Paul Smith’s College won’t be acquired by Fedcap
Request withdrawn after state education dept. required more revisions

Paul Smith's College sits on the shore of Lower St. Regis Lake. (Photo provided by Paul Smith's College)
PAUL SMITHS — Paul Smith’s College is not being acquired by Fedcap after all.
On Friday, the two announced that as a result of recent conversations with the New York state Department of Education, the local private college and the New York City-based educational nonprofit are discontinuing their plans to combine and share services.
This proposed acquisition, an unprecedented move in the world of higher education, was being pitched as a saving grace for the college struggling with declining enrollment and debt payments.
The college is withdrawing its request from its accreditors — NYSED and the Middle States Commission on Higher Education. According to Keshia Clukey with NYSED, PSC and Fedcap Group alerted the department of their intention to discontinue on June 30, the same day the department had sent required revisions to the proposal which would have limited Fedcap’s authority in the partnership.
PSC biology Professor Curt Stager said as he understands it from communications from college administration, NYSED had conditions for the acquisition that Fedcap couldn’t meet. A letter provided to the Enterprise from NYSED, sent from its deputy council to the two organizations, states that portions of the latest proposal were still “in conflict with the Education Law and the Rules of the Board of Regents.”
One of the key issues it singles out is a provision allowing Fedcap to assume majority control of the college’s board of trustees after two years.
To accept the proposal, the state required this provision to be removed, as well as revisions to procedures for appointing, removing and extending terms for trustees to reflect that PSC holds the majority of the board.
The state also required modifications to proposed Fedcap powers to ensure that the college could adopt its own budget — potentially with Fedcap approval — and amend its charter without Fedcap approval. This would allow the college to maintain authority over its academic activities, degrees and ability to establish or disestablish branch campuses.
The state also said Fedcap must be subject to New York laws, rules and regulations as if it were chartered like a college in the state.
NYSED also wanted affirmation of the college’s commitment to higher education in the Adirondacks. The state said the proposed petition and draft bylaws did not affirm the “core educational orientation” of the college.
The letter also says the state Attorney General had other concerns.
The attempted acquisition began when former PSC President Cathy Dove, who retired in 2020, reached out to the world asking for help from other colleges amid sliding enrollment. Fedcap Group answered the call. Fedcap would have acted like a “parent company,” allowing the college to maintain its 501(c)(3) nonprofit status.
Since nothing was ever approved, there is no final date for Fedcap to pull out.
Fedcap Group spokesperson Josh Vlasto said Fedcap will be reducing its support of PSC’s core operational functions. PSC Chief of Staff and Executive Director of Strategic Initiatives Nicole Feml said PSC will be taking back full control of its operational functions. The college is entering yet another transition period.
But the programming they built together will stick around.
The two plan to continue to work together in a less-formal partnership.
Though the request for approval from NYSED and MSCHE was delayed, the college signed an interim service agreement with Fedcap for services while they waited, working together under the assumption that they would get approval.
In that time, the two introduced a new culinary certification program which is partially based in New York City. The college also created new “stackable” credential programs in clean energy and urban forestry at Fedcap’s Apex Technical School, a trade school on Long Island.
“We are grateful to our Fedcap partners for laying a strong foundation for our next stage of growth and look forward to future opportunities,” Feml wrote in a letter to the Enterprise.
“While this was not the decision we were hoping for, the many mutually beneficial workforce and academic pathways we created with Paul Smith’s College … will continue into the future,” Vlasto wrote in a text to the Enterprise. “We are proud of what we have been able to accomplish during our short time working with Paul Smith’s College. Including closing a multi-million-dollar structural deficit.”
After the college was hit by a major cyber attack that affected approximately 10,000 students, staff and potential students in August 2022, Fedcap also upgraded PSC’s IT infrastructure and software.
In the past year, as faculty and staff have left positions in the college for one reason or another, the college has not refilled those positions, making cuts by attrition. They’ve been offloading those responsibilities onto Fedcap employees and partner organizations.
Fedcap owns numerous organizations all over the country, including training schools and high schools in the Northeast. It had been providing PSC with access to experts in finances, enrollment, grants, donations, communications and IT.
“We will be making key hires in finance, development, student life and admissions,” Feml wrote in an email.
The college’s student-run newspaper, The Apollos, reported in April that staffing at PSC had decreased by 15% over the last year. Offloading this “non-core work” from the college allowed it to keep costs low and focus on education.
After commencement, Kelting had told the Enterprise reducing this staff through attrition was what allowed the college to balance its budget this year.
This spring, Kelting sent an email to faculty saying that the college may consider layoffs in the future for programs with low student enrollment, saying to survive they needed to cut staffing in underperforming areas to put more resources into areas that are growing.
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. The college has also attributed this to operational services provided by Fedcap this year.
The college still has debts it is paying off and it has been making these payments on time, without penalty, according to Feml in May.
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. 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.
PSC Interim President Dan Kelting and PSC Board of Trustees Chairman Mark Dzwonczyk each deferred comment on Friday to Feml, saying they would speak for interviews at a later date.
Vlasto said Fedcap remains “committed” to the Adirondacks, and especially the Saranac Lake community. He said the group plans to stay “deeply involved in strengthening the region.” Vlasto added that Fedcap is exploring their partnerships with “colleges and universities.”
The PSC affiliation would have marked Fedcap’s 24th organization affiliation, and its first with a college. Fedcap had hoped this would be their first affiliation with a higher education institution to expand their academic offerings.
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 593 students at the start of the past spring semester.