Dan Kelting speaks at Berkeley Green in Saranac Lake in December 2020. (Enterprise photo — Aaron Marbone)

PAUL SMITHS — Paul Smith’s College’s pending affiliation with the educational nonprofit Fedcap Group is a massive change for the college, but one that the administration, faculty, staff and student leaders hope will help the college with its declining enrollment numbers and financial deficit.

College administrators announced late last year that the college would be partnering with New York City-based nonprofit Fedcap in an effort to expand the college’s promotional reach, create branch campuses and support its finances by offloading back-end work onto Fedcap’s much larger systems.

Though the affiliation has not yet been approved by the organizations which give the college its accreditation, PSC and Fedcap have already started working together daily to weave the two entities together and to get a jump start on their collaboration.

“We haven’t been sitting around,” Interim College President Dan Kelting said. Last year, the college signed an interim service agreement with Fedcap for interim services until they get approval from accreditors.

The Fedcap affiliation has been commonly referred to as a “merger.” Kelting said this is not exactly right — there is an important difference between merging and affiliating. He said PSC is not becoming part of the larger company, which allows it to maintain its 501(c)(3) nonprofit status and maintain an independent board of trustees.

Kelting said Fedcap works like a “parent company.”

Fedcap owns organizations all over the country. The PSC affiliation would mark Fedcap’s 24th organization affiliation, and its first with a college.

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Collaboration

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The affiliation still needs the approval of the college’s accreditors — the state Education Department and the Middle States Commission on Higher Education. Kelting does not know when this approval might happen.

PSC Board of Trustees Chairman Mark Dzwonczyk said he has heard “nothing definitive but nothing negative either” from the accreditors. He hopes to hear more news about it in the spring. He said the college can’t rush it. They have to let their accreditors do their “critical work.”

Kelting said the Fedcap affiliation, a process which started around a year ago, is ongoing. He is working daily with Fedcap.

Kelting said they are starting to work together under the assumption that they will get approval. He said the “merge” hasn’t started yet, but Fedcap is offering PSC consulting services and beginning to make connections between the college and its other partners to hit the starting gate running when accreditation is approved.

It’s not a secret that Fedcap is involved, Kelting said. The regulators know they are working together.

Kelting said Fedcap brings experience on the business side.

PSC’s chief financial officer is on loan from Fedcap. The organization has upgraded the college’s servers and cybersecurity. Representatives have been on the campus physically. Fedcap is advising PSC on getting grants and donations.

Chiefly, he said, Fedcap has been giving the college advice on enrollment.

Dzwonczyk said Fedcap has offloaded the non-core work from the college — back-end things like financial management and IT work — allowing it to focus on education.

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Working together

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Fedcap’s stated mission is “lifting people out of poverty.”

This is a dreamy, altruistic mission, but Kelting said he believes it is truly their goal. Dzwonczyk even called it an “audacious goal,” but he said he feels Fedcap, as a non-profit organization, is set up to meet that goal.

This is done in multiple ways, including education. But Fedcap has never partnered with a higher education institution before. Kelting said the potential affiliation with PSC would fill out the larger organization’s portfolio.

Kelting said it is a “fact” that a college degree, on average, is likely to lead to higher wages for an individual. This is opportunity for disadvantaged people to climb the social ladder.

Fedcap would get a financial benefit from this affiliation, too, he said.

Dzwonczyk said the college does not have an annual financial agreement with Fedcap, so he could not provide exact numbers on how much the college will pay Fedcap for its services. But he said Fedcap does not require much financial return, just enough to keep itself running.

“Fedcap is not a conventional company in that they are looking for a return,” Dzwonczyk said. “They’re not here to provide services to Paul Smith’s College to make money.”

He said the main return Fedcap gets through their affiliation is college opportunities for its clients.

By offloading and sharing services across its many organizations, he said Fedcap keeps costs low at its organizations like PSC.

According to Fedcap, in the 2022 financial year, which ended in September, it made $360 million in revenue, an 8.8% increase from the previous year.

Its operating expenses were at $354.3 million, with 88% of that being spent on programs. Fedcap said it reported an operating profit of $5.3 million this year, around the same as the year prior. It calculated its “cash and marketable securities” at a value of $60.1 million this year, up around $6 million from the year prior.

In late November, Kelting attended Fedcap’s “corporate week” at its headquarters in New York City. He said this is an event to gather all the companies Fedcap owns to learn about each other and collaborate and he came away encouraged.

Kelting described Fedcap as a “constellation” of 23 companies and nonprofits whose “whole is greater than the sum of its parts.”

There is a declining population of college age people in the Adirondacks, Kelting said. PSC is making a “big push” to recruit in local schools, he said. But also, with the Fedcap affiliation, they would have access to a much larger population in New York City.

Fedcap owns a culinary training center in New York City. PSC has a large culinary program. Fedcap owns Apex Technical School, a trade school on Long Island. PSC has a major forestry focus. Kelting said they are working on a partnership to offer a urban forestry degree at the Apex location.

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Request for clarity and support from campus

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In mid-December, college faculty felt they were not hearing enough about the college’s planned affiliation with Fedcap. They voted to pass a resolution asking for clarity on the affiliation from Kelting and the college’s Board of Trustees.

Faculty Congress President Kendra Omerod said one of the main things was that faculty wanted to confirm that governance of their teaching would remain autonomous, and that Fedcap would not be involved in dictating how they teach.

Omerod said Kelting told faculty that their handbook — which gives them ability to oversee their own academic programs and classrooms — would not change.

She said at an informal meeting with the faculty senators, two from from each department; Staff Council Chair Josh Clemens and Student Government Association President Charlotte Kline, they also signed a letter of support for the affiliation, which Clemens helped write. Omerod said faculty, staff and student representatives were unanimously supportive of affiliating.

Personally, and without reservation, Omerod believes the affiliation to be a positive move for PSC.

“Fedcap has really strong resources that we don’t have,” she said, adding that the reverse is true, too.

She said faculty having uncertainties is very reasonable and also “inevitable.” This is an “unprecedented” affiliation, she said.

“Who wouldn’t?” she asked. They’ve been approaching the affiliation with healthy skepticism.

“No one has done this before,” Omerod said. “It’s uncharted territory. … There’s no rulebook for this yet.”

She said they’ve also been thinking about the precedent they set for other institutions that might affiliate like this in the future.