Rider University Chapter of the AAUP
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    • Update on Kaiwen Education's Financial Status
    • Arbitration Over Layoffs at WCC
    • Kaiwen Education 2018 Annual Report
    • By Federal Reserve Standards Kaiwen Education is a Highly Leveraged and Risky Business
    • Two Updates on Kaiwen's Finances
    • Due Diligence and Kaiwen Education
    • Chronology of a Crisis
    • WCC Reset
    • New Jersey Attorney General’s Office Delivers Major Setback to Rider University’s Plan to Sell Westminster Choir College
    • Westminster Foundation Press Release on AG Investigation
    • Purchase Agreement
    • Faculty Shocked to Learn Secret Agreement Would Allow Buyer to Close Westminster Choir College
    • Universities as the Guardians of Assets
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    • 2019 Report on Kaiwen
    • DejaVuDellOmo
    • Kaiwen Announcement 1/11/19
    • AAUP Goes to the NJ Assembly
    • Sign the Petition to Save WCC
    • WWCAC Letter November 8 2018
    • Kaiwen Education: Report on Company Performance Through the Third Quarter 2018
    • New Information Reveals Chinese Corporation Plans to Take $20 Million Westminster Choir College Endowment despite Prohibitions Imposed by State/Federal Law
    • More Bad News about Kaiwen
    • Claims v. Reality
    • AAUP Challenges Legitimacy of Newly announced Non-Profit Said To Be Created To Run Westminster Choir College
    • Label Your Stuff!
    • WCC Alumni Council Questions and Answers
    • Statement on Proposed Sale of Westminster Choir College Faculty Union Vows to Continue Oppose ill-conceived Sale of Iconic Music School
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    • A Failure of Due Diligence
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      • A Message from AAUP regarding the potential layoff of Westminster Faculty
      • ​Update on Westminster
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      • Outrage Over Rider University's Plan To Sell Legendary Choir College To Chinese For-Profit Company With No Experience in Higher Education
      • DellOmo Lays Off Entire WCC Faculty
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      • The Coalition to Save Westminster Choir College Initiates Spin-Off Discussions With Rider University Administration
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      • Support for Westminster Choir College
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      • Rider AAUP Executive Committee Recommendations Concerning Credo Consulting
      • Administration Attempts to Bully AAUP Executive Committee
      • Save Rider Rally
AAUP's Analysis of the Administration's Three Year Cash Projection Reveals Serious Discrepancies in CFO Karns' Budget Projections
July 15, 2017

In September of 2016, Rider’s Chief Financial Officer (CFO) Julie Karns began circulating a “Three Year Unrestricted Fund Projection” which projected annual cash deficits in excess of $10 million through 2019. On the basis of these projections, Rider’s CFO concluded that Rider would run out of cash in its unrestricted fund in three years unless rash actions were taken to control costs. Note that the rationale for the closing of Westminster Choir College and the sharp reductions in faculty pay and benefits which administration is now insisting upon in negotiations are based entirely upon these budget projections. We have had numerous concerns about the validity of the “Three Year Unrestricted Fund Projection” and have evaluated various aspects of the budget over the past year.

As part of our evaluation of this budget, we assessed the actual cash spent by Rider for the 2017 fiscal year. In late 2016, the Rider accounting department began providing a “Cash Activities Report” to the AAUP which provides an account of all cash spent by the University. The evaluation of these periodic reports has ultimately led to a startling revelation. The “Three Year Unrestricted Fund Projection” developed by CFO Karns has been presented as a cash basis accounting budget. This means that expenses and revenues on the report represent actual cash spent or received by the institution in a period of time. This is logical, given that the ostensible purpose of the three-year unrestricted fund budget projection is to determine the solvency of one of Rider's cash funds. An alternative to cash basis accounting is the accrual method  which does not examine cash flows and would not be appropriate for this type of analysis. It is improper to mix both of these methods in accounting.

However, based on information provided by Rider’s financial office, it appears that what has been presented as a cash basis budget in the “Three Year Unrestricted Fund Projection” is neither cash basis nor accrual method accounting but is instead a hybrid of the two. The AAUP met with Jennifer Potter (Associate Vice President/Controller) from Rider’s finance office on July 8th and questioned her specifically about this accounting inconsistency. In this meeting she confirmed that the “Three Year Unrestricted Fund Projection” used both accrual and cash basis accounting methods. This failure of consistent accounting renders the University’s projections useless in trying to determine actual cash flow in the unrestricted fund.

The current “Cash Activities Report” provided by the administration identifies actual cash spent by the university. This report indicates that Rider will have spent approximately $92 million for salary and fringe benefits in the 2017 fiscal year. CFO Karns, however, had indicated in her “Three Year Unrestricted Fund Projection” that the University would spend $99 million in cash for salary and fringe benefits in fiscal year 2017. This is a significant $7 million difference between the actual cash spent by the university and what CFO Karns had predicted would be spent. We asked the administration for an explanation of this variance and were provided with the response contained in the attached document.

After careful parsing of this explanation, we believe the most likely outcome for fiscal year 2017 is that the actual cash spent for salary and fringe benefits will be in the range of $93 to $95 million. This is $4 to $6 million less than what CFO Karns projected in her widely circulated budgets. This discrepancy is significant because when this variance is applied to the “Three Year Unrestricted Fund Projection” the cash deficit is dramatically reduced. While the administration may either ignore this significant discrepancy in their budget, or try to explain it with vague claims of “difficult non-faculty cost-cutting” on their part, the reality is that the budget projections used by CFO Karns in 2016 were, in our view, simply incorrect. Furthermore, it is our carefully considered conclusion that the use of these budget projections amounts to a serious misrepresentation of Rider’s finances by CFO Karns.

Our interactions with the administration concerning the variance between their budgets and actual spending are consistent with past patterns of administration responses to our inquiries: We point out serious variances; the administration provides an “explanation”; we indicate that their explanation is flawed; and they provide an equally flawed explanation of their explanation and so on. We have come to the conclusion, therefore, that the administration's projections are unreliable.

We have attached the original email from administration concerning this alarmingly significant discrepancy. Administration responses are in normal font, the AAUP comments, based on our careful review of all details are indented and in italics. Documents providing more details on the specifics are provided below.
Original email from administration with AAUP comments, which are indented and in italics.
Rider Cash Activity Through May 2017
 
Your Negotiating Team,

Mike Brogan
Dave Dewberry
Herb Gishlick
Jeff Halpern
Joel Phillips
Elizabeth Scheiber
Arthur Taylor ​

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  • Home
  • About
    • Mission Statement
    • Chapter Meeting Minutes
    • Presentations from AAUP Meetings
    • Meeting Dates 21-22
    • Points of Contact
    • AAUP Officers
    • AAUP Awards >
      • Bertram Mott Award
      • Henry J. Frank Award
    • P&T Committee Members
    • APC Committee Members
    • UAPC Committees
    • Training for College/School Academic Policy Committee Members
    • CIM Training Video
    • Membership
    • Assumption of Risk and Waiver Form for Employees that is required for travel funds
  • Contract
  • Grievances
    • Grievance Process
    • Amendments to Grievance Process, Updated April 2016
    • Grievance Procedure Explained
  • Constitution
    • I - Name
    • II - Purpose
    • III - Membership
    • IV - Dues
    • V - Chapter Officers
    • VI - Committees
    • VII - Election of Officers
    • VIII - Removal of Officers
    • IX - Disciplining of Members
    • X - Meetings
    • XI - Contract Ratification
    • XII - Finance
    • XIII - Amendments
  • Saving WCC
    • Decision on Standing Lawsuit
    • AAUP Response to Provost Fredeen's October 2nd Email
    • Important Information on Campus Consolidation
    • Chinese Company Out As Buyer Of Westminster Choir College
    • Kaiwen is Gone
    • Kaiwen Education Reply to a June 2019 Inquiry from the Shenzhen Stock Exchange
    • Update on Kaiwen Education's Financial Status
    • Arbitration Over Layoffs at WCC
    • Kaiwen Education 2018 Annual Report
    • By Federal Reserve Standards Kaiwen Education is a Highly Leveraged and Risky Business
    • Two Updates on Kaiwen's Finances
    • Due Diligence and Kaiwen Education
    • Chronology of a Crisis
    • WCC Reset
    • New Jersey Attorney General’s Office Delivers Major Setback to Rider University’s Plan to Sell Westminster Choir College
    • Westminster Foundation Press Release on AG Investigation
    • Purchase Agreement
    • Faculty Shocked to Learn Secret Agreement Would Allow Buyer to Close Westminster Choir College
    • Universities as the Guardians of Assets
    • Press Release Kaiwen Finances
    • 2019 Report on Kaiwen
    • DejaVuDellOmo
    • Kaiwen Announcement 1/11/19
    • AAUP Goes to the NJ Assembly
    • Sign the Petition to Save WCC
    • WWCAC Letter November 8 2018
    • Kaiwen Education: Report on Company Performance Through the Third Quarter 2018
    • New Information Reveals Chinese Corporation Plans to Take $20 Million Westminster Choir College Endowment despite Prohibitions Imposed by State/Federal Law
    • More Bad News about Kaiwen
    • Claims v. Reality
    • AAUP Challenges Legitimacy of Newly announced Non-Profit Said To Be Created To Run Westminster Choir College
    • Label Your Stuff!
    • WCC Alumni Council Questions and Answers
    • Statement on Proposed Sale of Westminster Choir College Faculty Union Vows to Continue Oppose ill-conceived Sale of Iconic Music School
    • June 7 Letter to Board
    • A Failure of Due Diligence
    • Bond 2017
    • Chronology of the WCC Crisis
    • Kaiwen Education Technology
    • Pending Legal Actions >
      • Legal Complaints against Rider University over Sale of WCC
    • The Legacy of Westminster Choir College
    • Updates and Information Sent to Faculty from AAUP Leadership >
      • A Letter to WCC Faculty regarding President Dell'Omo's Letter
      • Open Letter to Board of Trustees
      • Letter to Faculty
      • How a For-profit Company Might Ruin Westminster
      • A Message from AAUP regarding the potential layoff of Westminster Faculty
      • ​Update on Westminster
    • Press Releases >
      • Outrage Over Rider University's Plan To Sell Legendary Choir College To Chinese For-Profit Company With No Experience in Higher Education
      • DellOmo Lays Off Entire WCC Faculty
    • WCC Crisis in the News >
      • The Coalition to Save Westminster Choir College Initiates Spin-Off Discussions With Rider University Administration
    • Letters of Support for WCC >
      • Eric Whitacre Praises Westminster
      • Statement of support from NJ Higher Ed Leadership Council.
      • Support for Westminster Choir College
    • Teach In at WCC
    • WCC Teach In Audio >
      • Remarks by Laura Brooks Rice
      • Have American Universities Lost Their Way? by Joel Phillips
    • Governance Standards in Institutional Mergers and Acquisitions
  • 2022 Negotiations
    • Negotiation Updates
    • STRIKE FAQ
    • AAUP's Response to Admin's "Critical Need for Change"
    • AAUP v. Admin Proposals
    • CREDO >
      • Admin's Prioritization Report
      • WCC Students Petition DellOmo
      • Dr. Sanjay G. Reddy Speaks to the Chapter
      • A Bargaining Unit Member's Guide to Credo Part 1
      • A Bargaining Unit Member's Guide to Credo Part 2
      • Rider AAUP Executive Committee Recommendations Concerning Credo Consulting
      • Administration Attempts to Bully AAUP Executive Committee
      • Save Rider Rally