks like.

7 Can you share with me -- first, I

8 understand that the State System employs about

9 12,000, a little bit over 12,000 faculty and

10 staff across this Commonwealth. It's one of the

11 biggest employers in our state.

12 Can you share what that staff looks

13 like? How many minorities do we hire; women;

14 what is the comparison to last year?

15 And I'm going to ask you a little

16 further question, because I really do appreciate

17 the work of our staff. Can you give me any

18 other demographics?

19 What is the average time that a faculty

20 person has spent with the university, if you

21 have any of those kinds of details?

22 CHANCELLOR GREENSTEIN: Yeah. I'm going

23 to have to get back to you on the -- I can give

24 you a breakdown of the types of staff, the

25 number of faculty, number of staff. I'm going 59

1 to have to get back to you on the demographic

2 breakdown.

3 REPRESENTATIVE BULLOCK: Great.

4 CHANCELLOR GREENSTEIN: Two data

5 sources, which will definitely be in front of me

6 next time, but I can also get that information

7 to you. And can you remind me of the other

8 aspect of your question?

9 REPRESENTATIVE BULLOCK: The first part

10 with regards to minorities versus women or with

11 regards to --

12 CHANCELLOR GREENSTEIN: Yeah, I don't

13 have the demographic data on that one with me.

14 REPRESENTATIVE BULLOCK: So my other

15 question is understanding the dedication that

16 our faculty and staff have to our State System.

17 CHANCELLOR GREENSTEIN: Yeah.

18 REPRESENTATIVE BULLOCK: Any

19 demographics around time that they have been

20 with our system or, you know, what is the

21 average tenure for faculty and staff --

22 CHANCELLOR GREENSTEIN: Yeah.

23 REPRESENTATIVE BULLOCK: -- anything on

24 that?

25 CHANCELLOR GREENSTEIN: Let me reflect 60

1 on my experience. So at each one of our

2 universities at each one of my visits, I would

3 do a focus group with faculty and staff, and I

4 would meet with different groups in different

5 combinations.

6 And I would always go around the room

7 asking people, you know, tell me your name.

8 What do you do? How long you've been here. And

9 then we always did an icebreaker, like, if you

10 could be an expert instantly in something, what

11 would it be and why, you know, just to kind of

12 clear the air.

13 And I was -- it was remarkable about the

14 longevity of the tenure and the duration of

15 employment. I mean, these are -- I mean, it's

16 one of the unique aspects of -- these are

17 communities.

18 They are communities of dedicated people

19 who have often been in those communities and

20 like many of you, have had relatives and sons

21 and daughters and aunts and uncles and parents

22 who have also been to that university. It is a

23 unique feeling.

24 REPRESENTATIVE BULLOCK: It's a family.

25 CHANCELLOR GREENSTEIN: That it's a 61

1 little bit out of the Andy Griffith Show, but in

2 a good way, if I'm giving away my age. And that

3 shows up in the longevity of employment, in the

4 relative dearth of -- you know, there's

5 turnover, but absence of turnover and long

6 service and long standing. It is remarkable.

7 And it shows up, in particular, in the students.

8 When the students -- yes, everybody had

9 a bad experience with somebody; but they don't

10 lead with that. In fact, you have to dig for

11 that.

12 They will lead with the overall

13 experience that they're getting from their

14 faculty, from their advisors, from the resident

15 hall assistants, from the people who are working

16 with them in student supports from the

17 administrative staff.

18 It is a community, great tight-knit; and

19 it's under pressure, and that shows up, as well,

20 in ways which are both, in some ways, profound

21 and sad.

22 REPRESENTATIVE BULLOCK: Yeah, I think

23 that's what I was getting at, is that we

24 understand that our faculty, staff, our

25 administrators are all partners in our State 62

1 System and that they're dedicated; and I want to

2 thank all of them that are here with you today,

3 that they're dedicated to serving our students,

4 serving the system, and making sure that we get

5 through this sort of hurdle that we're in at

6 this point. And I want to thank them for their

7 service and for their years working with our

8 students.

9 Can you also paint a picture of what our

10 students look like, you know, any demographics

11 you have around, who are the students that are

12 using the State System?

13 How many are first-generation college

14 attendees? How many are from Pennsylvania,

15 immediate neighborhoods, any of those things,

16 average age?

17 CHANCELLOR GREENSTEIN: Yeah. So the

18 majority of our students are obviously

19 undergraduate, 85 percent; 59 percent of them

20 are women. The vast majority are from

21 Pennsylvania, 88 percent.

22 According to our alumni survey, the vast

23 majority of them stay in Pennsylvania. About

24 three-quarters of those that are employed are

25 here in Pennsylvania. 63

1 The vast majority are full-time, come to

2 us directly out of high school. Twenty-five

3 percent of our students are from minority

4 populations.

5 That's almost reflecting the

6 demographics of the State of Pennsylvania. And

7 there is particular growth, as you'd almost

8 anticipate, in the Hispanic population. We

9 expect that to continue.

10 The vast majority of our students come

11 to us as new freshman, about 17,000; but we get

12 6,000 every year in transfers mostly from the

13 community colleges but also from other sources,

14 and I could go on.

15 In terms of Pell students, it's about a

16 third. First generation is going to be close to

17 that, as well.

18 REPRESENTATIVE BULLOCK: Thank you.

19 Do you have any numbers on the number of

20 students who are parents?

21 CHANCELLOR GREENSTEIN: I do not. Ten

22 percent of -- it doesn't matter -- but ten

23 percent of our students are -- ours is a

24 traditionally high-school-leaving population.

25 Ten percent of our students are in the adult 64

1 population. I can get you -- can I get those

2 numbers? We can try to get you those numbers.

3 REPRESENTATIVE BULLOCK: I appreciate

4 that. Last -- my time is up.

5 Thank you, Chancellor.

6 MAJORITY CHAIRMAN SAYLOR: Next, is

7 Representative Owlett.

8 REPRESENTATIVE OWLETT: Over here.

9 Thank you, Chancellor, for coming out today; and

10 I thank you so much for being involved in the

11 process of change.

12 I love your quote in here of not looking

13 to tweak the system, but really fix it and take

14 it on. Thank you for being engaged in our

15 business community in our area as to what

16 Mansfield can do and offer students in our area.

17 I really appreciate that.

18 I just want to ask you a question on the

19 sharing system. What specifically is holding us

20 back or maybe from making that change right

21 today?

22 CHANCELLOR GREENSTEIN: Oh, my goodness.

23 REPRESENTATIVE OWLETT: Sorry.

24 CHANCELLOR GREENSTEIN: So let me talk

25 about the things that I expect to deliver -- to 65

1 come here and talk to you about the next time

2 over the course of -- and they are things that

3 are not yet in place, but need to be in place.

4 We already talked about having goals for

5 the system, but also for the individual

6 universities and how the universities contribute

7 to those goals. We will have those goals this

8 time next year.

9 We do not have an internal budget

10 process. Sorry. We need strategies at the

11 university level and at the system level for

12 achieving those goals.

13 We need budgets that align with those

14 strategies, right? We will begin to have those

15 conversations with you. We will begin to show

16 results around that this time next year.

17 We do not have an accountability

18 framework where we cannot only hold ourselves

19 accountable by reporting information -- I think

20 we do routinely -- but that we can hold

21 ourselves accountable for the actions and

22 inactions that we're taking in pursuit of those

23 goals, right?

24 What does it mean for us as a system to

25 recognize an institution in a weaker state to 66

1 make an investment in that institution? When do

2 we know to double-down, because it's going well,

3 or it could be a stronger university; or when do

4 we know -- what does a stop-loss look like?

5 Those are -- that's accountability.

6 It's accountability, not just to the

7 Board and to the Legislature; it's

8 accountability to universities to one another in

9 a system where the success of one relies on the

10 success -- we'll begin to have those

11 conversations with you, and we will have that

12 structure in place.

13 We need a budget system that supports

14 that, where all of our universities are

15 developing budgets in a way that's comparable;

16 so we can talk about apples and oranges when

17 we're talking about money.

18 We will begin to have that -- we will

19 have that budget not -- I'm sorry; not by

20 October, but hopefully by February, and then the

21 allocation formula that drives it.

22 So there's a lot of pieces that need to

23 be put in place, basic enterprise management

24 tools that you would expect to see in a $2.3

25 billion enterprise, which simply aren't yet in 67

1 place. And then as we're doing that, we can go

2 deep and build out the infrastructure that's

3 necessary to support the sharing system.

4 REPRESENTATIVE OWLETT: Great. I really

5 love the idea, and look to talk more about it.

6 In that system, in this sharing system,

7 I'm just curious, would a student -- say, a

8 student at Mansfield University, what percentage

9 would that student take in classroom versus

10 potentially online?

11 Would it be -- could we see these

12 students taking more than 50 percent of their

13 classes online --

14 CHANCELLOR GREENSTEIN: Yeah.

15 REPRESENTATIVE OWLETT: -- and less than

16 50 percent in classroom?

17 CHANCELLOR GREENSTEIN: Yeah. So it's

18 really interesting. So first thing, is that

19 about 47 percent of our students currently take

20 at least one course online, which is actually

21 high.

22 The national average is about a third.

23 So we're already creeping up. And that's good.

24 I mean, it gives students more options. It

25 makes us more available to working students and 68

1 working adults.

2 But having said that, students aren't

3 all the same, right? An adult student who's

4 returning to college to get a short-course

5 certificate that allows them to do better in the

6 extraction industry is fundamentally different

7 from a kid from the inner city of Pittsburgh who

8 comes to a university and needs a different kind

9 of experience directly out of high school,

10 right?

11 And the use of online should be, and is,

12 different for those different kinds of students.

13 It's more appropriate with some populations in

14 some cases than it is for other populations, for

15 different objectives.

16 REPRESENTATIVE OWLETT: Great.

17 CHANCELLOR GREENSTEIN: And we need to

18 be that refined in our thinking.

19 REPRESENTATIVE OWLETT: Great.

20 Totally different subject. With the

21 general appropriations in the educational, about

22 $65 million per year is in capital funding from

23 the Commonwealth.

24 How do you prioritize projects with that

25 money? And can you walk us through the process 69

1 of how that goes and help us understand that a

2 little bit?

3 CHANCELLOR GREENSTEIN: I can. And the

4 number has gone up to 70, I think, annually. So

5 thank you very much for that increment.

6 The process is one where, you know, need

7 is taken in from all of the universities and

8 then funds are allocated on the basis of -- it's

9 kind of a mix of need and urgency and also

10 probably an element of, you know, who's next.

11 This is something, again, as part of the

12 allocation formula that we will need to address.

13 How do we strategically allocate capital and

14 other kinds of dollars in order to achieve

15 system objectives?

16 It may be for a period of time more

17 appropriate to funnel more money into

18 universities X, Y, and Z, in order to achieve

19 critical systemwide objectives which may have to

20 do with student success or university financial

21 health and to dial back in other places.

22 So again, this strategic use of funding

23 which is outcomes driven and there's

24 accountability put in place in order to report

25 and react accordingly, is going to be a part of 70

1 our future.

2 REPRESENTATIVE OWLETT: And I realize

3 I'm out of time, but I have one real quick

4 question for you: Besides Mansfield, which

5 school has the best food? Second to Mansfield,

6 who has the best food?

7 CHANCELLOR GREENSTEIN: The best food?

8 You know, it's so funny; because every time I've

9 eaten on a university campus, it is

10 exceptionally good at every single one.

11 REPRESENTATIVE OWLETT: That was safe.

12 CHANCELLOR GREENSTEIN: It's remarkable.

13 (LAUGHTER AND APPLAUSE.)

14 REPRESENTATIVE OWLETT: Thank you.

15 MAJORITY CHAIRMAN SAYLOR:

16 Representative, I'll answer that for you: IUP.

17 Anyway, the next questioner is

18 Representative Schweyer.

19 REPRESENTATIVE SCHWEYER: Thank you, Mr.

20 Chairman. Chancellor, welcome.

21 One of the benefits to serving on the

22 Appropriations Committee for more than one year

23 is having a little bit of history. And for the

24 last three or four years during these

25 Appropriations Hearings, I've asked you and your 71

1 two predecessors sort of the same question about

2 what are you doing to try to attract and retain

3 urban kids, particularly those urban kids that

4 don't necessarily look like me?

5 And sort of famously, okay, famously, in

6 the perspective of people who sit and watch

7 Pennsylvania House Budget Hearings, there was an

8 announcement last year or two years ago -- they

9 all sort of blend together -- about a $1.5

10 million initiative from one of your

11 universities, specifically, to target Hispanic

12 and Latino kids.

13 The reward for that $1.5 million

14 announcement or whatever the dollar figure was,

15 is that your total enrollment of new kids

16 joining your system who are Latino, has dropped

17 from 1130, which is pathetically low on your

18 best year, to 985 kids in the entire

19 Commonwealth of Pennsylvania who said as your

20 lineage here as Latino or Hispanic in your

21 entire system.

22 CHANCELLOR GREENSTEIN: Yeah.

23 REPRESENTATIVE SCHWEYER: Whatever

24 you're doing, it is woefully inadequate. It is

25 shameful, and it needs to improve. 72

1 Now, our African American kids, by your

2 own numbers, you had 1865 across the entire

3 Commonwealth and that includes one of your 14

4 universities being a historically black college;

5 so, Huh?

6 CHANCELLOR GREENSTEIN: So couple

7 things: Let me take your first question, which

8 had to do with what are we doing? So,

9 obviously, reaching into schools, into community

10 colleges, into communities, doing all the normal

11 things, putting in place and strengthening the

12 obvious pipelines, working deeply within

13 communities, whether it's through churches or

14 neighborhoods or whatever.

15 But then I want to step back and I want

16 to say, Look, this is a national issue. I

17 spent, in my previous life, I administrated a

18 large scholarship program, a $1.8 billion

19 scholarship program. It was the Gates Millenium

20 Scholarship Program.

21 And it was in service to

22 African-Americans, Hispanics, Native Americans,

23 and I knew I was going to screw this up, Asian

24 Pacific Islanders. And in these communities

25 you're talking often about college-going 73

1 culture, which doesn't exist, right? It is --

2 and I agree with you, it is a national problem;

3 you could even argue it's a disgrace. Frankly,

4 it's an economic problem; because if we do not

5 do better with those students, we will not meet

6 our workforce development needs either in this

7 state or in this nation.

8 So it has urgency whether you're

9 interested from an equity point of view or from

10 a workforce development point of view. But it's

11 not like you can just turn a switch and create a

12 college-going culture where one doesn't exist.

13 Right?

14 So it's a partnership between

15 universities, between schools, between

16 communities, and with the Legislature and other

17 constituencies. So I agree with you. This is a

18 challenge.

19 I, frankly, don't agree; and one of the

20 reasons I came here, our data are shameful. Our

21 data are actually pretty good. If you look at

22 the attainment gaps that we've registered -- and

23 we're registering the closure and attainment

24 gaps that we've achieved with minority

25 populations over the worst ten years that are 74

1 known in higher education, I would ask the

2 question differently which is, How can you guys

3 actually continue to return those results in an

4 era of such financial hardship?

5 So I don't disagree with you that

6 there's a great deal more to do on the equity

7 front. There's a great deal more to do on the

8 equity front, but we're talking about major

9 structural difficulties that the state and the

10 nation are facing and those difficulties are not

11 uniquely or exclusively going to be handled by

12 any university or higher education.

13 So I would argue we're doing pretty

14 well. There's a lot more that we can and should

15 do.

16 REPRESENTATIVE SCHWEYER: 985 kids that

17 are Hispanic across the Commonwealth of

18 Pennsylvania chose your 14 universities.

19 CHANCELLOR GREENSTEIN: I'm not --

20 REPRESENTATIVE SCHWEYER: I'm sorry. I

21 don't -- I just fundamentally disagree that that

22 is somehow a positive indicator for --

23 CHANCELLOR GREENSTEIN: 985 new

24 students?

25 REPRESENTATIVE SCHWEYER: In that 985, 75

1 according to Appendix A6 of your own chart that

2 you --

3 CHANCELLOR GREENSTEIN: Correct, those

4 are freshmen.

5 REPRESENTATIVE SCHWEYER: Freshmen,

6 that's correct. That's correct.

7 CHANCELLOR GREENSTEIN: Multiply by four

8 or five.

9 REPRESENTATIVE SCHWEYER: Okay. Still

10 not good enough.

11 CHANCELLOR GREENSTEIN: I do agree.

12 REPRESENTATIVE SCHWEYER: I represent a

13 school district of 17,000 kids. Ninety percent

14 of them are kids of color.

15 CHANCELLOR GREENSTEIN: And how many are

16 going to college?

17 REPRESENTATIVE SCHWEYER: A couple

18 thousand. Couple thousand. And I have, as a

19 member of the Appropriations Committee, as a

20 third-term member of the Legislature, one of 253

21 overall votes to fund your universities, and I'm

22 not seeing any investment in our -- in at least

23 my urban core -- the urban core I represent, in

24 terms of any kind of real outreach. And I've

25 been asking, begging, pleading for this for some 76

1 kind of effort from your 14 universities for the

2 last three years on this Committee.

3 Whatever your collective efforts are,

4 they are not good enough in our urban core and

5 our urban core of kids of color. And I'm

6 thrilled to hear that you're looking at the

7 entire system from a completely different

8 perspective.

9 Quite frankly, and I'm going to be

10 perfectly candid, this is the first time I'm

11 hearing anything from PASSHE. As a supporter of

12 higher education, this is the first time I'm

13 hearing from PASSHE an overall desire to change

14 the way you're doing things.

15 I'm going to beg and implore you, and I

16 will say my future votes for appropriations are

17 going to continue to be tied upon the fact that,

18 as part of your reforms, you're going to have to

19 do a better job in building real relationships

20 with our communities of color, our at-risk kids,

21 regardless of what urban core they're part of or

22 what area of the Commonwealth they are; because

23 what we are doing now is not working.

24 Thank you, Mr. Chairman.

25 CHANCELLOR GREENSTEIN: May I respond? 77

1 And you should expect no less from us. And just

2 to point out, that the goals we were talking

3 about before, the system and the

4 university-level goals we were talking about,

5 they will be -- the data and the goals

6 themselves will be disaggregated, which means

7 that you will be able to identify goals for

8 individual populations.

9 REPRESENTATIVE SCHWEYER: And I do

10 appreciate that. Thank you.

11 MAJORITY CHAIRMAN SAYLOR:

12 Representative Lawrence.

13 REPRESENTATIVE LAWRENCE: Thank you, Mr.

14 Chairman. And thank you, Dr. Greenstein, for

15 appearing before the Committee today. I greatly

16 appreciate it.

17 I realize you're new to your position,

18 having served for five months; but I wanted to

19 speak with you with regard to expenditures at

20 the California University of Pennsylvania over

21 the last several years, specifically.

22 And I realize many, if not all of these

23 things, were before your time. $59-million

24 convocation center built largely with borrowed

25 money that is not meeting expectations; $12 78

1 million new parking garage, six years old,

2 closed for the last three years due to

3 substandard construction; the loss of at least

4 half a million dollars in revenue to the

5 university; roof replacement of the Old Main

6 Building, approved at a cost of $500,000; later

7 required a 20-percent-increase change order;

8 $800,000 renovation of the president's home;

9 $750,000 softball field.

10 Fiscal year 2017-2018 required a

11 20-percent drawdown of the reserve fund, just to

12 make payroll. My understanding is, the most

13 recent fiscal year resulted in a $478,000

14 surplus.

15 But according to press releases, the

16 surplus is being used to fund new initiatives,

17 not to be used to pay any of these

18 previously-incurred expenses.

19 This is at a university where enrollment

20 has dropped 20 percent since 2010, and the

21 university that has over $150 million in total

22 debt, and serves less than 7500 students.

23 My question to you, Dr. Greenstein, is

24 do you believe this track record of expenditures

25 is problematic? 79

1 CHANCELLOR GREENSTEIN: So a couple

2 things. I believe the financial condition of

3 the university right now is something that needs

4 to be addressed, not as a matter of casual

5 inquiry but as a matter of some urgency and

6 haste.

7 Thing two, in a sharing system, where

8 universities, individually their success is

9 reliant on the success of one another, budgeting

10 practices and allocation practices and

11 tuition-setting policies that we're talking

12 about are done in camera with a group of

13 presidents and their leadership teams in advance

14 of even a Board action, looking at each other's

15 strategies and budgets on the one hand and their

16 dashboard of financial results and student

17 outcomes on the other and asking one another

18 tough questions, exactly the kind of questions

19 you're asking me.

20 That's the kind of accountability that

21 we need to exercise internally in order to

22 ensure the continued strengthening of our

23 universities.

24 Those are the kinds of practices that

25 we'll be putting in place. Those are the kind 80

1 of budgeting practices that we'll be able to

2 share with you that will be outcomes oriented,

3 so that you can ask exactly the kinds of

4 questions you're asking; but then follow on in

5 saying, And how does that help you, university,

6 or system, get to the specific goal that you've

7 outlined in your strategy?

8 So that's where we're going. I can't

9 speak to or own much of where we've come from.

10 I can tell you that the aggregate effect of

11 challenging decisions -- remember these are

12 decisions taken at different times when the

13 world looked different, right, and we're trying

14 to build in order to attract students.

15 That was the way to address enrollment

16 challenges, right? We're now actually dealing

17 with that legacy.

18 REPRESENTATIVE SCHWEYER: Let me ask you

19 this question: Do you believe additional

20 oversight of the California University of

21 Pennsylvania's Board is required?

22 CHANCELLOR GREENSTEIN: I believe that a

23 higher level of internal accountability is

24 required for the Pennsylvania State System and

25 its universities. 81

1 REPRESENTATIVE SCHWEYER: What form

2 would you suggest that takes?

3 CHANCELLOR GREENSTEIN: So aligning our

4 budget practices, so that they're goal oriented,

5 involving in a very transparent process

6 involving our university leadership so that they

7 can advise and support one another and advise

8 the Board in terms of how money is allocated and

9 tuition dollars spent, full transparency in

10 reporting to the state, not just in terms of

11 here's a cost-to-carry budget next year, which

12 is what we've typically done; but here's a

13 budget and here are the outcomes that you can

14 expect from it.

15 Those are the kind of changes. And I

16 expect to have them implemented within the next

17 12 to 15 months.

18 REPRESENTATIVE LAWRENCE: Very good.

19 I'll look forward to asking you next year, and

20 hopefully we can work between now and then.

21 CHANCELLOR GREENSTEIN: Very good.

22 REPRESENTATIVE LAWRENCE: Thank you, Mr.

23 Chairman.

24 MAJORITY CHAIRMAN SAYLOR:

25 Representative Cephas. 82

1 REPRESENTATIVE CEPHAS: Thanks, Mr.

2 Chairman. Thanks, Chancellor for coming to

3 testify today. I wanted to see if you can

4 expand on a topic that you just brought up, and

5 that's your experience at the Bill and Melinda

6 Gates Foundation.

7 I had an opportunity to work at a

8 nonprofit prior to me coming to the Legislature,

9 and I recognize the role of the philanthropic

10 community.

11 Oftentimes, they're able to take deeper

12 dives into public policy issues that we're

13 trying to tackle, similar to the issues that

14 Representative Schweyer just brought up; but

15 they're also able to help us achieve some goals

16 that you specifically outlined.

17 So how are you using, pretty much, the

18 work that you did at the Foundation to achieve

19 the goals that you are trying to reach within

20 this system?

21 CHANCELLOR GREENSTEIN: So I bring

22 perspective on, you know, education and public

23 policy strategy techniques. I can ring people

24 up; some people still call me back. Those are

25 all very valuable. What's really been very 83

1 interesting to me, quite honestly, is the

2 engaging with my colleagues here in something

3 that you don't see from the philanthropic world;

4 and that is the challenges of change management

5 are deeply cultural and they're deeply

6 emotional.

7 And the philanthropic world doesn't

8 really engage in that kind of change management

9 practice. They tend to be -- certainly at the

10 Gates Foundation, they're much more kind of

11 technocratically driven; so it's a great

12 opportunity to sort of integrate the stuff which

13 comes out of philanthropy with the stuff that

14 real change is made of.

15 REPRESENTATIVE CEPHAS: How are you

16 specifically leveraging your relationships with

17 the philanthropic community with improving the

18 system? You said some still call you back. So

19 if Bill is still calling you back, tell him we

20 need an investment.

21 CHANCELLOR GREENSTEIN: That is -- yeah,

22 he's got a lot of asks, I'm told, right? Yeah.

23 No, I appreciate that. You know, as with other

24 philanthropic work, it's really important to

25 stay -- to ensure that the work you're doing is 84

1 aligned with the work that the philanthropy

2 wants to move forward.

3 That alignment may or may not come with

4 the Bill and Melinda Gates Foundation,

5 specifically, but there are other foundations

6 that are very interested in the kinds of work

7 that we're doing here.

8 I mean, to be perfectly honest, and I

9 think I said it in my letter in the advance to

10 the book, look, the challenges that we're facing

11 here in Pennsylvania, they're not unique;

12 they're just superacute.

13 They're more acute than they really are

14 pretty much anywhere, so a lot of folks are

15 watching and there's a lot of interest in what

16 we're doing.

17 Because win, lose, or draw, there's

18 going to be a lot of lessons learned. And, you

19 know, that itself, I mean, it sounds a little

20 weird; but it's actually a leverageable asset,

21 and I expect to leverage that extensively.

22 REPRESENTATIVE CEPHAS: Great. My next

23 question is in reference to high-priority

24 occupations.

25 CHANCELLOR GREENSTEIN: Yeah. 85

1 REPRESENTATIVE CEPHAS: When you have an

2 uptick of older adults returning to our

3 postsecondary institutions into this system to

4 either skill up or get advanced certifications

5 so it makes them more marketable, how are you

6 -- have you begun to bring in programs that

7 offer certificate programs or two-year degrees

8 so individuals, if they are interested in,

9 again, getting more credentials, are able to use

10 that as an option versus getting a four-year

11 degree or --

12 CHANCELLOR GREENSTEIN: So we have some

13 of that. I think we offered last year -- we

14 produced 2000 AA degrees and 400 or 500

15 certificates. But certainly in the certificate

16 space, and maybe in the AA space, certificate

17 space certainly is a growth area.

18 And it requires us to work closely with

19 industry. You know, industry will often say,

20 you know, we need workers to show up. It's hard

21 to build an educational program around that, but

22 there are ways to work with industry to identify

23 the specific competencies that their employees

24 need, in particular, high-demand verticals. And

25 as you identify those competencies, then you can 86

1 really begin to build educational programs

2 around them, whether they're short course or

3 long course, degree form, or certificate.

4 And that's really the direction we're

5 pursuing. There's been a lot of traction with

6 that approach in, you know, Virginia, New York,

7 in Colorado and Texas; so we don't need to make

8 it up. We can borrow a lot of practice from

9 other places.

10 REPRESENTATIVE CEPHAS: Great. And I'm

11 assuming you're doing that regionally,

12 considering that there are different labor

13 demands based on the geography of where your

14 institutions are.

15 CHANCELLOR GREENSTEIN: So it's super

16 interesting. So I'm going to say yes and,

17 because obviously employment is local. But at

18 the same time, if you're building a pathway into

19 the financial services industry, that pathway is

20 unlikely to be different in Philadelphia,

21 Pittsburgh, or any other counties of

22 Pennsylvania.

23 And so there's an opportunity to develop

24 the competency map at the state level, but then

25 have them developed in the educational program 87

1 and delivered through the universities in a way

2 that meets their need.

3 REPRESENTATIVE CEPHAS: And I'll give

4 you my last question, since I see the lights.

5 In reference to subcontracting with

6 outside vendors, is that a part of your

7 sharing-cost strategy? And if it is, how so?

8 CHANCELLOR GREENSTEIN: So in terms of,

9 you know, shared-services infrastructure, I

10 mean, there's going to be serious questions; and

11 we will be here in October, November with a

12 portfolio of, here's a bunch of shared-services

13 options; here's what we believe the cost-benefit

14 analysis of each of those would be. And then as

15 we begin to prioritize what we're going to

16 actually do, you know, you typically get into a

17 kind of buy-build decision.

18 You know, in many areas, it may be more

19 effective to use third-party services than to

20 actually build internally. And it also -- so

21 let me leave it there.

22 REPRESENTATIVE CEPHAS: Thank you.

23 CHANCELLOR GREENSTEIN: Thanks.

24 MAJORITY CHAIRMAN SAYLOR:

25 Representative White. 88

1 REPRESENTATIVE WHITE: Hello. Thanks

2 for being here today. There are many students

3 across the Commonwealth who graduate from PASSHE

4 school and, unfortunately, they leave our

5 Commonwealth afterward. Is there anything that

6 you are doing to help address this issue?

7 CHANCELLOR GREENSTEIN: Yeah. So, first

8 of all, at least according to our alumni survey,

9 the most recent one, of our graduates at

10 20-percent response rate, 98 percent were, you

11 know, working or in graduate school or in the

12 military; 88 percent were working in the field

13 where they studied and almost three-quarters

14 were actually in the State of Pennsylvania. So

15 that's actually super high, and so I guess a

16 period paragraph.

17 I do think that as we begin to develop

18 some of those -- even more workforce aligned

19 short-course certificate programs, you'll see

20 that number tick up, yeah.

21 REPRESENTATIVE WHITE: So this is

22 probably going to be a little bit different than

23 some of the other line of questioning that

24 you've experienced today, and it's more going to

25 be along the lines of the management style that 89

1 you've taken; because I think it's important --

2 I'm curious to know if the various presidents of

3 these schools see themselves in competition with

4 one another, and does that make it more

5 challenging?

6 Because I think everyone in this room

7 wants to see improvements for our school

8 students across the Commonwealth; but

9 unfortunately, when you have that kind of an

10 environment, it makes your job more challenging.

11 So is there a way that you are

12 facilitating a culture of teammates and trying

13 to make sure everybody knows that they're

14 working on the same team for the betterment of

15 our students?

16 CHANCELLOR GREENSTEIN: So I think it's

17 probably one of the biggest challenges I have,

18 frankly, as a leader, is to set that table and

19 to invite that discussion.

20 My colleagues will tell you that I did

21 spare them my Henry V St. Crispin's Day speech,

22 gentleman of England, now a bad kind of thing.

23 But it is very -- it is absolutely critical, and

24 it's a journey; because, you know, for decades,

25 we were engaged to compete. 90

1 We hired CEOs to build and compete and,

2 you know, the journey that we have taken with my

3 colleagues over the last several months where

4 we've gotten our arms around our financial

5 independence, has been an emotional one and it

6 is one which is going to require leadership

7 support at all levels.

8 REPRESENTATIVE WHITE: Can you just

9 share with us what -- how frequently you have

10 group conversations, meetings, that sort of

11 thing?

12 CHANCELLOR GREENSTEIN: We meet once a

13 month. I was delighted at the Board meeting

14 when the Commissioner of the Commission of

15 Presidents, it was the president from Indiana

16 University of Pennsylvania, a fine university,

17 as are they all, reported to the Board that the

18 presidents were eager to meet even more around

19 the system redesign. We check in pretty

20 regularly.

21 REPRESENTATIVE WHITE: And do you

22 discuss shared best practices, etc.?

23 CHANCELLOR GREENSTEIN: Yeah. I mean,

24 you know, again, moving towards a sharing system

25 is something which is going to have to happen 91

1 at speed deliberately and with intention; and

2 sharing best practices is a way to accelerate

3 and amplify timed impact.

4 REPRESENTATIVE WHITE: Of course. And

5 so like over the next year, you basically told

6 us that all of the goals that you're going to

7 come up with, I assume you're coming up with

8 them together?

9 CHANCELLOR GREENSTEIN: Yeah.

10 REPRESENTATIVE WHITE: And how you're

11 going to be able to implement them? What are

12 you doing over the course of this year to make

13 sure that there is still accountability amongst

14 all of these institutions?

15 CHANCELLOR GREENSTEIN: So we are

16 putting in place an accountability platform and

17 then we're realigning our performance management

18 systems to it.

19 In the meantime, we are working with the

20 goals that the university presidents have had.

21 It is a one year; we're in a transition year. I

22 have spoken with each of the presidents when I

23 got here, and then again in December.

24 And I'll do it again at the end of the

25 performance year, which is fiscal; so in May, 92

1 June. And we've agreed that -- they have seen

2 my goals, and we have linked up where their

3 goals that they had before I got here, that we

4 will use the systems that are now in place for

5 the current year and then we will make a shift

6 as we begin to develop concrete, measurable

7 outcomes.

8 Many of the goals that the presidents

9 will produce and certainly mine, will align to

10 those outcomes.

11 REPRESENTATIVE WHITE: Okay. And then

12 just as a final question: During your meetings,

13 are there certain things that you want to see

14 during those meetings, like a budget, you know,

15 cost -- or I would say, you know, how they're

16 improving efficiencies in their own institutions

17 as well as, you know, the improvement of student

18 outcomes --

19 CHANCELLOR GREENSTEIN: Yeah.

20 REPRESENTATIVE WHITE: Are those things

21 that you talk about every meeting, or what do

22 your meetings look like?

23 CHANCELLOR GREENSTEIN: Yeah. So we are

24 moving to an environment, where as I have

25 explained before, we will be routinely looking 93

1 at the strategies that universities are putting

2 in place in order to achieve the goals that they

3 have agreed with the State System.

4 We will look at the budgets that have

5 aligned with those strategies and we will look

6 at their dashboard reporting that shows how

7 they're doing, and we will have those

8 conversations in a 360-degree way; because their

9 accountability through the Board, through me,

10 super important.

11 But in an interdependent system where

12 the success of any one university relies upon

13 the success of each other, their accountability

14 to one another is as important.

15 REPRESENTATIVE WHITE: Very good. Thank

16 you very much.

17 MAJORITY CHAIRMAN SAYLOR:

18 Representative Krueger.

19 REPRESENTATIVE KRUEGER: Thank you, Mr.

20 Chairman. And thank you, Chancellor, for

21 joining us here today.

22 So I wanted to make sure that I heard

23 something correctly. You said earlier, when you

24 were talking about budget and state investment,

25 that Pennsylvania invests about 27 percent of 94

1 the cost of higher education; and the average,

2 when you look at other states is, 54 percent?

3 Did I hear that correctly?

4 CHANCELLOR GREENSTEIN: Yeah, you did.

5 REPRESENTATIVE KRUEGER: So compared to

6 the rest of the country, we're doing about half;

7 is that correct?

8 CHANCELLOR GREENSTEIN: You're doing

9 about half, and we are 48th nationally.

10 REPRESENTATIVE KRUEGER: Forty-eighth in

11 the country?

12 CHANCELLOR GREENSTEIN: Yeah.

13 REPRESENTATIVE KRUEGER: Okay. And,

14 unfortunately, this is not the only area of

15 education funding where Pennsylvania is at the

16 bottom of the list.

17 When you look at K-to-12 education

18 funding, we're also very lowly ranked when you

19 look at the rest of the country; and I believe

20 that budgets are a statement of priorities.

21 When we look at the budget proposals

22 that we're evaluating over the course of these

23 hearings and what we'll wind up voting on in

24 June, how we vote and where we put our money

25 shows what Pennsylvania believes should be the 95

1 highest priority. And I personally believe that

2 education, across the board, should be a

3 significant investment for Pennsylvania.

4 So I had another question for you. On

5 page 29, you referred us to a table earlier that

6 showed that the enrollment from

7 low-and-middle-income families is declining

8 faster than the overall enrollment.

9 And when you look at the list, basically

10 the higher the family income, the greater the

11 percentage of students who are enrolling in

12 these universities; and the lower the income,

13 the more it's declining. I mean, it's almost an

14 exact corollary on family income.

15 CHANCELLOR GREENSTEIN: Yeah.

16 REPRESENTATIVE KRUEGER: I know that you

17 joined us from working in California at their

18 State System of Higher Education or at the UC

19 Berkeley System.

20 What are other states doing to make sure

21 that low-and-middle-income families can access

22 the higher education they need to get themselves

23 on a good career path?

24 CHANCELLOR GREENSTEIN: Yeah. So, I

25 mean, there's a higher rate of funding in 96

1 California.

2 REPRESENTATIVE KRUEGER: But what

3 percentage is in California?

4 CHANCELLOR GREENSTEIN: Oh, wow. That's

5 a tough one. It's been -- I haven't been there

6 for 7 or 8 years, but I can get back to you on

7 that.

8 REPRESENTATIVE KRUEGER: Okay.

9 CHANCELLOR GREENSTEIN: I would compare

10 our university, with the exception of Indiana;

11 they're not doctorate-granting universities. So

12 the relevant comparator is Cal State University,

13 where the tuition is, I don't know, 5 or 6,000 a

14 year, is my guess; so it's substantially -- it's

15 going to be less.

16 You're going to see -- as a result of

17 that, you're going to see lower graduate debt

18 levels; you're going to see lower overall net

19 average price paid by students; you're just

20 going to see a variety of other factors.

21 And you're going to see the same kind of

22 graduation rates. They're traveling in the

23 50-plus to 60th percentile, as we are. They

24 have a state grant program, a Cal grant program,

25 which is not wholly different from our PHEAA 97

1 program, which is available to students.

2 They have integrated the pathways from

3 their community colleges through their master's

4 level of Cal State to their doctoral

5 universities, University of California.

6 The master's plan of 1960 is probably

7 the gold standard of education public policy

8 making, where you're trying to align your public

9 supply so that there's limited redundancy; so

10 they have a lot of advantages in that regard.

11 They also have a growing population.

12 They're not dealing with the decline in the

13 high-school-leaving population that we are, and

14 they're not likely to even after 2025.

15 REPRESENTATIVE KRUEGER: And is that

16 because of overall population demographic

17 changes?

18 CHANCELLOR GREENSTEIN: Just a different

19 -- it's one of the rare states that's not going

20 to be as impacted by the 2025 decline, yeah.

21 REPRESENTATIVE KRUEGER: Okay. Well,

22 48th in the country is not good enough for me.

23 I hope that's something we can work together to

24 change, and thanks so much for joining us here

25 today. 98

1 CHANCELLOR GREENSTEIN: I can't do Iowa,

2 just saying.

3 MAJORITY CHAIRMAN SAYLOR:

4 Representative Struzzi.

5 REPRESENTATIVE STRUZZI: Thank you, Mr.

6 Chairman. Good afternoon, Chancellor. And I

7 want to thank the various presidents from the

8 universities around the state who are here

9 today, particularly, Dr. Driscoll, from Indiana

10 University of Pennsylvania, which is in my

11 district; and I would be remiss if I didn't say,

12 One Go Hawks. There is competition, in a good

13 way, amongst the universities, I would add.

14 But as was mentioned earlier, you know,

15 the universities within our communities are

16 significant economic drivers. They are the top

17 employer for Indiana County, and we truly

18 appreciate that. I think we can all value that

19 and build upon that.

20 But my concern -- and you mentioned the

21 online courses; I know they were mentioned

22 earlier. My concern, as we see the shift to

23 millennial learners, the more on-screen

24 learners, what does that do, in your eyes,

25 Chancellor, to having students actually on 99

1 campus, using the facilities and, again,

2 contributing to our local economies?

3 I know that's not your business, but it

4 does concern me; because I see that transition

5 continuing and more and more students simply

6 learning from home.

7 I can understand how that would increase

8 enrollment. But, again, your view on that and

9 what we can do to, perhaps, balance online

10 learning with in-classroom learning.

11 CHANCELLOR GREENSTEIN: Yeah. I mean,

12 again, as I referred to it earlier, not all

13 students are the same, right? And some students

14 really need and benefit enormously from a very

15 high-touch, on-campus experience. Some students

16 can't.

17 I mean, if you're a working adult and

18 you've got a family and you're working a

19 full-time job, that option to attend university,

20 you know, 9 to 5 or even in the evening, is not

21 possible. You know, people who are living in

22 remote, rural communities, that's also not

23 possible.

24 So there's a variety of student groups

25 for whom online makes a huge difference, and 100

1 they're actually net new, largely. It's not

2 like you're going to cannibalize the

3 on-the-ground existing population.

4 And the data that I've seen from places

5 like Georgia Tech, where they're running online

6 and face-to-face programs side by side, if you

7 look at the enrollments and the distribution of

8 students through both, they're clearly not

9 cannibalizing. There's a very modest amount of

10 overlap.

11 Where you're talking about the on-campus

12 population, the availability of online courses

13 introduces a degree of flexibility to take

14 courses you might not otherwise have access to

15 or have time to take.

16 You can take them in the summer. You

17 can potentially get a 3-year degree much more

18 quickly, which saves you money; you know, so

19 there's a lot of affordances even for the

20 on-campus population.

21 But, frankly, I don't see, either here

22 or pretty much anywhere else in the country, how

23 online is going to encroach on the communitarian

24 nature of and the economy that's generated by

25 students living and being on campus. That would 101

1 be my professional opinion.

2 REPRESENTATIVE STRUZZI: Good. Thank

3 you. I also want to appreciate your visionary

4 leadership. I know that you came out to

5 Indiana, Pennsylvania and other communities and

6 shared your vision for the State System.

7 And I think what we've heard today is,

8 you know, we want to see the System succeed. We

9 want to see it strengthen. We want to make sure

10 that all the universities stay as they are, and

11 improve and grow.

12 But my question, and it was in both of

13 the reports that we've had the chance to review,

14 is that there are certain impediments, I think,

15 and I'm asking for your opinion on this, some

16 impediments that will prevent you from having

17 your vision realized.

18 And just to be specific, you know, it

19 mentioned the Board of Governors and the lack of

20 ability or agility to turn a ship this large or

21 the will to turn a ship this large. So, you

22 know, what's your view on the impediments? What

23 can we do as a Legislature to help you overcome

24 those impediments?

25 CHANCELLOR GREENSTEIN: So the biggest 102

1 challenge I think that the Board's going to face

2 -- look, Pennsylvania, as I said before, we're

3 facing an interesting array of challenges. They

4 didn't just happen overnight. This is years in

5 the making, decades really, in the making.

6 My theory of the case is that the reason

7 we are where we are is because of the political

8 nature of decision making, not just sort of the

9 Legislature, Board, etc., but it happens right

10 down to the -- tough decisions are hard to make,

11 right.

12 And they're hard to make, and they're

13 deeply felt emotionally; because, you know, you

14 serve the people of Indiana, you know, and those

15 surroundings.

16 And others have spoken for other

17 universities that are here, and those are deeply

18 emotional ties that are reflected in the

19 communitarian nature of the education that we

20 offer.

21 And yet, we're going to still have to

22 make those tough decisions, which means that

23 when those tough decisions happen, we're going

24 to have to collectively exercise the discipline

25 that we don't always exercise, picking up the 103

1 phone and changing the nature of the

2 conversation, making that decision impossible to

3 make; and we're facing a bunch, this year.

4 We're talking about tuition; we're

5 talking about low-enrollment schools, right?

6 We're talking about getting our costs

7 controlled.

8 That's going to require an enormous

9 amount of discipline, so that the Board can take

10 the actions that the Board needs to take, that

11 the leaders of the university can take the

12 actions that the leaders at the university can

13 take in order to begin to address the situation

14 that we're in. That's my -- yeah.

15 REPRESENTATIVE STRUZZI: Just to get to

16 the hard question, though, do you think there's

17 a need to change the structure of the Board of

18 Governors, to streamline, to minimize the amount

19 of authority that they have? I know that's a

20 tough question, but I think it needs to be

21 posed.

22 CHANCELLOR GREENSTEIN: You know, I

23 remember a provost of mine telling me it's never

24 the structure; it's never the organization; it's

25 the people in it. And I don't know, maybe 104

1 that's relevant. You know, what are our

2 expectations?

3 Do we have an expectation that leading

4 members of the community, political figures,

5 whoever they may be, should be able to have, you

6 know, direct access to a decision that the Board

7 needs to take and to try to -- you know, is that

8 -- the structure of the Board is fine, in my

9 view, as long as our expectations are that the

10 Board is given the autonomy that it needs to

11 make the hard decisions that it needs to make,

12 and itself is accountable to and by the state.

13 You know, if that's not possible,

14 obviously, there's different ways one can

15 address the structure. But my guess is, that's

16 probably pretty hard; and I'd rather sort of

17 rely -- we were talking a moment ago about

18 culture change, and I would rather rely on the

19 culture change. I think that's probably easier

20 than the legislatively-driven restructuring.

21 Just a guess.

22 REPRESENTATIVE STRUZZI: Okay. Thank

23 you.

24 MAJORITY CHAIRMAN SAYLOR:

25 Representative Kim. 105

1 REPRESENTATIVE KIM: Over here,

2 Chancellor. Thanks again for being here. Being

3 so late in the questioning process, most of my

4 questions have been answered. So just wanted to

5 maybe make more of a comment.

6 You know, I read those independent

7 reports, the consultant reports; and they were

8 dismal. I mean, the words dysfunctional were

9 used, cilos, competitive; so it's just so

10 refreshing to see your leadership and vision.

11 You know, you've only been here for five

12 months; but I'm excited to see what comes after.

13 In your letter to us, you were talking about a

14 timeline. And, you know, I see this as a

15 gushing chest wound; and I'm glad you're not

16 talking about tweaks but things that are

17 transformational, because that's what we need

18 from being a dinosaur.

19 Do you have that timeline? You said,

20 let's keep -- be accountable. Can we see the

21 plan? You've given us some snapshots of it.

22 And what is your timeline, in terms of trying to

23 right the ship?

24 CHANCELLOR GREENSTEIN: So, and again,

25 some of the things you can expect to see in this 106

1 year, some of the basic business apparatus put

2 in place, the outcomes, the strategies, the

3 goals, the budgets, right? You've got to have

4 that stuff.

5 Then you've got to have the

6 accountability framework and you've got to have

7 the budget mechanisms that allow you to operate

8 according to those strategies and get to those

9 goals.

10 We're going to have a list of the

11 shared-services opportunities and the cost

12 savings that are available from them, and the

13 costs of getting those savings will have early

14 indications of the kind of academic programming

15 that we can do together in order to shift the

16 needle.

17 So we'll have a lot of that material

18 already -- we already mentioned we'll have a

19 reasonable analysis of the legislative and

20 regulatory adjustments that would potentially

21 save us money.

22 I think we can expect all of those

23 things, you know, within this financial year

24 into the first calendar year into the first

25 quarter of the next one. You know, then you 107

1 move into a pretty aggressive execution. But,

2 honestly, you know, this is not like -- this is

3 not a year's exercise. This is like -- this is

4 the economic recovery of Pittsburgh. This is a

5 major public policy transformation. This has

6 not been done at this scale, to my knowledge, in

7 higher education in this country.

8 So we know what the piece part looked

9 like. I'm not sure anyone's tried to put them

10 all together and drive this quickly with this

11 much, you know, challenge that we're facing. So

12 we will have that timeline for you. I think

13 there's a graphic, I think it's in the book,

14 which shows kind of where we are now in the time

15 line. We're still in that plan,

16 what-does-that-implementation-look-like phase.

17 It's a frustrating phase.

18 By this time next year, you will have a

19 pretty detailed execution phase -- an execution

20 map and the kind of ROI that we would expect to

21 see from it.

22 REPRESENTATIVE KIM: Okay. And my last

23 question is, you know, obviously, education is

24 the core. You know, you guys have to -- that's

25 our expertise and that's our product. But as 108

1 you were talking about it, some of our campuses

2 are about a hundred years old; and now you're

3 competing -- like I have a university called HU,

4 Harrisburg University, that is, you know, urban

5 city; doesn't have a cafeteria. Other campuses

6 have climbing walls. Their dormitories probably

7 look better than my own room, you know. How do

8 we compete with that in getting students

9 enrolled in old campuses?

10 CHANCELLOR GREENSTEIN: So I think we

11 have to be clear about who we are and for whom.

12 Who are our students; what do they need; what

13 can we give them; how can we build on our core

14 competencies; and how can we stretch those core

15 competencies into new areas?

16 We've spent a lot of time today talking

17 about restructuring the organizational and

18 business practice of the universities and the

19 System. We haven't talked a lot about the

20 change in the nature of education and

21 educational delivery, which is going to be

22 required to meet the needs of the Gen Z or

23 whatever we are, student, and to meet the needs

24 of the next generation of employers in this

25 state. 109

1 That, itself, is another transformation

2 that happens more in the classroom and in the

3 student supports. We have to get the ship in

4 order as we're beginning to address those

5 aspects, as well.

6 REPRESENTATIVE KIM: Very good. Thank

7 you so much. Thank you, Chairman.

8 MAJORITY CHAIRMAN SAYLOR:

9 Representative James.

10 REPRESENTATIVE JAMES: Chancellor, good

11 afternoon. Thank you, Mr. Chairman. Welcome,

12 all the presidents from the various colleges. I

13 would like to acknowledge Dr. Dale Pehrsson,

14 Clarion University. Fly, Eagles, fly.

15 Chancellor, I've been talking to

16 different people explaining that your background

17 is one of the business world. You're accustomed

18 to success, and we should be excited that you're

19 here; because you're going to be bringing new

20 ideas. And I think the work that you and your

21 staff did preparatory to today's talk, begins to

22 show folks that. So thank you for that.

23 The System was formed in 1983, so it's

24 36 years old; and it's a different day. The

25 environment is quite different. And I think 110

1 that's what caused the request for a couple of

2 formal studies, the NCHEMS Study and the RAND

3 Study, at a rather stunning cost.

4 I got a couple of sentences here, not a

5 lot; but I'd like to read a couple quotes of the

6 findings from the NCHEMS statement; it's on

7 page 22. It says, Collective bargaining

8 agreements have also enshrined requirements that

9 handicap the ability of institutions to address

10 local issues and to swiftly respond to local

11 opportunities.

12 A salary schedule that is the same for

13 all disciplines and ignores differences across

14 Pennsylvania and prevailing wage and

15 cost-of-living constrains the development of

16 some programs.

17 And the other sentence is, The real

18 policy document under which the State System is

19 led and managed is the APSCUF collective

20 bargaining agreement.

21 When three out of every four of the

22 dollars that we send you go into salaries and

23 benefits, it's pretty easy to find a place to

24 begin working. And when you start your comments

25 today saying we're never going to close any of 111

1 our schools and then couple that with the

2 comments about the collective bargaining

3 agreement, it's very difficult to square those

4 two in conversation. Can you address this

5 concept and give us your thoughts on that?

6 CHANCELLOR GREENSTEIN: Yeah. I mean, I

7 think there's a couple things going on. So one

8 of them is, we're clearly going to have to align

9 our costs with enrollment levels. We haven't

10 done that. And there's a variety of ways to do

11 that.

12 And, you know, salaries and benefits is

13 certainly one. We cannot continue -- I think

14 the number in my head is that our enrollments

15 have declined 18 percent; our head count has

16 declined 8 percent. And so as you've seen in

17 the numbers, our costs per employee -- someone

18 mentioned it, our costs for employees are going

19 up.

20 I mean, it's not a sustainable modality,

21 unless we continue dramatically to grow our

22 enrollments. We're going to have to address

23 that. We're going to have to address our costs,

24 generally speaking, not just in salaries. I

25 think there's a second question about whether 112

1 the CBAs impede us from doing what we need to do

2 to be a cost-sharing system.

3 And I try to look at it, and have spent

4 quite a bit of time on it with presidents and

5 union leadership, asking that question, What is

6 it that we're trying to accomplish and where is

7 it, specifically, the collective bargaining

8 agreement stands in our way?

9 And where it appears to stand in our

10 way, are these issues of management, effective

11 implementation of the tools that we have, or are

12 they issues of impediment, i.e., collective

13 bargaining agreement, which actually does

14 prohibit us from moving forward.

15 I don't have answers to those questions.

16 I have hypotheses about them. I'd be happy to

17 share them with you; but that's where -- and I

18 mentioned the third point, and that's why I

19 mentioned earlier, I mean, these are issues that

20 we're going to have to work collaboratively with

21 APSCUF to address.

22 Our inability to work collaboratively

23 with APSCUF leadership, in particular, to

24 address these issues, will, in my view,

25 undermine our ability to succeed; that unless 113

1 we're able to change our relationship and change

2 the nature of our relationship and work together

3 to solve these problems, this is a fool's

4 errand.

5 I also believe that we've made enormous

6 progress, even in the time that I've been here,

7 in beginning to address those relational issues.

8 I think the interspace bargaining that we talked

9 about earlier is a major step in that direction.

10 Engaging with APSCUF leadership in

11 understanding together where we were financially

12 and how we are doing with our students, I think,

13 is a major advance in that direction. I think

14 the kind of information sharing that you've seen

15 in this budget book, that approach, that radical

16 transparency is what I'm attempting to do in all

17 aspects of my leadership and my office's

18 leadership of the System, with the Board, with

19 all of our constituents, including our faculty,

20 including our unions.

21 You know, these are collective problems.

22 We have to address them.

23 REPRESENTATIVE JAMES: The two studies

24 were pretty long on finding and enumerating our

25 problems, but very short on coming up with 114

1 solutions; and I was very sorry to see that.

2 One out of every six legislators in this

3 building is a product of your system, and we

4 want you to succeed.

5 CHANCELLOR GREENSTEIN: Yeah. Thank

6 you.

7 REPRESENTATIVE JAMES: Thank you, Mr.

8 Chairman.

9 MAJORITY CHAIRMAN SAYLOR: Before I move

10 on to the next questioner, I wanted to recognize

11 our Chief Clerk of the House of Representatives,

12 who is a graduate of Indiana University of

13 Pennsylvania, David Radcliffe. David.

14 The next representative is

15 Representative Gabler for comments.

16 REPRESENTATIVE GABLER: Thank you, Mr.

17 Chairman. And thank you, Mr. Chancellor. It

18 really is a pleasure to get to see you in this

19 context, and it was a pleasure meeting you a few

20 -- about a week ago, when we had the opportunity

21 to have a meet and greet; and I really thought

22 that that was very great of you to start showing

23 your style of leadership.

24 As was previously mentioned, your book

25 is very much unlike other materials we've 115

1 received; and I think it shows the diligence

2 that you're putting in. And I think we have

3 reasons to be optimistic about the future of

4 your leadership.

5 And starting out with quotes like, I

6 hear you, I agree with you, it's a really good

7 first step; so I think we have reasons to be

8 optimistic about where we're headed, but

9 certainly we have a structure here that, as

10 you've mentioned, brings great challenges.

11 So I wanted to dig a little bit deeper

12 into those challenges, especially with the

13 challenge that lies in front of us in this

14 Committee over the next few months with the

15 budgeting process.

16 So a little a note of history, and this

17 is from before your time, but the State's

18 appropriation for the PASSHE System for

19 2018-2019 was an increase of $15 million over

20 the prior year.

21 The union contract for that same time

22 frame included a pay raise that amounted to a

23 total cost increase of about $19 million. So

24 that means that for every dollar increase over

25 that time frame, it was met with a dollar and a 116

1 quarter in pay and benefits increases.

2 And the individual pay increases for

3 professors over that time ranged from 5 to

4 7-and-a-half percent, which is much out of step

5 with the parents paying tuition and the

6 taxpayers that are footing the bill for the

7 state appropriations.

8 As Representative Brown had previously

9 mentioned, your predecessor last year described

10 a disconnect between the negotiation of labor

11 contracts and the budgeting process that enables

12 those contracts to be funded.

13 Additionally, at 13 of the 14

14 institutions in the system, expenses exceeded

15 revenue. System-wide enrollment has declined by

16 over 21,000 students over the last several

17 years. That's a loss of nearly one-fifth of

18 enrollment since 2010.

19 So with the System's status quo facing

20 deficits, does a $15-million state increase

21 funding a $19 million pay raise make sense? And

22 what can be done to address this disconnect that

23 your predecessor mentioned?

24 CHANCELLOR GREENSTEIN: So a lot of

25 things are going on there, too. So let me start 117

1 with the obvious. We need to align our costs

2 with our enrollment. Forget enrollment. We

3 need to align our costs with our revenue.

4 Right? Wherever the source of that revenue

5 comes from. And that revenue is driven by

6 enrollment. And that's true all over the shop.

7 And, you know, there are any number of

8 expenditures you could point to over the last

9 year which would account for the 15 million; and

10 you'd maybe ask questions about how they were

11 spent, as well, and you probably should. So

12 that's something we need to get our arms around.

13 I think the second question -- the

14 second aspect we've touched on before, is that

15 our success is a collective responsibility.

16 It's our collective accountability. Right? I'm

17 happy to lead.

18 I require -- we've talked a lot about

19 presidents working together in new ways. It's

20 going to require our working with our union

21 leadership in wholly new ways.

22 And we're putting in place that kind of

23 collaborative infrastructure. And, you know,

24 there's only so many places to spend money. If

25 you put it somewhere, it's got to come out of 118

1 somewhere else; because of the reasons that

2 you've addressed.

3 REPRESENTATIVE GABLER: And I appreciate

4 that. So certainly aligning costs with

5 enrollment, I think, is a theme that we've heard

6 from this hearing; and I think it's something

7 that will certainly be a welcome conversation

8 going forward.

9 And that being said, the budget request

10 from PASSHE is for an 8.1-percent increase this

11 year. I believe the Governor's budget includes

12 a one-and-a-half percent increase, and so I

13 guess my question related to those proposals out

14 there.

15 If the budget this year authorizes an

16 increase of any sort, what sort of assurances

17 can you give us that the funds will be used to

18 strengthen the system, rather than creating

19 further structural imbalance?

20 And, furthermore, how can we square a

21 funding-increase request against declining

22 enrollment and the need to align those two?

23 CHANCELLOR GREENSTEIN: Yeah. So I

24 submitted that appropriations request in my

25 first month. 119

1 REPRESENTATIVE GABLER: Understood

2 that's a challenge.

3 CHANCELLOR GREENSTEIN: It was a

4 challenge. It's a cost to carry. It is not

5 outcomes oriented or goal driven. My intention

6 is to never submit another request like that.

7 I'm not going to make it for October,

8 but I will make it for the next October; and I

9 may be able to have a revision by February,

10 because of the work that I'm doing with my

11 colleagues and their staff. So I think that's a

12 modest step.

13 I'm sorry. I forgot the question.

14 REPRESENTATIVE GABLER: Just -- how can

15 we receive assurances that, going forward, the

16 funding increase will be aligned with

17 strengthening the system rather than --

18 CHANCELLOR GREENSTEIN: I'll be able to

19 submit with the October appropriations

20 process -- you will have a clear understanding

21 of what the execution path looks like for this

22 redesign and what the ROI is on that.

23 You will have a clear understanding of

24 what our accountability structure and

25 performance management systems are and what they 120

1 will look like; and you'll have a clear

2 understanding of what our shared-services

3 potential return on investment will look like.

4 You'll have a better understanding,

5 overall, of what our budget and our budget

6 tradeoff decisions have been; so that we can

7 have a reasonable conversation, not about the

8 overall budget and how it aligns with our

9 revenues, but about the overall budget and how

10 specific allocations suggested within it align

11 with and help us achieve specific goals.

12 Does that make sense?

13 REPRESENTATIVE GABLER: Yeah. I

14 appreciate that. I think this is a helpful

15 trajectory for us to get started. Obviously,

16 there's a lot of work to do. I commend you for

17 taking it on.

18 Thank you.

19 CHANCELLOR GREENSTEIN: Thanks so much.

20 MAJORITY CHAIRMAN SAYLOR:

21 Representative Greiner.

22 REPRESENTATIVE GREINER: Thank you, Mr.

23 Chairman. And thank you, Mr. Chancellor, for

24 being here today. And I guess I'll start off by

25 saying, I think we found out today the System 121

1 needs overhauled; and I'm glad you're willing to

2 delve into it and take a look at that.

3 And on background, I have worked with a

4 lot of businesses. I'll be quite honest, if we

5 had a number of businesses like this, we'd be

6 closing a couple down. I know education's not

7 necessarily the same as private industry; but,

8 you know, at least we're going to look at it

9 extensively.

10 I do want to follow up on my colleagues'

11 comments here. And we brought it up earlier;

12 you're kind of lucky you weren't here last year,

13 because the acting Chancellor got skewered over

14 these labor costs on tracks, and I do want to

15 follow up and maybe drill down -- I'm glad you

16 mentioned big picture about aligning costs with

17 goals and budgeting, and I think that's

18 critical; but let's just take a look at this

19 year's budget.

20 The Governor proposed a $7-million

21 increase in this budget. Is that going to cover

22 -- and maybe we don't know this yet -- but is

23 that going to cover the additional costs of a

24 labor contract that's coming due here in the

25 next few months? 122

1 CHANCELLOR GREENSTEIN: The answer is, I

2 don't know, because I don't know what the labor

3 contract looks like.

4 REPRESENTATIVE GREINER: Well, let me --

5 because we just -- we have to try and figure out

6 how to come up with a budget here, you know, as

7 a Legislature, if the state -- let me just bring

8 this up -- if the state appropriations for

9 '19-'20 happens not to cover these increases,

10 and I think there's a possibility it won't, will

11 that further increase tuition at our schools --

12 I mean, because these are going to have to be

13 decisions made immediately this year; and we're

14 going to be getting the phone calls in our

15 office.

16 Is there going to be increased tuition,

17 or are we going to be able to necessitate the

18 additional cuts necessary immediately to be able

19 to do that?

20 So, like I said, I appreciate we're

21 looking big picture; but we have some immediate

22 needs we need to look at right now.

23 CHANCELLOR GREENSTEIN: Yeah. So I will

24 be honest with you now and forever. Next year's

25 going to be tough. We're expecting a 2-percent 123

1 further decline in enrollment. I don't think

2 we're done. I don't think the state is done,

3 demographically. I mean, I don't think we've

4 hit bottom.

5 As I've said before, we have to be super

6 careful about tuition. Because all the data

7 that I see, suggests that we're maxed out with

8 key -- large parts, key market. So if I do that

9 math, that's not great math, right? It doesn't

10 have a good result.

11 And the ROI that we're looking for from

12 shared services, the enrollment growth that

13 we're looking for from retention efforts in new

14 enrollment, you're talking two, three years out,

15 right? So the next couple years are really

16 hard, and that's true with or without an

17 increase.

18 REPRESENTATIVE GREINER: And, like I

19 said, I think everybody has an interest in

20 funding education; but it gets frustrating

21 when -- as I think my predecessor before had

22 made a comment, what percentage goes to salaries

23 and benefits; and it really doesn't -- you know,

24 it's not going to the schools and to helping the

25 kids as much as maybe it should be. 124

1 And I just want to -- I guess he's kind

2 of laughing at me there now, but --

3 Representative James, I guess it was; but

4 anyway, nonetheless, I appreciate the

5 willingness to take a look at this; because I

6 think it needs to be overhauled.

7 I think there needs to be -- we have

8 systematic problems with the whole system and --

9 but, you know, so there's long-term; but then

10 there's the short-term decisions we have to

11 make.

12 So I appreciate your time.

13 CHANCELLOR GREENSTEIN: Thank you.

14 REPRESENTATIVE GREINER: Thanks, Mr.

15 Chairman.

16 MAJORITY CHAIRMAN SAYLOR: We have two

17 people who have asked for a follow-up question.

18 I have Representative Topper first.

19 REPRESENTATIVE TOPPER: Thank you, Mr.

20 Chairman. And I agree with Representative

21 GABLER, your performance here today has

22 certainly given me faith. I don't know if it's

23 given me $37.7 million worth of it yet.

24 But if I could summarize, I think what

25 you're asking is, that's the money that you 125

1 think will cover the past mistakes but that

2 going forward won't be necessary.

3 First of all, is that a fair assessment?

4 We're trying to -- you know, get us through to a

5 point that you think real transformational

6 change can take place. Because that's what we

7 -- we need to know when we're appropriating

8 money --

9 CHANCELLOR GREENSTEIN: I know.

10 REPRESENTATIVE TOPPER: -- that that is

11 the goal that we're getting to.

12 CHANCELLOR GREENSTEIN: So this is a

13 cost-to-carry budget. It is built on an

14 internal budgeting process, which is imperfect.

15 It is imperfect, because -- for all the reasons

16 we've discussed. It doesn't have alignment with

17 goals. It's not done the way which allows for

18 complete transparency around tradeoff decisions,

19 etc.

20 So that's what we have in front of us.

21 It's a cost-to-carry budget which is -- and

22 factored into it, is a 2-percent enrollment

23 decline for in-state undergraduate students and

24 the thought that we really can't raise tuition

25 on students from families earning under 110,000, 126

1 which is where we're seeing the decline. So

2 that's what the budget we have looks like.

3 REPRESENTATIVE TOPPER: And we're doing

4 all of this -- when Representative Fritz asked

5 you the question, you gave him a very

6 straightforward answer: Is our market

7 oversaturated? Do we have too many colleges,

8 period, universities? You said, yes.

9 CHANCELLOR GREENSTEIN: Yes.

10 REPRESENTATIVE TOPPER: And, also,

11 you've said that it doesn't make sense to close

12 any of them. So my question would be is, Do you

13 agree with me, perhaps, we don't have too many;

14 perhaps, we have too many that are doing the

15 same thing? In other words, can we have some of

16 our universities, whether they be State System,

17 when we're talking about State System, we're

18 talking about PASSHE, that can be retooled so

19 that they can be functional and not doing the

20 exact same thing that everyone else is doing?

21 Because I think we do have an oversaturated

22 market.

23 CHANCELLOR GREENSTEIN: Yes, and the

24 infrastructure of a sharing system is agnostic

25 about who uses it and how. It drives down the 127

1 cost of use and delivery, right? So that you --

2 in a platform -- I think Amazon Web Services is

3 what's in my head when I think of the

4 infrastructure that a sharing system needs.

5 It has both back office and academic

6 programming functionality, and you can build a

7 university or a college or any amount of

8 educational program upon it, and you can -- and

9 it doesn't need only to be available to the

10 universities of a single system. It is a step

11 in that direction.

12 REPRESENTATIVE TOPPER: I appreciate

13 that. I know we have to move on. You and I

14 could maybe --

15 CHANCELLOR GREENSTEIN: I look forward

16 to it.

17 REPRESENTATIVE TOPPER: Or, look, Mr.

18 Chairman, maybe -- we keep talking about giving

19 more time. Perhaps, this fall we could have an

20 Appropriations Hearing somewhere specifically

21 focused on this. I think that would be helpful.

22 See how we're doing; make sure we can continue

23 that conversation.

24 Thank you.

25 CHANCELLOR GREENSTEIN: Thank you. 128

1 MAJORITY CHAIRMAN SAYLOR: We'll take

2 that under advisement, definitely. Maybe we'll

3 go to IUP.

4 (LAUGHTER.)

5 MAJORITY CHAIRMAN SAYLOR: Anyway,

6 Representative DeLozier.

7 REPRESENTATIVE DELOZIER: Thank you, Mr.

8 Chairman. I appreciate the opportunity to ask

9 another question. I know last time we were

10 focused on dollars. I'm going a little bit off

11 of that, the idea behind having safety on our

12 campuses.

13 One of the issues I asked your

14 predecessor and then I wanted to make sure I

15 asked you, as well, and drive home, I guess, the

16 importance of it and also get your feedback on,

17 is sexual assault on our college campuses and

18 the awareness of it and the environment.

19 I don't, by any means, mean to say that

20 our universities are responsible for the actions

21 of others, but we are responsible for the

22 environment that our students are in. And I

23 would ask, you know, as we well know, one in

24 five women on college campuses and one in

25 sixteen men are victims of sexual assault. Who 129

1 reports it and who does not makes it two

2 separate battles that we have to fight.

3 But many times what we have found, is

4 they will report knowing what they have seen go

5 before them. So that environment, their

6 receptiveness.

7 And, also, if you could speak to the

8 relationships with our university police and the

9 relationships they have with the municipal

10 police that surround them.

11 Because as you well know, a university

12 system is private. The municipal police is a

13 public and right-to-know, and I don't want high

14 numbers because high numbers certainly don't

15 indicate that there's high amounts.

16 It just means that campus actually might

17 take it more seriously, because they're willing

18 to identify the fact that they have an issue and

19 that we're dealing with it.

20 So numbers aren't my issue, just the

21 environment and our students. And having a

22 student that will be attending a state

23 university next year, I have heard it from other

24 parents; it's an issue that I'm very, very

25 passionate about as to protecting our students 130

1 with date rape and any other issues that go

2 along with that.

3 CHANCELLOR GREENSTEIN: Yeah. And, no,

4 obviously, to be that important, to be that

5 concerned; and safety is really paramount to all

6 of our universities. The safety, not only of

7 our students, but our employees.

8 I have been impressed, quite frankly,

9 with our university police. They are well

10 trained. First of all, they are professional.

11 Second of all, well trained in community

12 policing. My impression is that the

13 relationships with the community police are

14 good. They vary as everything else does across

15 campuses, but largely very strong.

16 Our policy environments seem to be to be

17 largely intact. The one thing I will report,

18 which I actually found quite remarkable, is that

19 the level of engagement among students on this

20 issue is high, in a very good way, and not just

21 on one or two universities; but it is a topic --

22 I did sessions with students at every

23 university. And really were led by them, topics

24 of their concern. I had a couple of STOP

25 questions. 131

1 It was interesting to me how often this

2 came up and how engaged students were. They

3 were typically in leadership positions, but how

4 engaged students were in communicating with

5 their faculty and their administration about

6 ways to improve and better align the various

7 services that exist at university levels.

8 REPRESENTATIVE DELOZIER: What were some

9 of those suggestions, if I may ask?

10 CHANCELLOR GREENSTEIN: A lot of it

11 focused on awareness-raising information, a lot

12 of support, victim support, as you'd expect.

13 REPRESENTATIVE DELOZIER: Well, knowing

14 where to go is paramount to being able to get

15 the resources that may be available and they may

16 not know about it. And many times, they feel

17 they're the only one, and they feel they won't

18 be believed.

19 But, you know, hopefully more and more

20 of that environment is shown that they will

21 stand behind and not hide behind numbers that

22 the university's willing to stand up for them.

23 I think that many times, you know, those

24 actions can be held accountable; but I would

25 just raise that issue. The buddy systems, the 132

1 training of RAs, and the ability for those

2 leaderships within the dorms, many times those

3 are where you find out what's happened. You

4 hear it, you talk about it, and somebody can get

5 some help.

6 So I would just raise that issue with

7 you. Thank you for asking those questions on

8 campus and having that dialogue, because the

9 more awareness we have out there -- also, are

10 the resources that are already in the community.

11 There are many, PCAR, and many of those

12 local, they're more than willing to help and

13 rather -- you know, not step on toes and the

14 university and its enclave and some -- if we can

15 work those partnerships, safety resources, as

16 well as get the services that are necessary.

17 So thank you very much.

18 CHANCELLOR GREENSTEIN: Thank you.

19 MAJORITY CHAIRMAN SAYLOR:

20 Representative Bradford.

21 REPRESENTATIVE BRADFORD: Chancellor, I

22 want to thank you again for the opportunity to

23 meet before the hearing. I was actually telling

24 my Committee members before the hearing,

25 actually, what an impressive job I think you've 133

1 done in a short amount of time, building trust

2 within the system and frankly with the labor

3 unions; and I think you should be credited,

4 frankly, for bringing a breath of fresh air.

5 And I think -- I'm glad to hear in a

6 bipartisan way, people recognizing the strides

7 you're making in being handed not the greatest

8 situation to deal with.

9 So I know everyone wishes you all the

10 best in dealing with the challenges,

11 demographic, tuition, student debt, labor

12 challenges, all that that's rolled into one big

13 sandwich for you.

14 I know I wish you well. The one thing I

15 want to say just in terms of bringing some

16 context. And, obviously, I think you have hit

17 the right chord about aligning costs and

18 revenue, and I think we should have a historic

19 talk about revenue, too; and maybe it should be

20 more than a footnote, but it's one that needs to

21 be added.

22 Obviously, revenues today, state support

23 is lower than it's been even a decade ago. So

24 when we talk about pressures on student debt and

25 we talk about pressures on unions and on the 134

1 workforce, I think we also need to look in the

2 mirror a little bit.

3 This Legislature has not an

4 insignificant amount of culpability in the

5 challenges we find ourselves in. Now, granted,

6 there are huge challenges in demographics that

7 is not unique to the State System, and they need

8 to be addressed.

9 And, again, I think you're the right man

10 for the job. But this Legislature needs to only

11 look at, I believe, page 22 in your book to get

12 a feel for what real cuts in higher education

13 look like and we need to have an honest

14 discussion with PHEAA coming in next about

15 student debt and what the role of pulling back

16 on higher-ed support looks like.

17 These challenges, again, would not

18 disappear if today we dropped a hundred million

19 dollars into the system and tried to hold the

20 system harmless in cuts that have been suffered

21 over many years, and we've obviously made some

22 progress in bringing revenue back into align

23 with the expenditures, as opposed to cutting

24 down to a number.

25 But give me an idea, in a very real way, 135

1 of what these cuts have looked like for PASSHE.

2 And I realize you've been here 5 months, but put

3 into context, when you look at -- at one point,

4 I guess, inflated in -- adjusted for inflated

5 dollars, at one point we looked like we were in

6 the ballpark range of about 700 million.

7 Today, we're almost -- well, I guess

8 we're at 468 million. You're talking severe

9 pullback in terms of revenue. What role does

10 that play in this?

11 We've talked about demographics, but

12 talk about state support and what that looks

13 like in other states, more progressive states,

14 what that looks like in terms of student debt

15 and the challenges you now face.

16 CHANCELLOR GREENSTEIN: Yeah. So, you

17 know, it shows up everywhere. Our student debt

18 load is high, significantly higher than the

19 national average.

20 It's significantly higher than that is

21 for our comparative -- if we compare ourselves

22 to the universities that teach to the master's

23 level, with one exception, being IUP, you know,

24 our students net average price is high.

25 The debt they graduate with -- I mean, 136

1 not just a little bit, significantly higher. At

2 the end of the day, these are policy choices;

3 and they will impact directly on the economy and

4 the workforce capability of the people of

5 Pennsylvania.

6 Those impacts will not be felt for 5 to

7 10 to 12 years. They will be felt -- my

8 hypothesis, they will be unfortunate and they

9 will be uncomfortable.

10 There are other hypotheses floating

11 around out there. We'll know in 10 to 12 years.

12 So, I mean, those are choices that will be made

13 in this building.

14 Let me, though, respond to this question

15 in a different way, having been to the

16 universities and actually seen what's actually

17 happening on the campuses. So you're really

18 talking about universities which have been doing

19 recession management for well over a decade,

20 right?

21 That means that I get my budget sometime

22 in July where I'm already into the fiscal year.

23 I don't know what my budget is, and I don't know

24 what my tuition is. That's part of our process

25 internally and just the way we work, 137

1 collectively.

2 And it means that I am now trying to

3 balance my budget because I'm required by law to

4 do that and I'm making the cuts necessary in a

5 very nonstrategic -- I'm not meaning our folks

6 are not doing great work, it's just that now

7 we're already in the financial year, it's hard

8 to -- so -- and that shows up on campuses. And

9 what really got to me was it shows up to

10 students.

11 Now, I have been -- I have lived through

12 the bottom falling out of market in 2008 to

13 whenever it was, the Great Recession in

14 California. And when the bottom fell out there,

15 it didn't just fall a little bit, it fell way

16 down and students never felt it, right, except,

17 obviously, in some increased tuition and

18 students didn't have places they would have

19 otherwise had because the state wasn't funding.

20 But the students who were fortunate to

21 be on a campus, they didn't know. They saw the

22 buildings, and they saw -- you know, with the

23 exception of their tuition incrementally

24 growing, which is a big deal, they didn't feel

25 the impacts. If you go to our campuses, it 138

1 comes out in every student session. And

2 students are transient. They're only there for

3 four or five or six years by design; and they're

4 picking up the impacts of these cuts, because

5 the food services aren't open as many hours as

6 they used to be. So if I'm an athlete, I can't

7 necessarily eat when I need to.

8 The trolley service that I rely upon to

9 move between different parts of the campus is

10 not available in the same way that it was,

11 because it has been cut. The student clubs

12 don't have anything like the kind of funding

13 they used to have, because enrollments are down

14 and these are student-fees driven.

15 They're noticing the deferred

16 maintenance. There's grass growing between, you

17 know, the steps up to the building, whatever.

18 That was, to me, unusual. I had never

19 experienced that.

20 And, obviously, our students have an

21 enormous amount of resiliency. Our faculty and

22 staff have an enormous amount of resilience, and

23 these are tight-knit communities and these are

24 tight-knit communities experiencing well over a

25 decade of what anybody else would assume in a 139

1 community is really the impacts of a prolonged

2 recession, right.

3 I mean, it's palpable when you visit a

4 campus. Visit a campus. Don't allow my

5 colleagues to take you to the best students or

6 the best faculty, just walk into the dining hall

7 and just open up a conversation and really try

8 to understand what is really beginning to

9 happen, whether with faculty or students, and

10 you will pick up some of these perspectives; and

11 that's what we're dealing with, yeah.

12 REPRESENTATIVE BRADFORD: Thank you,

13 Chancellor.

14 MAJORITY CHAIRMAN SAYLOR: Chancellor, I

15 think I want to follow up a little bit on

16 Representative DeLozier's comments. I do think

17 that in today's world, it's kind of scary to be

18 on a college campus from the point of sexual

19 assault today.

20 And I do think that it's a changing

21 world. As we know, let's be honest here,

22 there's a lot of drinking that goes on, on

23 college campuses, whether we like it, condone

24 it, it doesn't matter, it happens. Kids go away

25 from home and things happen. 140

1 But I do think that one of the

2 requirements maybe should be for all freshman is

3 to take, as we do here in the General Assembly,

4 not that that always solves the problem, is take

5 some kind of a training as part of the freshman

6 class to talk about sexual assault.

7 When people are drinking, they do stupid

8 things; and I would say that I think that maybe

9 it's not going to cure the problem on the

10 campuses, but I think it would go a long way to

11 make sure students understand responsibilities,

12 that stupid mistakes can be more dangerous to

13 you and where you end up in the end.

14 Enrollment, Chancellor, I believe your

15 system is the same as a lot of other systems.

16 In today's world, there's not as many children

17 out there, so I do believe that you're going to

18 see that enrollment decline maybe more, not just

19 because you're not a good system.

20 And you can see today, we all have great

21 pride in the schools that we go to, whether it's

22 Indiana University of Pennsylvania or it's

23 Mansfield or wherever. I do believe that the

24 General Assembly has lost faith in PASSHE

25 System. It's been coming for years. 141

1 That's the reason the funding hasn't

2 come forward. We've seen funding go elsewhere,

3 but we haven't seen it in the PASSHE System.

4 And until PASSHE restores its integrity with the

5 General Assembly, I think there will continue to

6 be struggles.

7 You know, it's not that we don't love

8 our schools where we came from. You know, when

9 I think about Millersville University having, I

10 think, one of the top three meteorology schools

11 in the country; Penn State teaching nuclear

12 engineers; one of the top nuclear engineering

13 schools in the country; and I can go on, to what

14 we're doing at a lot of our campuses, whether

15 it's IUP, Bloomsburg or Kutztown; and I've been

16 on a number of the campuses over the last couple

17 years. But it really comes down to

18 accountability.

19 And, for me, I was a poor kid. I went

20 to IUP, and that's what the State System was

21 created for: poor, low-income, middle-class

22 families. And it hasn't become that. In many

23 cases, you can go to other schools at a cheaper

24 cost than you can at our State PASSHE System.

25 And we have to get back to that if we 142

1 want the system to thrive. Or if I'm at West

2 Chester, and I'm not trying to put any ideas

3 into anybody's head at IUP or anywhere else, I

4 might say, Well, you know what, maybe I'm better

5 off by not being on the burden of the

6 universities that aren't doing as good.

7 And there's any number of reasons why

8 maybe they aren't doing good. And I'm not going

9 to go into that right now. But I do believe

10 that if we can get the PASSHE System, and I

11 believe that the faith in this General Assembly

12 earlier, is that the Board of Trustees has never

13 made the tough decisions; and we need that Board

14 to step up, make the tough decisions and put

15 this system back where it belongs, because it is

16 great a great system. It was created for the

17 right reasons, and it needs to continue for

18 those right reasons that is was originally

19 created for.

20 So I will leave it kind of there. I do

21 think that, as we move forward, we will continue

22 these discussions, as I think Representative

23 James or Representative Topper talked about, and

24 see what we can do together to work together as

25 a team. 143

1 Chancellor, I thank you and the

2 university presidents for their time being here

3 today, as well, and look forward to working with

4 you.

5 CHANCELLOR GREENSTEIN: Thanks so much.

6 Thank you.

7 (Whereupon, the hearing concluded.)

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1 C E R T I F I C A T E

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3 I hereby certify that the proceedings

4 are contained fully and accurately in the notes

5 taken by me on the within proceedings and that

6 this is a correct transcript of the same.

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9 ______Tracy L. Markle, Court Reporter 10 Notary Public

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