As part of the System Redesign, the Pennsylvania State System of Higher Education (PASSHE) created a multiyear planning process that explicitly relates financial and budget projections to a university’s goals for advancing the Board’s priorities and strategies for achieving those goals.

Implementing the process is central to the Board’s exercise of its fiduciary responsibility for the System. Universities are required to develop, implement, and adhere to budgets that:

• explicitly tied to measurable goals that reflect Board priorities;
• include realistic enrollment projections concerning revenues and expenditures as well as key cost drivers (personnel costs, debt service, etc.),
• are balanced annually without routine use of reserves;
• align expenditures on academic programs, athletics, and student supports and services, including those on related personnel, contracts, etc., so they are aligned with enrollments, adjusting those expenditures as necessary to take account of enrollment trends;
• contribute routinely to reserves to achieve and maintain minimum threshold levels as established by the chancellor; and
• are reviewed and approved annually by the Board.

CPPs include a narrative in four sections and two templated workbooks for financial planning and academic program array management, respectively (see below). 

THE CPP NARRATIVE

Part 1: Strategic goals 

This part identifies the university’s strategic goals and key strategies used to achieve them financially sustainable. It includes expected outcomes using Board-approved metrics. At a minimum, universities focus on:

Enrollment stabilization and/or growth – including:

• anticipated sources of new enrollments,
• b. improvements in student success (e.g., measured in 1st to 2nd year retention and 4- and/or 6-year graduation rates),
• c. reductions in URM and other attainment gaps (measured in 1st to 2nd-year retention and 4- and/or 6-year graduation rates).
• Goals in this section address issues about the expected decline in the size of the high school leaving population.

Diversity, equity, and inclusion – including anticipated sources of new enrollments and reductions in URM attainment gaps (in first-to-second-year retention and four- and six-year graduation rates).

Sustainability – including a specific financial sustainability goal describing how universities align program arrays and resources with enrollment. 

Parts 2-3: Enrollment & Financial Overview Narrative

This part explicitly ties revenue, expenditure, and enrollment projections together. 

In it, universities are required to achieve annual balanced operating results without routine reserve use and to meet or show progress towards the minimum required student/faculty ratios (System average of 19.4).

Universities projecting a surplus operating result will be required to briefly describehow the surplus will be used, e.g. for investment in student success, deferred maintenance, and/or replenishment of reserves.

Part 4: Academic Program Strategies 

To ensure financial sustainability, universities align the number of academic programs they support (their academic program arrays – e.g., degrees, majors, minors) and the number of faculty they engage with student enrollments. These data, together with completions and section size data, are the primary metrics by which the sustainability of the program array will be evaluated, as the number and mix of students are deciding factors in the number and type of programs that can be financially supported.

The academic program array workbook is a planning tool that universities use to ensure their program array is financially sustainable given enrollments, number and distribution of faculty, and section sizes.

PASSHE's governance model engages the Board at a high altitude – establishing and holding university and system leaders accountable for advancing measurable priorities without prescribing how. It empowers university leadership to pursue strategies that advance the Board’s priorities in ways that reflect local circumstances and to engage with the chancellor in the design and execution of systemwide initiatives that ensure all universities and the system succeed.

The approach was written into new policies (enacted after the redesign was initiated) and into amendments of existing ones. A sample follows.

1. The policy on appointing presidents was substantially revised in 2021. Previously, it had dictated in some detail precisely how the University Councils of Trustees selected two candidates for consideration and appointment by the Board. For example, it dictated the utilization of an executive search firm, whether interim presidents could be considered, and other execution-level details. The revised policy states the Board’s objectives at a high level, confirms that all searches must conform to statute (Act 188) and consult with specific stakeholder groups, and then more or less leaves it to the Chancellor and chair of the Council of Trustees (with agreement from the Board Chair) to work out a process that fits a university’s specific circumstances. Since adopted, no two searches have been identical. Each has been modified to suit the specific needs of the university making the appointment, and university stakeholders and Board members alike have welcomed all. 

2. The policy on the Board’s distribution of state-allocated dollars (2022) is based on a formula developed by a working group of university leaders, with input from various stakeholders. The policy outlines the formula, but the “procedures and standards” that define how it is implemented leave the Chancellor (in consultation) to make implementation decisions, potentially impacting how funds are allocated.

3. The Board’s resolution about its fiduciary responsibility (2023) introduces a new governance approach. It bundles several policies together (some new since the redesign – financial stability – some pre-dating it – tuition setting). All written (or revised) to specify policy direction without getting into implementation details. The innovation in the approach derives from its ability to tie stove-piped policies together to get at their deeply underlying intent, which in this case is to ensure sound financial management at all universities, including through the implementation of “playbooks” developed by universities and defining practices that universities are required to implement in key areas including budgeting, academic program array management, course scheduling, enrollment management, and financial aid optimization.