Gov. Murphy pushing for more fiscal accountability for NJ's public colleges

New Jersey is looking to pass three new laws to make public colleges and universities more accountable in spending, after financial crises that showed a lack of transparency at some of the state's oldest institutions of higher education.

Recent reports showed irresponsible spending on athletics programs at Rutgers, the state's flagship public university, and on building expansion at New Jersey City University while it was emerging from the pandemic.

Three new bills would require additional financial reporting and publication requirements for these institutions and would 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, the faculty and support staff are the ones who suffer most,” said Gov. Phil Murphy, who announced a three-bill package to increase and secure state oversight of public colleges' financial management as a way to protect state residents, who invest in them through their tax dollars.

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Proposed legislation

The first bill (A-4970/S-3406) would require all 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) would require 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) would 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 would bolster state government oversight of how public colleges operate, by expanding the role played by the Office of the Secretary of Higher Education.

A state monitor would oversee a college’s operations if an audit of its financial reporting, also required by the first bill, exposes problems. Public colleges and universities would have to publish their annual reports and audits in a "user-friendly" format along with a timeline of how long it takes for students to graduate after they enroll, through the second bill, Murphy said. Training for board members, which the third bill would mandate, must “explicitly include institutional financial management,” to ensure that even the most qualified trustees are aware of what goes into managing finances in higher education.

Financial issues

William Paterson University announced layoffs in November 2021 to address a $30 million deficit. 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 financial decline, according to published reports. The Office of the State Comptroller began an investigation into a fiscal crisis at New Jersey City University 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, D-Union, pointing out that New Jersey’s public colleges have a collective debt of $6.7 billion. But less than 1 in 5 students have a bachelor's degree in four years from a standard four-year program, even though 9 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 it was "shot down" by trustees and presidents, said Assemblywoman Mila Jasey, D-Essex, chair of the Assembly Higher Education Committee. But the time has come for these bills, she said.

This article originally appeared on NorthJersey.com: NJ seeks more transparency in spending at public colleges