Report outlines path forward for strapped New Jersey City University

By: Mary Ann Koruth
NorthJersey.com
USA Today Network - New Jersey

..... Small New Jersey colleges - public and private alike - were challenged by falling enrollments during the pandemic and decreasing state aid over time. None, though, was likely as beleaguered as New Jersey City University, a 97-year old, minority-serving public college with deep roots in Hudson County.
..... A state investigation last year [2023] revealed a slew of bad calls by former NJCU leaders - including $14 million in wrongfully handled federal COVID relief funds and irresponsible real estate expansion, even as the pandemic's revenue declines snowballed into a full-blown fiscal criss for the institution.
..... A new recommendation in a report issued by independent state monitor Henry Amoroso, an attorney and faculty member at Seton Hall University, envisions NJCU as a an affiliate institution connected to another higher-education entity, calling it Jersey City College, with it disinvest in its satellite campuses' real estate expansions.
..... Remaining an independent city university is a "narrow pathway," Amoroso wrote, "fraught with numerous, significant challenges," and NJCU's long-term fiscal survival will not be possible without "significant additional state investment.
..... The university should engage an adviser "to explore any type of affiliation or partnership that could help create long-term financial sustainability with improved student outcomes," Amoroso told reporters Tuesday. [03/12/2024]
..... "We owe it to NJCU's storied history and its students to create something better."
..... Anything beyond a simple partnership might require legislative approval and full transparency, Amoroso said. The report mentions Rutgers as an institution with a chancellor model that would serve NJCU well.
..... Amoroso gave NJCU's interim president, Andres Acebo, credit for steering responsible decisions making since he too over in January 2023, but placed fault with former leaders responsible for campus expansions that bled resources when the school was already burdened with "old debt."
..... Amoroso's report says a fiscal audit in 2022 showed that the university had only $4 million remaining, after paying salaries amounting to $88 million, to meet operating expenses of around 476 million. Salaries usually come out of revenue from tuition and fees, which totaled around $92.5 million. Adding to its financial mismanagement was NJCU's practice of "consistently" underfunding its capital expenditures, the report says.
..... The total debt $287 million, resulting mostly from NJCU's investments in long-term leases at Fort Monmouth and the Harborside Jersey City campus. This is "too high for the university to meet," Amoroso said. Real estate investments will have to be "exited in responsible ways," he added.
..... The university also has an "immediate" need for $50 million in capital expenses to pay for roofs, doors and building infrastructure to operate effectively.
..... The university's capital needs were "underreported for a long time ... but moving into campus expansions while neglecting its main campus,: along with revenue declines since 2017, falling state appropriation and the depletion of millions of dollars in federal COVID relief, resulted in the financial crisis, Amoroso told reporters. New Jersey City University appropriations form the state budget for 2022-2023 were $33.9 million. It received 424 million in 2020-2021 and $26.6 million in 2019-2020.
..... NJCU also received $49.45 million in federal COVID relief, the report says.
..... Former university leaders mis-allocated $14 million of that to preexisting student scholarships in 2021, knowing that was likely unlawful, the Office of the State Comptroller revealed in a report last May. [2023]

Investigation began in 2022

..... Governor Phil Murphy announced a state investigation in August 2022 into financially strapped NJCU, citing a deficit of $67 million and an additional $156 million in debt, to see "if it can remain open at all."
..... The crisis also spurred passage of a new law, the Higher Education Accountability & Monitoring Act, which requires institutions to submit fiscal monitoring reports to the state.
..... The law also empowers the secretary of higher education to monitor schools that the office deems fiscally unstable.
..... The university challenged reports first published in The Jersey Journal that blamed poor finical management under former President sue Henderson for spurring the crisis. Henderson oversaw real estate expansion on the west side of Jersey City in a 22-acre "University Place" project, estimated to cost $400 million, that was widely criticized by faculty and students.
..... The state investigation began even as NJCU's deficit was contested. Gothic Times, the college's student newspaper reported that the NJCU board of trustees announced a $20 million deficit in June 2022. Murphy's statement said it was $67 million. and the university said in a statement at the time that were it not for a 2015 change in accounting standards showing a $61 million deficit, NJCU's net position would be positive - around $84 million.
..... The university went into right-sizing mode in December 2022, eliminating 48 undergraduate degree programs, 24 minors, 28 graduate programs, 10 certificate programs and one doctoral program. Acebo took over last January. [2023]
..... Furloughs, further program cuts and layoffs followed, though Acebo is credited with preserving some critical programs. The root cause of NJCU's financial woes was a big drop in enrollment revenues, which were worsened by its leadership's spending decisions, Acebo told NorthJersey.com early last year. [2023]
..... "My philosophy is not one of contraction,: he said last year, [2023] noting that he wanted to "reallocate" money.
..... However, the latest recommendations from the state monitor propose cuts.
..... Leasing out surplus real estate, selling capital assets, and restructuring and cutting programs are among Amoroso's recommendations, which follow a timeline with specific goals including hiring an adviser, identifying an institution to be partner and reorganizing its leadership and finances by fiscal year 2026.
..... "Debt must be reduced," Amoros said. "The university is already determining market value of its properties. It might mean exiting long-term leases, but it definitely means we need a plan to finance capital and exit long-tern debt."
..... Amoroso also slammed the board of trustees and wants it reorganized before a new, permanent president is hired.
..... The board is not "fully engaged," he told reporters, with some more involved than others. The expectation is that by this May, [2024] the board will replace four members to bring in new talent and expertise, the report says.
..... The report also asks to establish a post of vice president for student success to report directly to the university president.

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