New Jersey is looking to pass three new laws to make public colleges and universities more accountable in spending following financial crises that showed a lack of transparency at some of the state’s oldest higher education institutions.
Recent reports showed irresponsible spending on athletics programs at Rutgers, the state’s flagship public university, and building expansion at New Jersey City University while it was emerging from the pandemic.
Three new bills will require additional financial reporting and publication requirements for these institutions, and require board members to undergo regular training to make sure they are able to manage finances and provide greater oversight and transparency.
“When a financial decision goes south, yes an institution’s reputation may suffer, but the students and faculty are the ones who suffer most,” said Murphy who announces a three/ bill package to increase and secure state oversight on public college’s financial management,” Gov. Phil Murphy said.
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Proposed legislation
The first bill (A-4970/S-3406) requires all state public colleges and universities to submit an annual fiscal monitoring report to the Secretary of Higher Education and undergo a comprehensive audit every three years.
The second bill (A-4971/S-3407) requires them to post a copy of their annual fiscal monitoring report and audited financial report or statements to their website in a manner understandable to the general public.
The third bill (A-4967/S-3436), will require governing board members of public institutions of higher education to complete ongoing training programs on financial management and responsibility as a condition to remain in their positions.
Murphy said he will sign the bills into law if they “arrive at his desk.”
These new measures will bolster state government oversight in how public colleges operate by bolstering the role played by Office of the Secretary of Higher Education.
A state monitor will oversee the college’s operations if an annual audit of its financial reporting, also required by the first bill, exposes problems. The second bill, which addresses Fiscal monitoring, will require fiscal planning and real audits. Training for board members, which the third bill will provide for must “explicitly include financial management.”
Financial issues
William Paterson University also announced layoffs to address a $30 million deficit in November 2021. Critics say mismanagement by senior leadership has played a major role in the financial woes.
At the Jersey City university, former President Sue Henderson was primarily blamed for the university’s financial decline, according to published reports. The state comptroller’s office began an investigation into a fiscal crisis at New Jersey City University in Jersey City after its board of trustees announced a $20 million deficit in June.
A few months after the investigation began, the university announced that it was reorganizing its executive leadership and removing three senior management positions.
Rutgers University was reported as the only public school in the Big Ten Conference to increase spending on athletics in the last fiscal year, during the height of the pandemic. It also had the league’s largest yearly operating deficit, with a $73 million budget shortfall for the second consecutive year at the start of 2022.
The four year model of college is a challenge, said Sen. Joe Cryan, pointing out that New Jersey’s public colleges have a collective debt of $6.7 billion. But less than 1 out of 5 students have a bachelors degree in four years from a standard four-year program, even though 9 out of 10 students or their families absorb some student debt before they begin school, Cryan said.
“A Number of years ago we tried to get this bill out of the assembly.,” but we were ‘shot down’ by trustees and presidents, said Mila Jasey, chair of the Assembly higher education committee. But the time had come for these bills, she said.
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