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
    • Press Release Kaiwen Finances
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    • 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
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      • A Letter to WCC Faculty regarding President Dell'Omo's Letter
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      • Letter to Faculty
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      • 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
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    • 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
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      • Dr. Sanjay G. Reddy Speaks to the Chapter
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The Financial State of Rider University
August 3, 2017

As the administration asks faculty for draconian cuts to benefits and an increased teaching load with no additional pay, we find it instructive to examine the sources of the university's current fiscal situation and their proposed solutions to those problems. In this document, we detail the following points concerning this situation:

  • The primary source of Rider's current financial situation is the fact that enrollments are returning to historic norms, and have thus declined from historic high years, along with drastically increased tuition discounting. This combination has led to a reduction in net tuition revenue since 2015.
  • Auxiliary revenue, which comes from room and board, rental of Rider's facilities and various other sources, has also declined, worsening the current fiscal situation.
  • The administration has chosen to spend down budget surpluses for physical plant improvements (various building projects on campus) in lieu of traditional forms of financing these improvements such as capital fundraising campaigns.
  • Spending on faculty compensation has not created Rider’s current fiscal situation, given that the overall faculty compensation cost has declined since 2015 as a result of three years of no across-the-board raises and a reduced number of full time faculty.
  • Between 2010 and 2015, total faculty compensation (salary and benefits) rose only 10.5% while the Rider’s Chief Financial Officer’s (CFO) compensation rose by 40% and the president's compensation rose by 28%.
  • It appears that the ultimate goal of Rider’s administration is to slash faculty salaries and benefits to appease Wall Street banks who would then issue bonds to fund campus construction projects.
​
Rider’s Current Fiscal State

As previously noted, based on the AAUP analysis, we believe Rider’s current financial status poses some difficulties but does not portend financial doom. Likewise, we do not believe this situation is a result of out-of-control spending on overpaid and underworked faculty. Nor do we think that deep cuts to rank minimums and benefits, slashing of adjunct pay along with dramatic increases to teaching loads are a sustainable solution to this fiscal predicament.
The majority of Rider’s revenue comes from three sources: donations, tuition, and auxiliary enterprises, such as room and board, rental of Rider's facilities and various other sources. We believe that sharp decreases in two of these revenue sources, tuition and auxiliary enterprises, have created the current situation.

Rider’s declining tuition revenue is a result of both declining enrollment and increased tuition discounting. What the administration has done in recent years is reduce the cost of tuition for incoming students in the hope of increasing enrollments. But enrollments have not increased enough to offset the decrease in revenue per student, thus total tuition revenue has declined. Rider’s net tuition revenue (net after discounting) reached a peak of $114 million in 2015 and declined in 2016 to to $105 million and 2017 to $103 million (projected). This is above 2012 tuition level of $101 million and below the 2006 level of $106 million.

Auxiliary revenue, as noted, comes from various non-tuition sources. The administration has been able to generate somewhat irregular revenue from these activities in recent years. This revenue increased in 2016 but then declined by approximately $3 million in 2017 primarily due to loss of a major services contract. The net of both tuition and auxiliary enterprises revenue sources in 2016 was about $6 million below the previous year’s revenue levels. As part of a trend of revenue declines this is concerning, but it is not indicative of impending insolvency as some members of the administration have tried to suggest.

Rider University as an Institution of Higher Learning

Rider is a not-for-profit institution of higher learning. Its primary goal, as clearly specified in its state charter, is to provide an education to its students. While the institution needs to generate enough revenue to pay its bills and thus remain solvent, it does not need to nor should it operate like a for-profit business, in which the primary goal is to increase year-to-year revenues.

Rider has had surpluses—excess revenue over expenses—for decades. In the past it has used these surpluses primarily to build the institution's reserves—the fund that can be called upon to help support the institution in cyclical revenue downturns. In the past decade, however, the administration has been more inclined to spend these revenue surpluses in order to fund new construction and facility alterations. These are discretionary financial decisions, which have allowed reserves to decline at the very time when national demographic trends made it clear that we would soon be facing a decline in high school graduates. The decision to spend reserves rather than increasing debt through borrowing at a time of historically low interest rates, or foregoing some building projects, has arguably exacerbated the current financial difficulties.

While some members of administration like to argue that buildings attract students, there is no evidence to indicate that new buildings on campus improve enrollment. In fact, most studies concerning enrollment indicate that it is a multivariate problem—with many variables, in combination, driving students’ decisions. Unfortunately, this unfounded perspective that Rider must build structures in order to save the institution appears to be propelling administration decision making even in the face of significant evidence to the contrary.

The Fiscal Impact of Faculty Sacrifices

Since Rider’s undergraduate enrollment has declined, we would expect that the number of Rider’s full-time faculty should decline as well. At an institution of higher learning, we believe that a reduction in total faculty is best when it is not disruptive to the institution and its programs (its raison d’etre). Through natural attrition in faculty ranks and through early retirement incentives negotiated by the AAUP, we have been very successful in reducing the number of full-time faculty members at Rider. That reduction will continue through September 2019 by which time an additional 27 senior faculty will have retired through the early retirement program. That reduction in faculty numbers, combined with years of modest pay raises and in recent years, no raises, will provide the University with significant reduction in faculty pay and benefit costs, thus bringing its faculty pay and benefits expense into balance with its enrollments. We would argue, therefore, that any current fiscal difficulties at Rider are completely unrelated to faculty pay and benefits.

Faculty salary projected for FY 2017 is down by approximately 5 percent from the previous year and is now at the FY 2012 levels. Over the period between fiscal year 2012 and fiscal year 2017, our average pay increase has been .71%, and as faculty are well aware, we have received no pay raise in three years. Voluntary faculty departures have also reduced the cost of instruction for Rider, resulting in a savings of 1.8 million in 2017.

Average salary for all university faculty members nationwide has risen by 11% since 2013—a sharp contrast to the raise freeze for Rider faculty members during that same period. Had we kept up with our nationwide colleagues, Rider’s salary costs would have increased by 11%. Thus, the act of foregoing a raise for three years represents a savings of 11% of faculty pay for Rider or approximately $2.8 million for full time faculty in 2017. Additionally, the number of full-time AAUP faculty members at Rider has declined from 247 in 2013-14 to 230 in 2016-17. This represents a structural savings of approximately $2.3 million. Both the raise freeze and the decrease in faculty employed resulted in savings of $5.1 million in 2017.

Conversely, the compensation (base salary, bonuses, deferred income and benefits) for the top administrators grew between 2010 and 2015 (the latest date for which there is reported data.) During this period, total faculty compensation increased a modest 10.4 %. Top administrators, however, had significant pay raises. For example, CFO Karns’ salary increased 40%, and President Rozanski’s salary increased 28%.

The salary for these two officer positions is higher than national averages. Based on an AAUP survey conducted in 2016, the average pay for a president at a masters granting private university was $362 thousand. Rider’s president was paid $383.4 thousand (in addition he was awarded $137 thousand in deferred income) in 2015 (the last year for which IRS 990 data is available). The President’s salary was 6% above the national average. The same survey reports that the average salary for a CFO at a private masters granting institution was $206 thousand in 2015.Rider’s CFO was paid $279 thousand in 2015, 35% above the national average.
​
Administration’s Fiscal Plan


While communications from the administration have offered vague pronouncements concerning their plans for the management of Rider’s fiscal crisis, the specifics are still unclear. Rash actions the administration ostensibly adopted to “generate cash to invest in programs,” have only created confusion among Rider’s current and potential students, generated lawsuits, demoralized faculty, and have ultimately done nothing to address Rider’s revenue problems. Based on our understanding of Rider’s fiscal situation, therefore, we are at a loss to explain specifically why the administration has taken the actions that it has in the past several years, and why it continues to insist that drastic cuts to faculty pay and benefits are the solution to the “structural problems” Rider faces.

​However, the closing paragraph of a memo from Rider CFO Julie Karns’, dated May 20, 2017, may provide some insight into goals of the CFO and perhaps other members of administration. In the last paragraph of that memo she states:
 
"Given the current level of deficits, that [2M budget savings] is not enough to bring the University out of overall deficit. It will also take substantial savings in cost of instruction and other spending reductions, plus investments in facilities improvements from a bond issue and campus proceeds to stabilize and rebuild enrollments. All three elements will be necessary to bring Rider to financial health. The University needs to be able to evidence that it can generate healthy operating results in order to issue bonds and obtain and keep a line of credit while the University implements its Strategic Plan." (emphasis added)
 
In this paragraph, Karns restates the argument that the only way Rider can increase (or "stabilize and rebuild") enrollments is through buildings alone, with no regard for the instruction taking place within those buildings. For some reason our administration assumes that the only thing students and parents want from a university is new facilities rather than a substantive curriculum and quality instruction from credentialed faculty.

The crux of Karns’ argument, and she states it quite clearly, is that the university must obtain a bond issue in order to “stabilize and rebuild enrollments” and before we can do this, we need to sharply reduce the cost of instruction. If we don't do this, so she argues, the institution will not be able to “obtain and keep a line of credit while it implements its Strategic Plan,” which presumably involves building something.

CFO Karns’ paragraph closes with the statement that "... the University needs to be able to evidence that it can generate healthy operating results in order to issue bonds," an indirect reference to faculty salaries. CFO Karns has consistently argued that unless the administration can reduce the cost of instruction (reduce faculty salaries and benefits), we will be unable to “generate healthy operating results,” obtain a bond issue, or secure a line of credit—and without the bonds or a line of credit, the institution will not be able to come “out of overall deficit.”

(The presumed need for a line of credit has been raised in the past by CFO Karns. It is worth noting that our analysis of Rider’s cash flow for the past year has indicated no need for a line of credit given our current cash spending.)

This focus on “healthy operating results” is consistent with Wall Street investment banks' analysis of not-for-profit institutions: in analyzing the ability of the institution to repay its bonds, analysts prefer to count somewhat consistent revenue flows like tuition and auxiliary revenues while they diminish or even ignore inconsistent revenue flows such as grants and donations, sources traditionally used by not-for-profit universities to fund capital construction projects. We would argue that such an approach to running an institute of higher education leads to what is termed “corporatization” of the institution where the highly credentialed professional faculty are simply viewed as little more than a line item on the expense statement.

We believe the approach laid out by VP Karns in this memo is deeply flawed and in part has led to the rash actions we see from Rider administration today, all part of a reckless, corporate-inspired effort to generate “healthy operating results” in order to please Wall Street bankers, so that Rider administration can issue bonds to finance currently undisclosed building projects.

Conclusion

We believe that a reasonable analysis of the available historical financial data clearly indicates that Rider’s problems are revenue related and are not the result of excessive costs, as members of administration have repeatedly argued.
The administration’s inconsistent approach to managing Rider’s financial problems has included broadcasting Rider’s financial predicament, threatening to close a college, refusing offers of substantial cost-saving faculty concessions, and threatening some undisclosed action if a union contract agreement is not reached by August 31st. We believe these actions have only exacerbated the problem.

A quality university cannot exist without a quality faculty. We believe that Rider’s community of students, potential students, parents, alumni, faculty, and staff members recognizes this and upon understanding the true nature of Rider’s fiscal problems, also will understand that investing in a quality faculty is an investment in those who can develop the new programs, perform the cutting edge research, and attract and retain the undergraduate and graduate students the university needs in order to thrive.

Rider’s administration must recognize this and begin to treat the faculty as partners who can help solve Rider’s problems, not as a line item on an accounting statement.

Rider’s future is its faculty.

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    • Assumption of Risk and Waiver Form for Employees that is required for travel funds
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    • VII - Election of Officers
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    • 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
  • Audited Financial Statements
    • Universitys Financial Statement 2022-2023
    • Universitys Financial Statement 2024