The union that represents faculty and coaches is calling on the Pennsylvania State System of Higher Education to scrutinize capital projects more closely.
"Capital projects increase the weight students and their families must already carry," Ken Mash, vice president of Association of Pennsylvania State College & University Faculties, wrote on the association's blog. "While these projects may be desirable, many have questioned whether, in a time of declining resources, they are necessary."
In the last decade, Mash said, PASSHE's debt has risen to $941.7 million from $439.9 million -- roughly a 114 percent increase. PASSHE's 14 member institutions include Shippensburg University and Millersville University.
Mash said bonds for these projects are paid for in different ways, sometimes by auxiliaries, "most notably by students through additional or increased fees."
"Between 2000 and 2010, average fees increased 117 percent, while room and board increased 80 percent," Mash said. "Most of these drastic increases are due to the increase of capital projects on campuses. While there seems to always be trepidation over the rising cost of tuition, there seems to be little parallel concern about how fees drive up the cost of a college education for Pennsylvania's students. There is also little discussion about how these additional totals create sensitivity about any tuition increase."
Mash also noted that students may be indirectly on the hook for these projects. Moody's Investor's Service mentioned the same issue as a challenge in its June rating of PASSHE's revenue bonds, as follows.
* "High balance sheet leverage from substantial increase in debt since FY 2004, with total pro-forma debt rising to nearly $2.25 billion, driven largely by privatized student housing debt issued for replacement student residences on State System's university campuses."
* "Debt structure of member university foundations to fund replacement student housing includes variable rate debt requiring bank support or direct bank placement adding risk of liquidity demands of the foundations' own modest resources and potential expectations of PASSHE to step in to fund or assume management or ownership of the housing facility."
"It doesn't take an accountant or a budget expert to figure out that in an era of declining resources, there are zero-sum situations with our budgets." Mash wrote. "If funds from these budgets are being used to pay back bonds, that money is not being used for academics or athletics. We are in a position to actually see how the increased cost of bond repayments directly impacts educational quality by straining the resources that service the heart of our institutions."
Mash concluded with this: "The faculty and coaches hope that in the future we will see increased scrutiny of the bond issues, that we will see how the mistakes of the past have been turned into lessons for the future, and that we will share consistent concern for quality education and student costs, whether the source be tuition or the burdens imposed by these bonds."
Kenn Marshall, PASSHE spokesman, said about 75 percent of the system’s operating costs are personnel- related (salary and benefits), and the biggest cost drivers are in pensions and health care.
“Many of our capital projects on our campuses are funded through the state capital budget,” Marshall said. “We receive about $65 million a year in capital funds for these projects. They have no impact on students tuition or fees.”
Editor's Note: This item was modified from its previous version to include comments from PASSHE.