Between falling enrollments, rising costs, and at least one more semester disrupted by a pandemic, Pittsburgh colleges and universities are facing budget constraints in 2021 that could affect this major sector of the regional economy for generations to come.
Although the higher education sector has often been touted as a bright spot in the relatively dying economy of western Pennsylvania, it has already faced significant financial and demographic challenges – locally and nationally – that COVID-19 exacerbated.
“The number of traditional-age college students in Pennsylvania has been declining for several years,” said Drew Wilson, director of media relations at Carlow University. “The number of high school students coming in 2025 will decrease dramatically. So much so that it is referred to as ‘the cliff’ in college circles. The cliff would have an impact on higher education whether or not the pandemic occurred. “
More recently, the Trump administration’s immigration policies have resulted in a sharp decline in the number of international students completing their education in the United States. Foreign students are not eligible for much of the financial assistance available to their local classmates and usually pay full tuition fees. International students are an important source of income for many schools. Mike Hansen, director and chairman of the Brown Center on Education Policy at the Brookings Institution, said, “Essentially, they subsidize the other students.”
Public universities saw themselves additionally burdened by falling investments by state legislators. “[Pennsylvania ranks] in the lower end of the United States when it comes to public investment in public higher education, ”said David Pidgeon, public relations director for the Pennsylvania State System of Higher Education.
As competition increased and revenues decreased, students in both private and public schools were increasingly asked to bear the additional costs. A study by US News and World Report found that tuition fees at private universities rose 144 percent from 2000 to 2020. At public universities, outside of the state tuition fees rose 165 percent, while tuition fees at state universities rose 212 percent.
Ten years ago, students in the state university system in Pennsylvania paid an average of $ 6,800 less in annual tuition than students in state institutions like Pitt and Penn State and $ 8,800 less than their counterparts in private colleges, according to the Pennsylvania System of Higher Ed. However, as of 2017, those differences dropped to $ 2,200 and $ 2,800, respectively.
As Pidgeon said: “In the last 10 years the price advantage that we once enjoyed in this highly competitive market has unfortunately shrunk.”
Punishing the pandemic policy
Some of the region’s leading universities have reported significant financial losses over the past year as their campuses were cleared and online courses tumbled.
“For the 2019-20 fiscal year, the university lost an estimated $ 28 million in revenue, primarily due to room and board reimbursements and lost revenue from other ancillary services,” said Julianne Mattera, a spokeswoman for Carnegie Mellon University. The CMU’s revised budget for 2020-21 now anticipates a 10 percent ($ 116 million) decrease in total revenue and a 7 percent ($ 91 million) decrease in operating expenses. Despite the loss of many international students, the CMU recorded a slight increase in student numbers in the fall.
Between March and June 2020 alone, the University of Pittsburgh lost $ 50 million in revenue. “While there is still uncertainty in fiscal 2021, the university has estimated about $ 90 million to $ 130 million due to COVID-19 costs and lost revenue,” said Kevin Zwick, communications manager at Pitt. Fall semester enrollments fell by less than 2 percent, he said, but undergraduate enrollments overall remained stable despite a decline in international students.
At Chatham University, with support from federal CARES law, a hiring freeze, and a hiatus on large investment projects, we “closed our fiscal year this summer with a net cash flow budget that was above breakeven,” said Vice President of Marketing and Communication Bill Campbell. “In autumn 2020 we recorded a slight decrease in registrations. However, we were expecting this due to a record number of undergraduate classes last year as we received a large number of students from a transfer agreement with Green Mountain College in Vermont that was nearing graduation. ”
While Point Park University also confirmed a decrease in overall enrollments, the Community College of Allegheny County saw an increase in both distance learning (plus 25 percent) and visiting students (plus 6.5 percent).
Pennsylvania University’s 14-school system estimates COVID-19 cost the system $ 103 million in the 2019-20 academic year. In 2020-21, the system expects pandemic-related costs to reach $ 100 million. Enrollment has fallen by 2.7 percent across the system.
Within the state system, COVID accelerated large-scale reforms that were already underway. In February 2020, Chancellor Dan Greenstein issued a directive for each school in the system to draw up a plan for how they can become financially sustainable within five years. In April, when the pandemic was in full swing, Greenstein cut the schedule to three years.
“Many of the challenges we faced in terms of enrollment and financial security pre-pandemic,” Pidgeon said. “It certainly added to the challenge we faced.”
In July, Greenstein’s office announced a major reorganization plan that could effectively unite six of the state’s 14 universities, including Clarion, Edinboro, and the California University of Pennsylvania. Indiana University of Pennsylvania has also announced a major restructuring after its enrollment fell 33 percent over the past decade.
As Hansen von Brookings said, “Few colleges get away with it.”