Paul Smith’s College not closing, but acquisition is in limbo

Enrollment still declining, college cutting staff through attrition

Paul Smith's College sits on the shore of Lower St. Regis Lake. (Photo provided by Paul Smith's College)

PAUL SMITHS — With commencement coming on Sunday, it’s been a whirlwind week for Paul Smith’s College.

The college’s attempted acquisition by the educational non-profit Fedcap has seen a setback as its accreditors request more information on the unprecedented affiliation. An email from the college’s president revealed that the college is considering laying off faculty down the line, in programs with low enrollment. The college is projecting yet another fall semester of low enrollment, continuing a downward trend that’s been going on for years and has contributed to a growing financial deficit. And a report that the college was forming a “closing plan” created a stir, but PSC interim President Dan Kelting called it “erroneous.”

Faculty members declined to speak to the Enterprise directly this week, citing a “relatively new policy” that forbids them from speaking to reporters outside of their own scholarship topics.

College is not closing

An article in the Adirondack Explorer, published Monday night and since updated, reported that the college is forming what’s called a “teach-out plan” for students to be relocated to another university if PSC ends programs, referring to the plan as a “closure plan.”

Kelting said the college is not closing, has no plans to, and that this plan is “merely a precaution” required in response to a cyberattack on the campus last year.

Kelting called the story “erroneous” in a statement to the college community.

“Let me be clear, Paul Smith’s College has no plans to close,” he wrote.

The Explorer declined to comment on Kelting’s statement.

On April 26, the college’s accreditor, the Middle States Commission on Higher Education, told the college to create a plan by this coming Monday for relocating students to another institution if its programs are disrupted by another cyberattack.

The last cyberattack, which affected approximately 10,000 students, staff and potential students of the college, happened in August 2022.

A letter from Kelting to the college community in January said hackers accessed a network containing personal information including Social Security numbers and dates of birth. The college offered a free year of credit monitoring to anyone who may have been impacted and its IT infrastructure has been rebuilt to potentially prevent another security breach like this again.

Kelting said because of the cyberattack, the Federal Student Aid office put the college under more scrutiny and reviewed its financial aid programs. This triggered the teach-out plan process with Middle States, he said. 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.

When this plan is approved, it will be shared publicly, Kelting said.

“Our cyber security systems are secure and in place with limited risk of a shutdown occurring,” PSC Chief of Staff and Executive Director of Strategic Initiatives Nicole Feml wrote in an email to the Enterprise.

Accreditation, acquisition delayed

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

This approval was anticipated months ago, but has not happened yet.

On March 14, Middle States said PSC’s request was “incomplete.” On Tuesday, Middle States’ Director for Strategic Partnerships and Advocacy Nicole Biever told the Enterprise that evidence of approval by other regulatory authorities — the state and federal education departments — had not been received yet.

According to Middle States, written evidence of these approvals were not submitted in time — by March 11 — for it to review. It is requiring that PSC resubmit its request by Aug. 1.

Middle States noted that this acquisition is a “complex substantive change” to the college. It is potentially unprecedented for a nonprofit to acquire a private university and the accreditor is asking for more information because it is such a unique arrangement.

“There is no ‘hold up’ on the process,” Feml wrote. “We were asked for additional documentation which we are in the process of providing.”

Fedcap owns organizations all over the country. The PSC acquisition would mark Fedcap’s 24th organization affiliation, and its first with a college. Fedcap would act as a “parent company” for the college, Kelting told the Enterprise last year.

“With an acquisition, the college keeps its identity — our name, board, and the like — while with a merger we would lose our identity and board,” Feml wrote.

The college would maintain its 501(c)(3) nonprofit status and maintain an independent board of trustees, but non-core, non-educational work would be offloaded from the college to Fedcap.

The two have already begun to work together under the assumption that they will get approval.

Fedcap is offering PSC consulting services and is beginning to make connections between the college and its other partners. PSC’s chief financial officer is on loan from Fedcap. The organization has upgraded the college’s servers and cybersecurity. Fedcap is advising PSC on getting grants and donations. Fedcap is also assisting the college’s communications team.

Layoffs may come

An email to faculty from Kelting, obtained by the Explorer, revealed that the college may consider layoffs in the future. Feml clarified that these would be for programs with low student enrollment. She declined to share this email with the Enterprise, saying it is an “internal HR related communication.”

Feml declined to respond to questions asking how many layoffs are anticipated, when they might happen, which programs currently have low enrollment and if these potential layoffs were a decision by Fedcap or PSC, saying it would be “premature” since the college’s budget for the coming year has yet to be approved.

“The recent memo from Dr. Kelting was his decision,” Feml wrote in an email to the Enterprise. “Like every college, we, too, are not immune from the need to possibly reduce staffing in certain underperforming areas, while expanding in areas of growth. That is standard for any organization.”

Feml said the college almost ended its culinary program, one of the core offerings of the college, but decided not to and is now “investing” in this program more. She said it is also putting more into its new urban forestry program.

“PSC has had no faculty reductions to date,” Feml wrote, adding that PSC added faculty at the start of last year and during the year.

While they’ve avoided layoffs so far, Feml conceded that the college has eliminated positions by not refilling them when an employee leaves and transferring some duties to Fedcap.

“To achieve cost savings, each time an employee leaves, we evaluate the necessity of the position given the reduction of revenue,” Feml wrote.

“Given the college’s recent enrollment decline, we have strategically left several administrative positions unfilled when a person has left of their own volition,” Feml wrote in a separate email. “Fedcap has provided a number of highly qualified individuals to support the college at no cost, including in finance, admissions, communications, IT and engagement.”

But she did not respond to Enterprise questions asking how many of these positions have been eliminated through attrition, or in which departments.

The college’s student-run newspaper, The Apollos, reported in April that according to Kelting, staffing at PSC had decreased by 15% over the last year, with no reduction in faculty.

Feml said these attrition cuts are opportunities “to modernize and restructure to deliver more efficiency.” For example, she said resources from departures have been “redirected” to her new chief of staff position.

“We have at times filled the duties with short term contracts that offer reductions but also an upgrade in technology,” Feml wrote.

Enrollment staying low

Kelting estimated that 439 students would return in the coming fall’s semester, the Explorer reported, which is less than returned last fall. Feml declined to share these figures with the Enterprise herself, since “enrollment numbers for next year are not final.”

Feml said the college had 593 students at the start of the spring semester.

Kelting told the Enterprise last year that 668 students were enrolled in the fall semester, down by around 11%, from 754 students the previous year. Of these students last fall, 196 were new and 472 were returning.

The college’s enrollment peaked in 2012 with 1,050 students. It has been on the decline ever since, and Kelting has tied this decline to the college’s declining revenue, as well.

The college had a $600,000 deficit in 2020. In December, Kelting said the college was still carrying around the same amount of debt.

“A vast majority of colleges have experienced declining revenue and we are no exception,” Feml wrote.

She did not answer questions about staffing levels in the enrollment office.

“Change is difficult — especially for a college undergoing transformation — and many of our efforts with Fedcap didn’t really get underway until late fall 2022,” Feml wrote. “But to be clear, our Fedcap partners have already stepped up in a big way.”

She said they are confident in their recruitment strategy to improve things before the fall semester.

Feml said the college under Kelting has been “redesigning” its enrollment process since he started in November. She said in that time, applications for next year have increased from 300 to over 1,243 — “surpassing last year’s.” Last year, she said the college had “approximately 1,000” fall applications.

The soft deadline for applications passed on May 1, but Feml said PSC is an “open enrollment” school and applications are accepted up to the first day of classes.

She said improving enrollment takes time and is a “major shift.”

“Our attention is now focused on making the case to students that Paul Smith’s College is a good choice,” Feml wrote. “Erroneous stories, like the recent ‘closure’ story, make the already difficult enrollment environment for small non-profit colleges much more difficult.”

PSC future

The college has had a shaky path recently — rapid changeover in presidential leadership; protests over a former administration’s handing of accusations of racism and sexual assault; decreasing enrollment; a several-hundred-thousand dollar deficit; a data leak and periods of discolored, iron-rich water filling bathtubs and sinks in dorms on campus.

But Kelting said it should be a “celebratory” time as the school year comes to an end.

PSC has begun working with Fedcap, even as the approval for the acquisition is delayed. The college recently got $700,000 from the federal government to address its water problems. The college is expanding its culinary certification program into Manhattan in January. The state Department of Education recently approved PSC’s new eSports Management associates degree. Fedcap is deploying staff to recruit in “enrollment-rich” areas like New York City. And Fedcap is creating a clean energy solar path in their Apex Clean Energy Institute.


A previous version of this story included an incorrect date for when the cyberattack was discovered.


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