A state Office of Higher Education gunslinger is laying down the law to financially troubled New Jersey City University.
Unless the school, founded in 1927, can dramatically reverse its persistent high debt, enrollment declines (this year excepted), underfunded capital needs and questionable real estate deals, it should prepare to be absorbed into another institution, the state agent has concluded.
While he says the current administration “has performed well under its amended spending plan,” attorney Henry J. Amoroso – named August 29 as NJCU’s monitor – the first ever to ride herd on a public institution of higher learning in New Jersey – sees merger as essentially the only way out.
“Although there is a narrow pathway for NJCU to become an independent city university, it is one that would require far greater investment from the state than is presently appropriated, and such a path would remain fraught with numerous significant challenges,” Amoroso said.
Although Moody’s Investor Service recently upgraded NJCU’s credit rating to Ba2 (stable) after the school issued layoff notices to 30 tenured and 19 non-tenured faculty, eliminated 37% of its academic portfolio and dropped five sports programs, and despite active cooperation from the current board chairman, Amoroso said significant challenges remain.
For example, he said, NJCU “has an immediate need for $50 million of capital investment for infrastructure … for new boilers and chillers and the repair of leaky roofs, and for windows and doors that do not close securely – none of which will make the university more student-friendly or welcoming in today’s highly competitive higher education landscape.”
NJCU, the monitor added, “must also invest in other improvements to the campus – including but not limited to residence halls, classrooms, technology upgrades, the library (and) laboratories.”
But the university has been stymied in making these fixes because it has been “chronically compromised by its total debt level” over the past four years, with the biggest increase resulting from its long-term net lease liabilities,” mostly its investment in long-term leases at Fort Monmouth and the Harborside Jersey City campus.” Plus, an “advance refund” modifying its debt payment obligations “will result in an increased burden of $2.8 million in fiscal 2026.”
While the $46.5 million debt structure of the West Campus “is not a direct debt of the university, as set forth in the bond covenant documents, this campus, nonetheless, requires budgetary allocations from NJCU for subsidies and these allocations contribute to the university’s current financial problems,” Amoroso concluded.
NJCU’s total debt – calculated by the monitor at $287.1 million as “the value of direct, indirect and long-term lease obligations” – remains “stable … but … high for an institution of its size, resources and student body.”
And, in particular, its $145.9 million in non-current long-term debt “threatens its financial well-being and limits its potential to achieve many of its academic and other institutional goals,” he said.
The state’s discontinuance of Covid recovery aid – totaling $49.45 million from 2019 to 2021 – further compromised NJCU’s fiscal underpinnings and only got worse after the state discovered some of those funds were “misdirected to monetize student scholarships by the former president’s administration and the board.”
Amoroso also took to task NJCU’s governance structure (administration and board of trustees) as “outdated, does not function well, and cannot provide the … support needed to implement the monitor’s recommendations or adequately support the interim administration and navigate the complex path to NJCU’s fiscal stability, robust accountability and long-term institutional survival.”
Therefore, he said, “immediate, significant changes in the Board of Trustees’ membership and structure are warranted.”
To get NJCU on the right path, Amoroso is recommending these steps:
- By July 15, 2024, the interim president and board – with the monitor’s concurrence – will dedicate funds in their fiscal 2025 budget to hire a “nationally qualified higher education advisory firm” to study the feasibility of NJCU merging or affiliating with another public state institution based on the “chancellor model” of governance, such as that practiced by Rutgers University. The study must be completed by December 2024 and by “no later than the third quarter of fiscal 2025,” all parties must select a plan and commit funding for it.
- “Defer the search and selection of a permanent president and other top administrators of NJCU until the university’s board is re-structured and fully operational.”
- No later than May 1, 2024, the governor will appoint, with Senate confirmation, “at least four new well-qualified” members of the NJCU board “to replace current holdovers.”
- No later than June 30, 2024, the newly constituted board will meet six times annually to conduct business and hold one day-long retreat “to review progress in implementing a fiscal accountability plan … and engage in future fiscal, governance and academic strategic planning.”
- No later than August 1, 2024, NJCU will have “developed a proposal for a new vice president of student success to report directly to the president … in support of the university enrollment and retention goals further developing pathways for increased graduation rate and career placement.”
- No later than September 30, 2025, NJCU’s administration and board will begin to monitor the school’s progress in meeting “key performance indicators” ranging from finances, to tuition, student success, admission and enrollment, faculty and staff and facilities and resources.
- Undertake a property monetization strategy review, with a special focus on Ft. Monmouth and non-related properties on the West Side campus. These strategies can range from the sale or lease of properties “underutilized or not directly required for (their) educational mission.”
- Reduce NJCU’s long-term debt “by at least $30 million” by the third quarter of fiscal 2025. In the process of streamlining its debt obligations, NJCU should “dedicate a pre-determined portion of the revenues achieved from property monetization to critical areas of infrastructure, technology and academic programs.”
- NJCU (and any institution it merges with) “must make targeted capital investments of $20 million or more aligned with NJCU and its partner’s strategic growth objectives” by the start of fiscal 2026 and “leverage (from those investments) at least a 5% increase in full-time student enrollment.”
- Increase the pursuit of “substantive” grants from outside sources and implement “evidence-based energy conservation strategies and practices.”
Amoroso figures to attain all these objectives “by the commencement of fiscal 2026.”