President says PSC is ‘turning things around’

Paul Smith’s College Interim President Dan Kelting speaks at Sunday’s commencement ceremony. (Enterprise photo — Aaron Marbone)

PAUL SMITHS — Paul Smith’s College’s Class of 2023 may have graduated, but the college isn’t going anywhere, PSC Interim President Dan Kelting reiterated Sunday.

“Paul Smith’s forever,” he said, while walking back to his office after seeing off the college’s 2023 graduating class. It’s a phrase he’s been saying a lot recently as the college’s future has been called into question. A news article — which he called “erroneous” — inaccurately described a financial aid contingency plan as a “closure plan” for the college, causing confusion on campus and within the community last week.

The college is not closing, Kelting said once again. And he hopes the plans that are in the works right now will keep it open for a long time.

But it is a challenging time for the college. A planned acquisition by the educational nonprofit Fedcap has been stalled as the college’s accreditors ask for more paperwork; PSC, like many private colleges, has been struggling with low enrollment and subsequently, low revenue; it is paying off its debts — millions of dollars in loans taken out years ago; and staff who resign from the college are not always getting their positions filled again as cost-cutting measures.

“Whenever you’re in the middle of turning things around, you’re always in the middle,” Kelting said.

After the ceremony, Kelting told the Enterprise that handing out degrees to smiling Smitties getting ready to go out into the world was a reminder of what college is all about to him.

Back in black, paying off debts and cutting staff

Kelting believes the college can increase enrollment through the Fedcap acquisition with new programs and access to urban markets.

Currently, he said the college gets around $5 million a year in government grants and contracts. He wants to build that to $10 million, with more funding coming in for the Adirondack Watershed Institute and workforce development programs.

The goal is to “diversify” revenue and to not rely so much on tuition.

Kelting said PSC is expected to wrap up this fiscal year in June finally back in the black — breaking even between its expenses and revenues for the year. That has come by making staffing cuts through attrition, he said.

“It was the reduction of staff, which was attrition, which really allowed us to achieve a balanced budget,” Kelting told the Enterprise. “We had to downsize our staff. We’ve had declining enrollment for a while but we haven’t adjusted our staff.”

PSC Chief of Staff and Executive Director of Strategic Initiatives Nicole Feml also said operational services provided by Fedcap helped them break even this year.

The college still has debts it is paying off.

“We have been able to meet debt service requirements on time without penalty,” Feml wrote.

She did not respond to questions asking how much debt the college currently has.

According to the college’s 990 form from the IRS, the college had a total long-term debt of $11.15 million in 2021, the most recent form available. It had paid that down from $11.86 million the previous year.

This debt comes from bonds the college took out with the Franklin County Industrial Development Agency and NBT Bank. The final payments for these loans are due in 2028, according to the 990 form, an annual, publicly available document with financial information on the college.

Kelting said debt is what makes colleges close, and with PSC working its way out of debt, he said it puts them out of risk of closure.

Cazenovia College, some three and a half hours southwest of PSC, is closing at the end of this semester after defaulting on a $25 million loan last year.

Kelting said with staffing cuts, job responsibilities have been reassigned and consolidated. His mantra has been “all hands on deck.” He has told staff that everyone is responsible for enrollment.

Kelting said the college could regrow its staff if its student body grows in the future.

After cyberattack, college finances monitored

Last week, the college’s accreditor, Middle States Commission on Higher Education, put out a statement responding to news reports that it was telling the college to craft a “closure plan,” calling those reports “inaccurate.”

The commission has asked the college to create what’s called a “teach-out plan” for students to be relocated to another university if PSC programs are technologically disrupted.

“It has become necessary to provide public clarification regarding the nature of the Commission action as media reports have published inaccurate information,” the statement reads. “Paul Smith’s College has not announced a closure, nor has the institution communicated an anticipated or planned closure to the Commission.”

Middle States’ director for strategic partnerships and advocacy, Nicole Biever, said the Enterprise’s May 18 article on the situation, following those initial news reports from other outlets, needed clarification because of an oversimplification of the process.

It’s true that the college is required to submit a “teach-out” plan, and that the cyberattack on the college is related to that. But the specific catalyst for the “teach-out” plan is more complicated.

The cyberattack targeted a college network containing personal information including Social Security numbers and dates of birth last year. After the cyberattack, the Federal Student Aid office put the college on a “Heightened Cash Monitoring 2” status because of “Administrative Capability,” which is “concerns about the institution’s ability to manage the Title IV programs including student file maintenance, record retention, and verification.” It was that HCM2 status change, specifically, that required the “teach-out” plan from Middle States, not the cyberattack directly, according to Biever.

“In these circumstances, the Commission is required to obtain a teach-out plan,” Biever wrote. “This is a required action per MSCHE policy and procedures as well as federal regulation.”

Basically, if the college is hit with another cyberattack, shutting down its computer system, it is a plan to let students continue their academics at another university for continuity.

According to data from the U.S. Department of Education’s Federal Student Aid office, there are 396 institutions on heightened cash monitoring in March of this year for reasons including accreditation problems, missing audits, or financial responsibility issues.

According to FSA, a school placed on HCM2 no longer gets paid in advance by the federal government for money it loans to students through the college. Instead, the college gives students money from its own institutional funds, and requests reimbursement from the federal government.

Fedcap acquisition

Paul Smith’s College has been seeking approval for an acquisition by Fedcap for well over a year now after the two organizations were introduced in 2019, and has been waiting on a green light from its accreditors, one of which is Middle States.

Fedcap Group Spokesperson Susan Walsh said in a statement that Fedcap is “deeply committed” to the college’s success.

“We are confident that our partnership can only make the institution stronger,” Walsh wrote. “We believe they have a strong path forward. … In other words, our combination can mean Paul Smith’s College is here to stay.

“Many have asked, ‘what’s in it for Fedcap?'” Walsh wrote.

She says the chance to further their mission is what is driving the planned acquisition.

“As a charitable organization dedicated to breaking down barriers to economic well-being for the disadvantaged, the proposed combination advances Fedcap’s important mission because it opens doors to new educational opportunities for the people we serve,” Walsh wrote.

She said Fedcap is also waiting on the state regulators to approve the acquisition and end this limbo period.


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