Harrisburg University of Science and Technology has made a concerted effort to diversify its revenue streams.
As a relatively new institute of higher education, the university — which received state approval for operations in February 2005 — continues to deal with financial pressures, including debt on its Market Street facility.
Part of that debt was a $60 million bond issued by the Harrisburg Authority to pay for the construction of HU's 16-story building.
To combat its challenges, the university has added four research and training centers through various corporate partnerships.
The centers have the potential to foster significant regional business growth across many different sectors, which means new revenue for the university, said Eric Darr, HU's interim president.
As the university's enrollment rises and reaches a projected break-even point of 500 students by the 2013-14 school year, Darr said he is confident the centers will help with short-term revenue beyond just tuition.
Earlier this month, HU hired Dale Hamby as associate vice president in charge of managing the growing list of centers and coordinating their activities with businesses and groups.
The Business Journal last week sat down with Darr to talk about enrollment projections, university debt and growth in business center partnerships.
Q: How is the university marketing itself to prospective students?
A: We made a strategic decision going on four years now to work with a company out of Richmond, Va., called Royall & Company. They're a higher education recruiting firm.
What they do is work with us to buy names and start a marketing campaign to students that fit the profile that might be interested in Harrisburg University. That goes by keywords that tie to our programs or other criteria in the sophomore year (of high school). They get regular messages (that increase) in intensity and frequency through the years.
The messages are largely about the academic programs. Some are about the successes of the students in those programs (and) new concentrations within programs that we've added.
This past year we had a whole series of messages about the new student housing because we're quite pleased with the product that we have to offer (through developer) Dan Deitchman.
Last year, we expanded our search in West Virginia and northern Virginia around D.C. We (also) increased our search in southern New Jersey around Philadelphia because of successes we've had. This year we'll probably expand around Durham, N.C., and perhaps into New York more than we have before.
The marketing spend is in the neighborhood of $500,000, which is largely driven by buying names and postage.
How are HU's centers helping regional businesses and what type of growth are you projecting?
The mission of the institution has been connected to businesses. (We) provide strategic workforce development to the businesses in the region, help with business growth and economic development. So, because of that, we have ongoing conversations with businesses about all kinds of stuff, things we may or may not do. Out of that has come a set of centers which are focused activities in certain areas.
One that is relatively new is the Food Science (and Technology) Center, largely driven by our partnership with (The) Hershey (Co.)
They established in this building a sensory science lab, which is a fancy way of saying a place to test food. They also test marketing messages here and packaging. It's (about) how products are packaged for them, not just products for sale in the U.S. but as they expand globally.
In the last 12 to 14 months, (Hershey) made a strategic decision that they believed in the demographics of Harrisburg, meaning the demographics are useful for where they are today and where they want to go.
And (they) believed Harrisburg University and our students could execute the work in a more cost-effective way. (For more on the Hershey partnership, sign up for our industry e-newsletters at http://tinyurl.com/CPBJenews. Jim Ryan discusses the topic in his CPBJ Extra blog post, accessible through today's newsletter.)
In a very short period of time, we've built a database that is approaching 5,000 individuals (and) 4,000 of those have come through the university and tested products or marketing or packaging. That is led by a graduate of Harrisburg University and manned by eight students.
We also do quality assurance training for food testers. We do product testing (and professional training) for (other companies), so that center is expanding in terms of services it provides.
There is a set of big providers, vendors that the commonwealth uses. The relationship is typically transactional, meaning they come in and try to sell. They win a contract and execute the contract.
We created the center to provide an educational platform for these global vendors to talk to the commonwealth and various agencies in a more educational fashion. We created a CIO certification course, which has been running for almost a year now. There are 26 state agency CIOs and some CIOs from local municipalities that have gone through this first-of-its-kind certification course.
We have the Center for Advanced Entertainment and Learning Technologies. We have the Geospatial Technology Center.
We're hoping to get (a fifth center) off the ground around energy technology, principally nanotechnology. That has benefits both in the bioenergy area as well as in reducing the toxicity in water that is associated with the Marcellus Shale fracking.
The university's financial issues have been well documented recently. How does this university address its debt? What is the long-term strategy?
Five years ago, (500 students was) the number. When we get to that number, at our current set of fixed expenses — principally the debt on the building, utilities, wages, things you have to pay — a little more than 500 gets us break even. We're able to cover all of those fixed expenses and have a little left over. That's why it's important to get to that number.
The trick is to get from here, July 2012, to fall 2013. You do that by having a set of banks that perhaps extend credit to you. We're working on that. You have friends and donors of the university that support the university.
Another way is you build revenue in the short-term other than tuition. So that ties back to why did we hire Dale, why did we have him now? Well, because we have significant business opportunities that are associated with the four existing centers, let alone the opportunities with new centers. So, to the extent that Dale can have an impact on business development in those centers, that's revenue that is not at all tied to tuition.
We have to do things that are not tied to the tuition cycle, and these centers are a fantastic way to do that.
We (also) have conversations with the Department of Education about helping them. It's clear that this administration (and) their interest with regard to education is in the K-12 space. We do and have historically done a lot with teacher education (and) science outreach into the high schools. We're in a good position to expand some of those things.
Right now is not the time, nor do we really feel that we want to just go with our hand out to the state and say we need bailed out. One, that wouldn't work. And two, we would rather do something that benefits the state. It leverages our expertise in the K-12 space.
Are you in the running for the presidency? What is the timeline?
The trustees have set a goal to have a permanent president by next July. Yes, I am encouraged to put my name in for consideration.
How has enrollment grown and what are university projections for the coming years?
Last year, we brought in 91 freshmen and 126 (new students) total. This year, right now, we have commitments for 145 freshmen and still have 70 who have completed their application and federal financial aid form.
If we get another 10 or 15 out of that, we'll end up above 150 freshmen.
We had 72 freshmen and a few others across the street in student housing. We have our second student housing building that will open up in another two weeks. Of the 180 beds, 174 are committed already. That's freshmen and some sophomores.
The transfer market has stayed flat over the last three years. We get somewhere between 25 and 40 transfers every year. I'd like to get more but that's not really our focus in terms of marketing right now.
In the graduate world, we do consistently well (with) 20 to 40 students. And our grad students, almost 92 or 93 percent are part time because of the way our programs are structured.
So we'll have almost 430, 440 (students) in the coming year. That's 100 more than we did last year.
I would hope to do the same the following year and to be in the mid-500s, in terms of degree-seeking students. We're going to have to add a third student housing building by 2013. Fortunately, there are some options available to us, so we're going to start thinking about those decisions in the fall.
When you get between 500 and 600 (students), that puts pressure on (the) physical facilities and the number of labs we presently have. Do you start running lab courses on Saturdays? That may be what we have to do.
At that point, we'll easily be financially sustainable. We'll take a breath and see where we go from there. We're going to start planning for that growth right now and believe that it will come.
One of the questions we get is the impact of the City of Harrisburg on enrollment. In aggregate, it hasn't had an effect. We've been able to grow despite what's going on in the City of Harrisburg.
The impact it has had is that within 50 miles of Harrisburg, our enrollments are down 18 percent year over year. In the cities of Philadelphia and Baltimore and D.C., enrollments are up 43 percent year over year.
In those cities, they read about their own problems, their own challenges. Would I like the challenges of Harrisburg to be solved? Yeah, I would, because that would help us.
HU has been involved with other community groups to promote technology development in the region. Where do you see that development going?
We (have) supported startup WorkXpress, which is in the cloud computing space. In general, the notion of what the cloud means to businesses and the world at large is what we're just beginning to understand.
Couple that with accelerated application development — and the building blocks of those applications live in the cloud — that is an interesting model. That will change the business cycle and the spending that businesses now have to put forth to create new applications or to knit together proprietary vendor applications.
Couple that with mobile computing, which is another significant trend in technology, and that is clearly a direction we're going to go. We do mobile apps now, particularly iPhone app development.
Writing a business plan is one thing. Our view is being able to tell the story and, recognizing this is a business opportunity, make the pitch to a potential funder. You don't see a lot of organizations or groups helping do that. That's how we're trying to be complementary in what we do with regard to entrepreneurships, particularly aimed at technology entrepreneurs and, even more so, gaming entrepreneurs.
We're having conversations with health insurers around the topic of analytics and the importance for them to be very, very good at analytics. As health care exchanges are created and expand over time, the ability to build the exchanges, mine the exchanges, make business insights, all of that rests on the ability of business analytics and data mining, data visualization, all of those skill sets.
For their businesses, that's the strategic advantage.
About Eric Darr
Eric Darr joined Harrisburg University of Science and Technology on a full-time basis in 2004. Prior to that, he was COO at KnowledgePlanet Inc., a software company in Harrisburg.
The 48-year-old Upper Allen Township resident was named interim president, effective July 1, after Mel Schiavelli's decision to leave the school.
Schiavelli accepted a position at Northern Virginia Community College as its executive vice president for academic and student services.
Darr previously served as executive vice president and provost of the university. In that capacity, he oversaw academic services, enrollment management, information technology services, library services and curriculum and faculty affairs.
He received a bachelor's degree in mechanical engineering and a master's degree in industrial psychology from Rensselaer Polytechnic Institute. Darr also has an MBA and a Ph.D. in organizational behavior and theory from Carnegie Mellon University.