East Stroudsburg
University
Environmental Scan,
SWOT Analysis,
and
Five-Year Budget Projection
February 1, 2010
Presented by:
Donna R. Bulzoni CPA MBA
Director of Financial Affairs & Controller
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TABLE OF CONTENTS
Environmental Scan
Introduction ……………………………………..
3
Overview ………………………………………...
4
National Outlook ……………………………….
5-7
Pennsylvania Outlook ………………………..
8-9
Monroe County Outlook & Demographics .
10-11
Government ……………………………………
12-15
Economic Development ……………………..
16-17
Facilities ………………………………………..
18-19
Financial Resources ………………………….
20-29
SWOT Analysis ………………………………………..
30
5-Year Budget Projection …………………………… 31-33
Acknowledgements …………………………………..
34
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East Stroudsburg University
Environmental Scan
Introduction
East Stroudsburg University (ESU), like most colleges and universities across
our nation, is facing some of the greatest economic challenges of our time. With tax
revenue declining as a result of the recession and budget reserves largely drained, the
vast majority of states are making spending cuts that hurt families and reduce
necessary services. Higher education is among the cuts in services being made by
states. According to the Center on Budget Policies and Priorities, 36 states have made
cuts in higher education funding as a result of the recession. American Recovery and
Reinvestment Act (federal stimulus) dollars and funds raised from tax increases are
greatly reducing the extent, severity, and economic impact of these cuts, but only to a
point. While the Pennsylvania State System of Higher Education (PASSHE) and ESU
have benefited from federal stimulus dollars and have not yet felt the full impact of this
recession, our challenge will come when the federal dollars evaporate in fiscal year
2011-12.
As the University considers its financial position for fiscal year 2010-11 and
beyond, then, it is appropriate to give careful consideration to the environment in which
we exist. Our environment is constantly changing and poses opportunities and threats
which should be considered as an integral part of our planning process.
The Environmental Scan and SWOT Analysis presented herein are products of a
campus-wide effort involving more than 30 individuals. Historically, the Business Office
prepared our Environmental Scan (no formal SWOT Analysis) without input from the
campus constituency. In an effort to improve the scan and more fully engage the
campus community in our planning process, individuals viewed as experts in select
fields were identified during last year’s planning process and asked to provide a detail
SWOT in their respective areas of expertise. The response to our request was
tremendous and we believe the resulting product was much improved. Thus, this
Environmental Scan and SWOT were prepared using the same methodology. Again,
we were not disappointed! Response was great and much value was added.
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Overview
After scanning the environment, we have come to the conclusion the fiscal
uncertainty we have been facing will continue. According to “The Budget and Economic
Outlook: Fiscal Years 2010 to 2020” released by the Congressional Budget Office
(CBO) on January 26, 2010, the deep recession that began two years ago appears to
have ended in mid-2009. However, the CBO is also predicting a very slow pace to
recovery. This slow recovery is expected to have an impact on the Commonwealth of
Pennsylvania and its budget which could ultimately result in a further tightening of East
Stroudsburg University’s state appropriation.
While it is clear the University is financially strong, it is equally as clear our real fiscal
challenge has been deferred until Fiscal Year 2011-12 when the American
Reinvestment and Recovery Act funding dries up and we are faced with a projected
budget gap. Unlike some of our sister institutions in the Pennsylvania State System of
Higher Education who are facing financial challenges in the current fiscal year, we have
been afforded the benefit of time to plan a course of action to face our financial
challenges.
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National Outlook
According to the Congressional Budget Office, the deep recession we have been
in for the past two years ended in mid-2009. Recovery is expected to be slow due to
the waning of federal stimulus funds and constrained spending by households due to
slow growth of income, lost wealth, and limits on their ability to borrow, coupled with
slowed investment spending due to the large number of vacant homes and offices. It is
expected state budgets will not feel the effects of this recovery for several years.
According to “Recession Continues to Batter State Budgets; State
Responses Could Slow Recovery”, (Center on Budget and Policy Priorities,
December 23, 2009), new shortfalls have opened up in the budgets of at least 39 states
for the current fiscal year resulting in 48 states reporting budget shortfalls (FY 2010,
which began July 1 in most states) (See Figure 1). In addition, initial indications are that
states will face shortfalls as big as or bigger than they faced this year in the upcoming
2011 fiscal year. It is expected states will continue to struggle to find the revenue
needed to support critical public services for a number of years.
Of the states with mid-year budget deficits, Pennsylvania ranks 32nd with a $5.2
billion deficit representing a 19.7% increase in deficit since the date the budget was
adopted (See Table 1).
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Table 1
STATES WITH FY2010 BUDGET GAPS
FY2010
FY2010
FY2010 Total –
Before Budget Adoption
Mid-Year Gap
FY2010 Total
% of General Fund Budget
California
$45.5 billion
$6.3 billion
$51.8 billion
56.20%
Arizona
$3.2 billion
$2.0 billion
$5.2 billion
53.00%
Illinois
$9.3 billion
$5.0 billion
$14.3 billion
40.90%
Nevada
$1.2 billion
$67 million
$1.2 billion
40.00%
New York
$17.9 billion
$3.2 billion
$21.0 billion
38.00%
Rhode Island
$590 million
$400 million
$990 million
32.20%
New Jersey
$8.8 billion
$400 million
$9.2 billion
31.30%
Alaska
$1.3 billion
0
$1.3 billion
30.00%
Kansas
$1.4 billion
$459 million
$1.8 billion
30.00%
Oregon*
$4.2 billion
0
$4.2 billion
29.00%
Total
$158.5 billion
$34.1 billion
$192.6 billion
28.10%
Vermont
$278 million
$28 million
$306 million
27.30%
Connecticut
$4.2 billion
$549 million
$4.7 billion
27.00%
Maine
$640 million
$209 million
$849 million
26.90%
Washington*
$3.4 billion
$2.6 billion
$6.0 billion
26.00%
Georgia
$3.1 billion
$1.2 billion
$4.3 billion
24.90%
Hawaii
$682 million
$533 million
$1.2 billion
23.70%
Florida
$5.9 billion
$147 million
$6.0 billion
23.30%
Oklahoma
$777 million
$550 million
$1.3 million
23.20%
Wisconsin
$3.2 billion
0
$3.2 billion
23.20%
Idaho
$411 million
$151 million
$562 million
22.40%
Minnesota
$3.2 billion
$209 million
$3.4 billion
22.30%
Alabama
$1.2 billion
$400 million
$1.6 billion
22.20%
Virginia
$1.8 billion
$1.8 billion
$3.6 billion
22.00%
North Carolina
$4.6 billion
0
$4.6 billion
21.90%
Louisiana
$1.8 billion
0
$1.8 billion
21.60%
Colorado
$1.0 billion
$561 million
$1.6 billion
21.00%
Maryland
$1.9 billion
$936 million
$2.8 billion
20.40%
Iowa
$779 million
$415 million
$1.2 billion
20.20%
South Carolina
$725 million
$439 million
$1.2 billion
20.10%
Massachusetts
$5.0 billion
$600 million
$5.6 billion
20.00%
Utah
$721 million
$279 million
$1.0 billion
19.80%
Pennsylvania
$4.8 billion
$450 million
$5.2 billion
19.70%
New Hampshire
$250 million
$38 million
$288 million
18.70%
New Mexico
$345 million
$650 million
$995 million
18.10%
Delaware
$557 million
0
$557 million
17.60%
Mississippi
$480 million
$370 million
$850 million
17.10%
Missouri
$780 million
$690 million
$1.5 billion
16.40%
Ohio
$3.3 billion
$296 million
$3.6 billion
13.40%
Kentucky
0
$1.2 billion
$1.2 billion
12.90%
District of Columbia
$650 million
$150 million
$800 million
12.70%
Michigan
$2.8 billion
0
$2.8 billion
12.40%
Tennessee
$1.0 billion
$96 million
$1.1 billion
10.70%
Indiana
$1.1 billion
$309 million
$1.4 billion
9.60%
Texas
$3.5 billion
0
$3.5 billion
9.50%
Nebraska
$150 million
$155 million
$305 million
8.60%
West Virginia
$184 million
$100 million
$284 million
7.50%
Arkansas
$146 million
$107 million
$253 million
5.60%
South Dakota
$32 million
0
$32 million
2.90%
Wyoming
0
$32 million
$32 million
1.70%
Notes: Some or all of the pre-budget shortfalls have already been addressed.
* Oregon and Washington have two-year budgets. For Oregon, the size of the combined shortfall before budget adoption for FY10 and FY11
is shown here. For Washington, the mid-year gap shown is the projected gap for the two years ending in FY11.
Source: Center on Budget & Policy Priorities
Page 7 of 34
The impact of the recession is expected to be felt for some time. Budget deficits
are already projected for the upcoming fiscal year for many states. Initial estimates of
these shortfalls total almost $180 billion. Additionally, state shortfalls are being
predicted out to 2012 with estimated deficits totaling $120 billion. This is even after
taking into consideration the federal stimulus funds of approximately $40 billion which
will be available to states in 2011.
Figure 2 shows recent estimates of the size and duration of the state deficits in
the recession that occurred in the first part of this decade and the latest estimates of the
likely deficits in our most recent recession (Center on Budget and Policy Priorities,
December 23, 2009).
Source: “State Budget Troubles Worsen”, Center on Budget and Policy Priorities, Dec. 23, 2009
In an effort to fill these budget gaps, at least 43 states plus the District of
Columbia have begun cutting important services. Among the areas hardest hit are
public services including children’s health services, programs for the elderly and
disabled (medical, rehabilitative, home care, or other services needed by low-income
people who are elderly or have disabilities, K-12 education), state workforces, and
higher education to include reduction in faculty and staff as well as tuition increases.
The University of California is increasing tuition by 32 percent. Tuition at all 11 public
universities in Florida increased by 15 percent for the 2009-2010 academic year.
Students in Washington and other states face significant tuition increases as well,
costing families hundreds of dollars per year. Michigan and New Mexico have made
deep cuts to need-based financial aid programs.
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Pennsylvania Outlook
Pennsylvania opened the current fiscal year with a $4.8B budget gap and by midyear added another $450M. The final budget gap is now estimated at $5.2B. According
to a statement from the Commonwealth’s budget office issued on December 15, 2009
the Governor has directed a freeze of $170 million, which is less than a one percent
reduction in state expenditures, to address the projected shortfall. The state will also
recoup $50 million from prior-year unspent funds and will plan to draw $230 million from
a year-end surplus originally projected at $354 million. That will leave $124 million to
serve as a cushion against further erosion of finances. The Governor, in his statement
to the press on December 15, 2009, stressed that the state still needs to enact gaming
legislation designed to produce $250 million for the General Fund.
While caution is still necessary, a Pew study of the fiscal status of the states
found Pennsylvania among the 10 best in financial condition. Pennsylvania ranked
seventh in the nation for fiscal stability, and is the only state in the Northeast and the
only large industrial state to appear in the top 10. Pennsylvania's revenue decline was
only half the national average.
The Commonwealth’s unemployment rate for October 2009 was 8.8%,
unchanged from September 2009. Since the national recession began in December
2007, Pennsylvania has held onto jobs better than many other large, competitor or
neighboring states.
As published in the “Commonwealth of Pennsylvania’s 2009-10 Budget in Brief”,
the Governor’s 2009-10 Budget Overview projected $26.6 Billion in General Fund
Expenditures broken down as follows:
General Fund
Expenditures
$26.6 Billion
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What does this mean to higher education, the Pennsylvania State System of
Higher Education, and most importantly, East Stroudsburg University?
Looking further down the road, state deficits over the next two and a half years
are predicted to total more than $300 billion. Local governments are also expected to
face shortfalls. Given that a large portion of the Commonwealth’s budget is in
education, cuts in state appropriation are possible. While cuts in Fiscal Year 2010-2011
will be tempered by the American Recovery and Reinvestment Act funds, we need to
prepare ourselves for Fiscal Year 2011-12 when the federal dollars go away.
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Monroe County Outlook & Demographics
Northeastern Pennsylvania, Monroe County in particular, has seen steady
population growth during the past several years while the remainder of Pennsylvania
has been experiencing population stability or declines. This trend is likely to extend with
ongoing population declines being likely for all but Northeastern Pennsylvania and
perhaps some of those counties located in Southeastern Pennsylvania. Based on
available data, it is also likely that the region will become increasingly diverse.
Pennsylvania’s population is also older than the vast majority of the nation’s
population. According to the Center for Workforce Information and Analysis “Economic
Review of Pennsylvania 2007”, the number of Pennsylvanians age 65 and over was 1.9
million in 2007. The state’s percentage of those aged 65 and over is 15.3%, second
only in the nation to Florida which has the highest percentage of those 65 and over.
Interestingly, according to the U.S. Census 2008, only 12% of Monroe County’s
population is 65 years of age or older while 24% is under 18 years of age.
Pennsylvania’s total working age population (those aged 25 to 64) will be less
than the year before until at least 2029. Therefore, there will be worker shortages in the
coming years and some areas, industries, and occupations will be affected sooner and
harder than others.
Pennsylvania’s Education & Health Services, Professional & Business Services,
and Leisure & Hospitality industry sectors will account for nearly 90 percent of all annual
employment growth through 2014. The education and health care industries are
expected to dominate growth. East Stroudsburg University currently offers programs in
all growth areas.
The latest employment by industry data available for Monroe County, as per the
American Community Survey (2008) follows. Note that the top three industries in
Monroe County with the highest number of paid employees are retail trade,
accommodation & food services, and health care & social assistance, as highlighted in
yellow in the table that follows.
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Employment by Industry in Monroe County, Pennsylvania in 2008
Agriculture, forestry, fishing
and hunting, and mining 1%
Construction
Manufacturing
Wholesale trade
Retail trade
10%
10%
3%
13%
Transportation and
warehousing, and utilities 7%
Information
2%
Finance and insurance, and
real estate and rental and
5%
leasing
Professional, scientific, and
management, and
administrative and waste 8%
management services
Educational services, and
health care and social
22%
assistance
Arts, entertainment, and
recreation, and
accommodation, and food 12%
services
Other Services, except public
administration 4%
Public administration
3%
Percent of employed people 16 years and over
Source: American Community Survey, 2008
Monroe County, in particular, has a heavily tourist-based economy and will
continue to use its scenic resources to provide recreational services for the
Northeastern region of Pennsylvania. However, the county continues to encourage
economic development by attracting new industries to the area. Pennsylvania’s
manufacturing industry continues to shed jobs and its economy continues to adapt and
transform itself from one of goods producing to service providing.
It should be noted, Monroe County is not immune to the impact of the national
economic crisis. Approximately 25% of municipalities located in Monroe County chose
to raise taxes for next fiscal year.
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Government
Given East Stroudsburg University’s position as a member of the Pennsylvania
State System of Higher Education and a “state-owned” institution, trends in
governmental activity are relevant to our future financial health. Slightly less than onethird of the University’s operating budget is derived from state appropriations, now
approximately $26 million per year. Additionally, significant capital (building) funding
also comes from the Commonwealth.
Where once the University received approximately 2/3s of its operating budget
through state appropriations, it now receives slightly less than 1/3 of its operating
resources via state funding. For the past 15 years, appropriations have not kept pace
with either student growth or increased costs due to inflation. The following graph
shows PASSHE Appropriation per Student as adjusted for inflation in 2009 dollars for
the period Fiscal Year 1999-2000 through Fiscal Year 2009-2010.
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The burden of addressing these costs has been shifted to the students by
increasing tuition. The following graph shows PASSHE revenue per student from state
appropriation and tuition for the same time period.
As a result of this shift, college affordability continues to decline. The National
Center for Public Policy and Higher Education’s Measuring Up 2008 Report gave 49 of
50 states, including Pennsylvania, a grade of F in higher education affordability. To
follow is a graph taken from The National Center for Public Policy and Higher
Education’s Measuring Up 2008 Report depicting the percentage of income needed to
pay for public two- and four-year colleges (Pennsylvania vs United States vs the median
of the top five states).
Page 14 of 34
Affordability
Legend
Pennsylvania
United States
Median of Top Five States
There is uncertainty whether the state’s downward trend in support for Higher
Education, and in particular the State System of Higher Education, will continue into the
foreseeable future. In recent years, the current Governor focused his higher education
funding efforts on community colleges. However, given this is the Governor’s last term
in office, it is difficult to predict the priorities of the Commonwealth’s next Governor.
An additional issue of some importance to public higher education is the
increased concern on the parts of the executive and legislative branches of government
on accountability. Government expects public universities to run efficiently and to use
the public funds provided as prudently as possible. Further, government expects results
from the universities it funds in the form of well-trained students, who move
expeditiously through their academic programs and become capable of contributing to
the state’s economy.
East Stroudsburg University and PASSHE have been successful in meeting
these expectations, producing skilled, successful graduates. According to the most
recent data available from the PASSHE Institutional Resources Office, more than
454,000 PASSHE alumni live and work in the Commonwealth of Pennsylvania.
The notion of “performance indicators” and “performance funding” grew out of the
concern for accountability. PASSHE was one of the first and continues to be one of
Page 15 of 34
the few public university systems in the nation to voluntarily implement and continue
performance funding. Since the program began in 2000, the Board of Governors has
steadily increased the amount of funding available to the universities for improving their
performance, for outperforming their peers nationally and for meeting System goals.
Approximately $27 million in performance funding dollars were awarded to the
universities in the PASSHE in Fiscal Year 2009-10. It is anticipated that this amount will
remain stable or grow slowly during the next 5 to 10 years. However, how an institution
benefits from such funding will depend entirely on its performance vis-a-vis the
indicators. During the earlier years, when performance funding was implemented, East
Stroudsburg University had experienced a net loss in terms of the potential for
performance funding allocations. This posture is changing with improvement in our
results from the indicators that produce revenue. However, when comparing this year’s
allocation to the year prior, it appears we may have reached a plateau. A cautious
position would be to project level funding from this source so as not to produce revenue
shortfalls from this tenuous source.
The following graph shows a history of East Stroudsburg University’s
performance funding allocation since inception of the program.
Page 16 of 34
Economic Development
East Stroudsburg University is an economic engine for Monroe County. It is wellpositioned as a major center for innovation, science and technology in northeastern
Pennsylvania. The University is located 75 miles west of New York City and 85 miles
northeast of Philadelphia, placing it in close proximity to the nation’s top global
pharmaceutical and financial services companies.
The University’s Science and Technology Center is a major attraction in bringing
innovative business and education opportunities to the region. In addition, the
University is actively engaged in the Pocono Mountains Keystone Innovation Zone
(PMKIZ) and is developing a 15-acre ESU Research and Business Park on Universityowned property. Phase I of the park, a 51,000 sq. ft. Center for Innovation and
Entrepreneurship, is nearing completion. The facility includes 11,000 sq. ft. of business
accelerator space and wet labs to support start-up companies. The Park, operated by
the ESU Center for Research and Economic Development, is focusing on attracting
start-up/anchor companies and educational opportunities in the areas of homeland
security, financial services, biotechnology/life sciences, information technology,
healthcare, and advanced manufacturing. The economic impact projections for Phase I
of the project are 595 jobs and $457M into the Monroe County economy. These
initiatives, supported by the creation of the University’s College of Business and
Management, Research and Economic Development Division, and the ESU Research
and Business Park, provide a strong foundation for regional alliances and academic
opportunities which prepare students to serve, lead and succeed in a competitive global
society.
East Stroudsburg University’s contributions to regional economic development
efforts are noteworthy. According to the most recent data available from PASSHE, East
Stroudsburg University is the ninth largest employer in Monroe County, providing 750
jobs directly and creating a total employment impact of 1,206 jobs. The university
generates more than $273.5 million annually in direct and indirect business stimulus in
Pennsylvania, $109.9 million annually in Monroe County, and $18.3M in East
Stroudsburg and Stroudsburg. This encompasses the impact of spending by the
institution, faculty, staff, students and visitors. Additionally, ESU is located on 256 acres
located in East Stroudsburg Borough and Smithfield Township that are valued at
$322M.
ESU has been identified as a “best practice” model in community and economic
development regionally and by the Pennsylvania State System of Higher Education.
The success of the ESU Business Accelerator Program has led to the creation of nine
high tech companies including one company owned by an ESU graduate and one
faculty-owned company. The Pocono Mountains Keystone Innovation Zone Program
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has resulted in 170 jobs retained, 54 businesses assisted, 70 student internship
placements and $8.7M revenue leveraged by KIZ companies.
In the area of sponsored projects and research, in FY 2008-2009, ESU faculty
and staff submitted 110 external grants and contracts totaling $22M and successfully
secured $4.54M. The Office of Sponsored Projects and Research worked with 90
faculty and staff representing 37 University departments. Workforce development
initiatives included administering $617,019 in employee-training grants involving 32
businesses and training of over 3,600 employees. The Entrepreneurial Leadership
Center sponsored ESU’s first Entrepreneurial Boot Camp and first student Business
Plan Competition. A total of thirty-two students, representing 16 majors, participated in
the Business Plan Competition.
Legislative appropriations supporting economic development initiatives at
PASSHE universities across the Commonwealth totaled $5.4M from FY 2007-2008
through FY 2009-2010. ESU was awarded $562,000 to support the following economic
development initiatives:
 ESU Web-Based Internship Network (WIN) ($90,000)
 ESU Entrepreneurial Leadership Center ($191,000)
 ESU Research and Business Park Infrastructure ($281,000)
Additionally, ESU received a $191,598 Keystone Innovation Grant to support the
development of a PASSHE Technology Transfer and Commercialization Resource
Network that will provide a strategic and integrated approach to protecting intellectual
property and advancing faculty and student projects toward commercialization across
the fourteen PASSHE universities. The grant has enabled PASSHE to partner with the
Penn State Research Foundation (PSRF) to serve as the PASSHE Technology
Transfer and Commercialization Office.
Page 18 of 34
Facilities
Analysis of our current space during a 2008-09 study conducted by Sightlines,
Inc. revealed East Stroudsburg University is an older campus in comparison to its peers
within PASSHE. According to their report, greater than 50% of our facilities are more
than 50 years old and 95% of our facilities are greater than 25 years old.
Looking back to Fiscal Year 2004, there was $18.3 million of deferred
maintenance from Fiscal Year 2004 – Fiscal Year 2008 with anticipated additions in the
range of $3-5M per year each year thereafter due to the Science and Technology
Building coming online.
Page 19 of 34
Much of our 2002 campus master plan has been achieved. The University has
been working with a master plan consultant revisiting the existing plan and devising a
new one. Our new plan is in the final stages of development and proposes new
facilities that will greatly improve the functionality of Campus facilities However, the
capital funding requirements for new and renovated buildings proposed in this plan are
in the hundreds of millions of dollars while ESU’s current share of the PASSHE capital
budget is approximately $3.5 million / year.
The University is space-constrained for future growth without additional, new or
modernized facilities and also by the condition of our residence halls and the number of
available beds. Much work has been done to correct this.
Our new Science and Technology Center (120,000 square feet of new academic
space) was completed in 2008 and a renovation of Monroe Hall (40,000 of new
academic space) is scheduled to begin the summer of 2010. These new facilities will
position the University for enrollment growth planned in the near and intermediate
terms.
Support facilities for housing, dining and activities are being considered. The
University’s partner, University Properties, Inc, completed 541 beds of student housing
that is already 100% occupied. This increased our ability to house students by more
than 15%. UPI has a development agreement with Allen & O’Hara to construct new
residence halls and to modernize or replace the existing residence halls. However, the
current economy has made UPI’s ability to acquire bond funding for new construction
difficult. UPI was unable to secure bond financing last fiscal year due to the tightening
of credit resulting from the recession. UPI will attempt, again, to secure financing. The
University is also pursuing the construction of a $100M Information Commons complex
(Info Commons). This complex would house a new library, university center, computing
center and center for hospitality management. We have already secured $75M in
capital appropriations from the Commonwealth to fund the University’s share of the
construction cost of Info Commons and an additional $25M to be used in renovation of
the existing Library into academic space.
Parking continues to pose a challenge for the University. The University will be
working with a consultant to once again examine our parking requirements on campus.
However, should their work result in a recommendation for additional parking, possibly a
parking garage, there is no current income stream to support such a project. Finally,
utility costs were expected to escalate with the expiration of the electrical rate cuts
imposed by deregulation. It was originally estimated there was a potential for electrical
rate increases in 2010 of 30% to 40% or more. The University was able to mitigate the
increases in these costs by bidding out our electricity.
Page 20 of 34
Financial Resources
East Stroudsburg University is fiscally sound, receiving an unqualified opinion on
its audited financial statements for Fiscal Year 2008-09. Over the past four fiscal years,
ESU has enjoyed increases in unrestricted net assets as follows:
While there has been a downward trend in our Change in Net Assets, one must
consider this in relation to our sister institutions which comprise the Pennsylvania State
System of Higher Education. East Stroudsburg University is one of only five universities
in the PASSHE who closed Fiscal Year 2008-09 with an increase in Net Assets. The
remaining nine universities in the PASSHE recorded decreases ranging from $500k to
$94M. It is the judicious management of our resources that has positioned us well to
weather the economic storm we currently face.
The comparison of ESU’s Fiscal Year 2008-2009 Change in Net Assets as
compared to our sister institutions in the PASSHE is graphically depicted as follows:
Page 21 of 34
The sources of the University’s operating revenues have been consistent
and predictable. To follow is a Total Operating Revenues summary (in
thousands) prepared by the University’s auditors, ParenteBeard, LLC, and
presented to the University’s Council of Trustees on December 10, 2009.
Like revenues, University operating expenditures have also been consistent and
predictable. To follow is a Total Operating Expenses summary (in thousands) prepared
by the University’s auditors, ParenteBeard, LLC, and also presented to the University’s
Council of Trustees on December 10, 2009.
Page 22 of 34
There are four core higher-level ratios that can provide information on the overall
financial health of an institution: Primary Reserve Ratio, Viability Ratio, Return on Net
Assets Ratio and Net Operating Revenues Ratio. Each of these ratios was calculated
for East Stroudsburg University using data from our Fiscal Year 2008-09 financial
statements. Although the ratios allow for the inclusion of component unit data, the
results presented for ESU below do not.
The resulting ratio values will be useful when assessing future prospects of the
University as well as when implementing our strategic plan.
Page 23 of 34
Four Core Higher-Level Ratios on the Overall Financial Health of the Institution
Name of Ratio
Primary Reserve Ratio
ESU's Ratio Value
What Does it Mean?
.365x
Can the institution retain expendable
resources at the same rate of growth
as its commitments? The implication
for ESU is that we could cover 4 1/3
months (36.5% of 12 months)
expenses from reserves.
Net Operating Revenues Ratio
.02%
Return on Net Assets Ratio
2.05%
Viability Ratio
.97
Explains how any surplus from
operating activities affect the
behavior of the other 3 core ratios.
For ESU, the positive percentage
indicates we had a surplus for this
past fiscal year equal to .02% of our
total Operating Revenues. A target of
2-4% is usually good.
Determines if an institution is
financially better off than in previous
years by measuring total economic
return. A return of 3-4% is usually
good.
Used to determine the availability of
expendable net assets to cover debt
should the institution need to settle
its obligations as of the balance sheet
date. A ratio of 1:1 generally means
sufficient expendable net assets are
available to satisfy debt obligations.
Enrollment trends/predictions
Over the past five years, undergraduate enrollment has increased at an average
rate of 3.4% per year. Undergraduate headcount enrollment has increased 18.2% over
this five-year period while undergraduate full-time-equivalent (FTE) enrollment has
increased 18.8%.
Graduate enrollment has increased at an average rate of 0.8% per year over this
same five-year period. Graduate headcount enrollment has increased 3.6% over this
Page 24 of 34
five-year period while graduate full-time-equivalent (FTE) enrollment has increased
12.9%.
Taking the same growth rates into the future, we would have a university in 2014
with 7,555 undergraduate students and 1,233 graduate students for a total enrollment of
8,788. Continuing this pattern five more years to 2019 we would have 8,932
undergraduate students and 1,284 graduate students for a total of 10,072.
An area of concern is the beginning of the decline in the annual number of high
school graduates in Pennsylvania. Projections indicate the total number peaked in
2008-2009 and will now decline for at least the next five years. To follow is a graph of
Pennsylvania high school graduates, actual vs projected, for the period 1990 through
2016.
Source: Institutional Research Office, Pennsylvania State System of Higher Education
While the graduation numbers are expected to increase in Monroe County and
some surrounding areas through 2013 (See Table 2), the recent announcement of
pending teacher layoffs in the county, however, suggests declines. The drop in high
school graduation numbers throughout most of Pennsylvania also means other colleges
and universities are now more actively recruiting students in our region.
Page 25 of 34
HIGH SC HOOL GR A D U A T ES B Y C OU N T Y F OR SELEC T ED Y EA R S
W IT H PER C EN T C HA N GE B ET W EEN Y EA R S
Per cent
A ct ual
Pr o ject ed
C hang e
Pr o ject ed
2004
2005
2004 to
2 0 13
C o unt y
HSG
HSG
2005
HSG
Pike
373
388
4.0%
483
Clinton
401
367
-8.5%
451
M onroe
2,203
2,381
8.1%
2,810
Lebanon
1,268
1,296
2.2%
1,436
Lehigh
3,441
3,609
4.9%
3,972
Chester
5,369
5,711
6.4%
6,263
Franklin
1,412
1,400
-0.8%
1,525
M ontgomery
9,885
10,021
1.4%
10,748
Wayne
651
682
4.8%
728
Carbon
674
660
-2.0%
702
Northampton
3,504
3,567
1.8%
3,789
Berks
4,552
4,744
4.2%
5,025
Adams
1,252
1,156
-7.7%
1,217
Lancaster
5,275
5,280
0.1%
5,497
Butler
2,032
2,010
-1.1%
2,026
York
4,621
4,802
3.9%
4,842
Fayette
1,343
1,584
18.0%
1,590
Beaver
2,168
2,372
9.4%
2,367
Columbia
879
764
-13.0%
759
Centre
1,149
1,127
-1.9%
1,111
Cumberland
2,351
2,349
-0.1%
2,302
Dauphin
2,864
2,886
0.8%
2,814
Luzerne
3,610
3,544
-1.8%
3,444
Washington
2,148
2,191
2.0%
2,098
Lackawanna
2,406
2,357
-2.0%
2,257
M ifflin
421
423
0.5%
404
Clarion
541
486
-10.1%
463
Perry
501
493
-1.5%
469
M ercer
1,470
1,394
-5.2%
1,323
Juniata
254
227
-10.7%
215
Greene
455
406
-10.8%
384
Elk
481
423
-12.1%
399
Tioga
481
495
2.9%
466
Armstrong
854
799
-6.4%
744
Delaware
6,694
6,823
1.9%
6,326
Bedford
531
584
9.9%
537
Wyoming
354
337
-4.9%
307
Erie
3,406
3,347
-1.7%
3,035
Huntingdon
487
472
-3.0%
428
Fulton
157
164
4.4%
148
Westmoreland
4,311
4,322
0.3%
3,899
Blair
1,518
1,494
-1.6%
1,345
Bucks
7,842
8,032
2.4%
7,155
Cambria
1,738
1,628
-6.3%
1,451
Crawford
806
781
-3.0%
690
Lawrence
1,068
1,068
0.0%
939
Sullivan
66
61
-6.9%
54
Bradford
805
803
-0.3%
688
Clearfield
1,137
1,090
-4.1%
934
Schuylkill
1,653
1,590
-3.8%
1,360
Allegheny
13,541
13,539
0.0%
11,472
Philadelphia
15,219
15,792
3.8%
13,363
Jefferson
535
492
-8.0%
411
Somerset
952
889
-6.6%
741
Northumberland
1,084
1,067
-1.6%
884
Indiana
918
887
-3.4%
726
M ontour
196
187
-4.4%
153
Susquehanna
582
583
0.2%
473
Snyder
427
441
3.3%
357
M cKean
573
532
-7.1%
430
Lycoming
1,244
1,200
-3.6%
964
Forest
58
58
-0.2%
45
Union
315
360
14.4%
278
Warren
510
444
-12.9%
334
Venango
748
739
-1.1%
543
Potter
223
245
9.7%
170
Cameron
66
87
31.9%
58
Total
141,053
144,539
2.5%
135,820
Source: Penn State
Per cent
C hang e
2005 to
2 0 13
24.4%
22.9%
18.0%
10.8%
10.1%
9.7%
8.9%
7.3%
6.8%
6.3%
6.2%
5.9%
5.3%
4.1%
0.8%
0.8%
0.3%
-0.2%
-0.7%
-1.4%
-2.0%
-2.5%
-2.8%
-4.2%
-4.3%
-4.5%
-4.8%
-4.9%
-5.0%
-5.1%
-5.3%
-5.7%
-5.8%
-6.9%
-7.3%
-8.0%
-8.7%
-9.3%
-9.4%
-9.5%
-9.8%
-10.0%
-10.9%
-10.9%
-11.8%
-12.1%
-12.1%
-14.3%
-14.3%
-14.5%
-15.3%
-15.4%
-16.6%
-16.6%
-17.1%
-18.1%
-18.2%
-19.0%
-19.1%
-19.3%
-19.6%
-21.7%
-22.8%
-24.8%
-26.6%
-30.4%
-33.6%
-6.0%
Page 26 of 34
This presents new challenges for the university. The current economic recession
is also an area of concern because this may prevent some students from affording to
attend any college even though it may also have the effect of bringing us students who
cannot afford more expensive institutions.
Therefore, the university needs to be extremely strategic and comprehensive
about overall student enrollment management.
The University’s enrollment goals have been loosely organized around a sense
of our potential for growth, which is great, tempered by the desire to retain the intimate
instructional atmosphere that has characterized the University for many years. When
the University last completed a master plan, the figure settled on for total enrollment
was 8,500 over a 10-15 year period. While unofficial annual projections have been for
1% growth in undergraduates and to allow graduate enrollment to float naturally as
capacity for graduates is less constricted, in six of the last seven years, enrollment
increases have exceeded those projections.
While it is important that issues relative to the University’s enrollment goals
receive the broadest possible input, it is appropriate to continue a trend of assuming
cautious enrollment growth while these discussions begin. For financial purposes it is
assumed enrollment growth will be approximately 1% annually.
Appropriation trends/predictions
In terms of finances, the University is largely dependent on revenue from two
streams: 1) Commonwealth appropriations, and 2) Tuition and Fees.
In the case of appropriations, resources have been decreasing steadily as a
proportion of our overall budget. The following graph depicts East Stroudsburg
University’s state appropriation for the past several years:
Page 27 of 34
Growth in E and G resources has largely rested with increased tuition revenue
during the past 5 years or so. Although the System-approved tuition and fee increases
have been moderate, enrollment increases have supplemented the benefits of these
increases.
For the purposes of discussion, given the uncertainty of the state’s fiscal posture,
we will assume our appropriations will hold at the current year’s level across all five
years of our budget projections.
The University will have to carefully monitor this revenue source and determine
what is likely to be the most accurate reflection of what may occur.
Tuition trends/predictions
Predicting tuition revenue is a difficult and complex task. There has been
increased attention on tuition by the Governor’s office during the past three years. Our
current Governor strived to keep increases to an absolute minimum. Given this is our
Governor’s last year in office, tuition will be especially difficult to predict. Another issue
impacting tuition is the spread between in-state and out-of-state tuition. State
government has expressed the desire to not subsidize out-of-state students in any way.
Out-of-state tuition is 250% of in-state tuition and is so set to ensure that out-of-state
students pay the full cost of educating themselves.
In the past, the University had a limit of 15% on out-of-state students. However,
this has been relaxed somewhat recently and the University’s out-of-state enrollment
has now floated to approximately 23%. This has been very helpful in generating
revenue in a time when appropriation increases have been so limited. For the purposes
of revenue projection, it is appropriate to hold out-of-state enrollment at current levels.
Page 28 of 34
However, if the University were to grow its out-of-state enrollment beyond 30%,
unwanted attention would very likely be drawn to us.
To follow are graphs of tuition and fees for the past 10 years:
Page 29 of 34
It can be seen that increases vary considerably within the various categories. It
is unknown at this time how much the System is willing to increase tuition next year.
We will be using 3% for planning purposes.
The University charges several fees in addition to tuition. All miscellaneous, nonrecurring fees will be held at Fiscal Year 2009-2010 levels for Fiscal Year 2010-2011
with the exception of the transcript fee which will be increased from $3 to $5 per
request.
Other revenues
The University receives some revenue from sources other than appropriations
and tuition and fees. This revenue is primarily interest earned on invested funds, but
also includes rental income and a few other small items. Marginal increases have been
assumed in our projections. Anticipating interest rates, especially during the current
economic crisis, is difficult at best.
Expenditure trends/predictions
Expenditure projections are based on somewhat limited information about
salaries and benefits. This analysis attempts to project salaries based on the collective
bargaining agreements and benefits using the best known rates at this time as per the
PASSHE Budget Office. In the area of non-personnel services (utilities, supplies, etc.) it
is wise to assume moderate increases in utilities following a year of significant increases
due to the rapidly rising cost of oil and gas. Other commodities are projected flat with
no anticipated increases.
Page 30 of 34
East Stroudsburg University
SWOT Analysis
Strengths
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Competitive Advantage
Monopoly position in Monroe, Pike and Wayne
Counties
Close proximity to NYC and Philadelphia
Attractive, well-maintained campus
Completion of the Science & Technology building
Commitment to Diversity – now included in the
University’s Strategic Plan
Competent faculty, dedicated to our students, a large
number holding terminal degrees
Good curriculum
Growing student body
Enrollment Services model
Commitment to research & economic development
Fiscally sound (unqualified audit opinion)
Commitment to sustainability
Weaknesses
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Opportunities
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Weak economy is expected to expand the available
labor pool in Monroe County
Growth expected in industry sectors all of which ESU
offers programs
Population growth in Monroe and surrounding
counties
Philadelphia initiatives
Completion of the Science & Technology Center
Completion of our new Campus Master Plan
Plans to renovate Monroe Hall, construct new
residence halls and to modernize or replace existing
residence halls
Commitment to research & economic development
Expanded focus on diversity
New faculty with their own areas of expertise
Implementation of Banner as our new student
information system
Opportunity to partner with the public on parking
Space constrained for future growth
Age and condition of University buildings, including
dormitories
No revenue stream to support additional parking
Steam plant, steam & sewer distribution system need
major upgrades
Significant debt related to Science & Technology
Building and GESA project
Ineffective/antiquated student information systems
Difficulty changing curriculum
Lack of policies & standard operating procedures
Funding of backfill plan
Lack of swing space during renovations
Loss of deferred maintenance funds
Threats
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Decreased enrollments
Increased competition
Popularity of community colleges
Distance education
Tightening of credit resulting from the economic
crisis, its impact on enrollment and our collection
rate
Potential for state appropriation cuts
Evaporation of federal stimulus funds
Campus master plan requirements in the hundreds of
millions while ESU’s share of the PASSHE capital
budget is approx. $3.5M/year
Ability to acquire bond funding for new residence
halls given the economy
Oversight (Legislative, PASSHE, Accrediting bodies)
Perception of diversity on campus
30% annual increases in defined benefit retirement
costs beginning FY 2012-13
Borough’s unwillingness to approve new projects
without a parking solution
Failure of a student referendum for the University
Center portion of Information Commons
Less bureaucratic organizations out-pace ESU and
better meet student needs and demands
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Page 34 of 34
ACKNOWLEDGMENTS – REVISED 02-04-2010
Diversity & Inclusion
Dr. Victoria Sanders
Danelle McClanahan
Matthew Simmons
Daria Wielebinski
Martin Lacayo
Sandy Shaika
Enrollment Management
Dr. Hank Gardner
Jeffrey Jones
Patti Kashner
Kizzy Morris
Adademic Affairs
Dr. Marilyn Wells
Dr. Peter Hawkes
Dr. Mark Kilker
Dr. Pamela Kramer Ertel
Dr. Thomas Tauer
Dr. Edward Owusu-Ansah
Michael Southwell
Academic & Institutional Effectiveness
Curtis Bauman
Dr. Yun Kim
Research & Economic Development
Mary Frances Postupack
Patti Campbell
Patricia Reigler
Miguel Barbosa
Sharone Glasco
Michelle Keiper
Ingrid Sidlosky
Facilities
Syed Zaidi
Bill Pierson
Financial Resources
Richard Staneski
Donna Bulzoni
Debbie Morgan
Shelly Chester
Student Affairs
Dr. Doreen Tobin
Warren Anderson, M.Ed.
Fred Moses
Bob Moses
Dr. Tom Gioglio