Pennsylvania universities cutting costs through layoffs, mergers to meet financial challenge
From Philly and the Pa. suburbs to
Faced with falling enrollment and cuts in federal spending, universities are cutting costs, merging with others and pooling their resources to buy energy, computer services and health insurance, industry observers say.
And some are closing.
Between 2010 and 2021, the number of students at institutions of higher learning dropped by 15%, according to a report by the
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The numbers are a result of a decline in college-age students. They come at the time of cuts in federal funding for higher education and research. In addition, staffing cuts in the
In this environment,
"AICUP manages 39 cost-saving programs resulting in tens of millions of dollars in annual savings for participants," Foley said. "We save schools money in all sorts of ways and in a variety of sectors, from technology and finance to HR and research. We buy insurance together, buy software together, buy energy together, and invest retirement funds together."
The group includes larger schools, including
According to Foley, AICUP pools its resources to be financially nimble because as private, independent universities, many of its members do not receive direct payment from the federal or state government. With a large percentage of students who receive financial aid and minority students, AICUP gets federal money via student Pell and other grants, he said.
"We still don't know how the decrease in staffing in the [
About 98% of
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"We are having to figure out how to manage our own cash flow," Allen said. "We are just trying to navigate our way in this really shaky time."
So far,
In
Three closed outright, including the
The rest merged with another university, some of which were in the
In March,
In June,
In July, the federal government approved Drexel's merger with
A spokesperson for Drexel said in a statement that the merger "strengthens research capacity, community engagement and long-term sustainability in a rapidly evolving healthcare and higher education landscape."
"The Drexel-Salus merger represents a strategic and collaborative integration that combines
Other universities have sought to cut costs.
At
Penn State also cut staff and other costs.
In July,
The announcement followed a June budget update by Temple President
There is much at stake for the surrounding communities when universities face financial pressures, experts say.
"College closures, mergers and other forms of financial distress can have profound effects not only on students and employees of the affected institutions but also on local economics – particularly in areas where the institution of postsecondary education serves as an anchor of local activity," according to a 2024 report by the
Drexel,
Last year, Gov.
Shapiro's 2025-26 budget proposes a
In the
The report states that the higher education industry contributed about
In a report on the
"Public funding has flattened as states return to normalized revenue growth expectations, and net tuition growth prospects are modest at best," Wadhwani said in her report. "This revenue trajectory is unlikely to be sufficient to fully offset still-elevated labor and wage costs, rising capital needs, and a sharply uncertain legislative landscape."
Despite talk by some people about higher education not being a good return on investment, Foley, the AICUP president, said a college degree still translates into about
Allen, the
"Our ability to move people out of poverty and into some of the higher socioeconomic levels will always be important to us," she said. "We are redoubling our efforts to get that message out."
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