New Jersey City University has promoted its executive vice president, 37-year-old Andres Acebo, to interim president, its third leader in less than one year and the youngest person ever to preside over a public university in New Jersey, according to a campus spokesman. Appointed by NJCU’s board to a two-year term, Acebo assumes the presidency today. The university is in dire monetary straits.
Sue Henderson stepped down as NJCU president in June 2022 after the board declared a financial emergency. In her place the board named then vice president and chief strategy officer Jason Kroll acting president. During Kroll’s tenure, the board took steps to reduce payroll, phase out some academic departments, and pause on-campus expansion in the wake of a $23 million structural deficit.
Acebo, whose father was a farmer in Cuba before emigrating to the U.S., will be working with NJCU stakeholders not only to “right-size” the university but also to maintain a safe and secure academic environment.
With students returning to campus from winter break this week, NJCU has advised them that the Science Building repairs are complete while the Visual Arts Building is under maintenance for two more weeks. The latter will require students scheduled for classes there to move to other facilities or to online learning.
In recognition of whittling down its deficit to $13 million, Fitch credit rating agency removed NJCU from its Rating Watch Negative status in favor of a BB+ issuer default rating for the university’s $136 million of outstanding New Jersey Educational Facilities Authority bonds, qualified by a “Negative Rating Outlook.”
Fitch based its revised rating on “the potential for stable or increased levels of state support while NJCU’s new management team overhauls its operations towards long-term structural balance.” But, at the same time, Fitch cautioned that NJCU has a lot of formidable obstacles to overcome before its rating can substantially improve.
Between Fall 2017 and Fall 2022, NJCU enrollment fell by more than 20 percent, from around 8,300 to about 6,500, causing net student revenue to drop about 14 percent over the same period, Fitch noted. A three-percent tuition increase to $14,000 imposed in the fall of 2022 may help in the short term, but to ensure future growth in its undergraduate population, NJCU will have to overcome “losses in new transfer enrollment and retention among continuing students,” said the agency.
Securing those goals is likely be a daunting prospect, Fitch said, given that experts predicted that New Jersey would experience a nine-percent decline in the number of high school graduates between 2018 and 2028, a percentage “twice the drop anticipated for the nation.”
Other red flags that Fitch said prompted its Negative Outlook included the fact that NJCU’s $13 million in remaining federal stimulus funds “will be exhausted during fiscal 2023” and possible continued fallout from “debt, lease, and pension liabilities” and from “sizeable, visible and critical capital needs.”
Fitch cited NJCU expansion projects, including a Fort Monmouth campus opened in August 2021 offering classes in nursing and cybersecurity (where enrollment hasn’t met projections), a leased business school campus in downtown Jersey City, a campus-based performing arts center, and expanded student housing as areas of fiscal concern.
“To the extent that these projects underperform expectations,” Fitch said, “net costs accrue to the university,” such as $2.2 million in operational subsidies paid to the West Campus student housing project in fiscal 2022 from federal stimulus funds. NJCU has retained a realty firm to find “potential partners” for the Fort Monmouth campus and is said to be considering selling the campus housing project.
Meanwhile, Fitch said, NJCU “has identified $26 million in critical infrastructure needs for items such as electrical and plumbing systems, boilers and heating/air conditioning along with another $9 million in basic and strategic capital needs” for which the university is seeking federal American Rescue Plan funds.
Only “extraordinary support from the state or another external party together with the implementation of a visible restructuring plan may stabilize (its) rating,” said Fitch. NJCU, which currently receives $43 million from the state annually — representing about 40 percent of its revenue — is seeking an additional $10 million in state aid.