Proposed acquisition of college by Manhattan nonprofit group won’t happen
By James M. Odato
Paul Smith’s College broke off what its leaders had described as an urgent need to be acquired by The Fedcap Group after months of planning and takeover of key college operations by Fedcap.
Fedcap and the school, a major employer and contributor to the Adirondack Park’s economy and recreation and research resources, acknowledged the breakup on Friday after college employees were informed and the Explorer inquired.
We will continue to explore collaborative program opportunities towards our common belief that higher education is a pathway to economic wellbeing.Paul Smith’s College Interim President Daniel Kelting in a letter to faculty and staff
Asked for response, Fedcap’s communications consultant released an email statement saying that the development “was not the decision we were hoping for.”
Interim President Daniel Kelting notified faculty and staff that the school will be unwinding its administrative partnership with Fedcap. He said the school had terminated its application to regulators to approve the Fedcap acquisition.
The deal collapsed shortly after the state Department of Education informed Fedcap and Paul Smith’s that proposed changes to the college’s bylaws and charter were unsatisfactory and problematic, particularly passages that would give Fedcap control of the board and operations. For instance, the department called for removal of proposed language to allow Fedcap to assume majority control after two years.
Proposed bylaws and charter changes advanced by Fedcap and the college on May 24 included revisions that are “in conflict with the Education Law and the Rules of the Board of Regents,” the department’s lawyer wrote in a June 30 letter provided to the Explorer.
The development came as Paul Smith’s board of trustees worked on a budget for the new fiscal year, which started July 1. The spending plan has been delayed despite several board meetings since May, according to a person familiar with the school’s operations.
Asked about Kelting’s announcement, Nicole Feml, Kelting’s chief of staff, provided the Explorer several of the lines of his note to faculty and staff. He told employees that after recent conversations with the New York Department of Education, “Paul Smith’s College and Fedcap are discontinuing their combination discussions and the College is withdrawing its request” for approval of the combination.
“Over the next few weeks we will transition operational functions back to Paul Smith’s College,” he said. “We will continue to explore collaborative program opportunities towards our common belief that higher education is a pathway to economic wellbeing.”
His note said two weeks ago the college board requested “a comprehensive plan given our enrollment decline.” Working closely with Feml and in consultation with academic department chairs, “we created what we feel is a robust Roadmap to Success that lays the foundation for a campus-wide strategic planning process to begin this fall.”
“This plan, endorsed by the trustees, requires us to examine our faculty size in relation to our enrollment numbers, but we will do so following a thoughtful process that adheres to the Faculty Handbook and aligns with MSCHE (Middle States Commission on Higher Education) standards.”
He said the plan includes key hires in finance, development, student life, and enrollment management. Details on these hires will be shared next week, Kelting said.
Fedcap, through its consultant, Josh Vlasto, said it is proud of accomplishments achieved during its “short time” working with the college.
It listed closing a multimillion-dollar structural deficit, upgrading the college’s information technology and software after a major cyber-attack, and providing “sophisticated management and operational capacity to meet the challenges of a small private college in the ever-changing higher education landscape. “
The college’s most recent tax documents, for the fiscal year that ended June 30, 2022, showed a $2.5 million loss in operations compared with a $2.2 million loss the year earlier.
“While this was not the decision we were hoping for, the many mutually beneficial workforce and academic pathways we created with Paul Smith’s College—including the college’s first-ever NYC-based culinary program as well as exciting new stackable credential pathways in clean energy and urban forestry—will continue into the future,” Fedcap said. “We remain committed to the Adirondacks, especially Saranac, and look forward to staying deeply involved in strengthening the region. Over the next several weeks, The Fedcap Group will begin to reduce its support of PSC’s core operational functions as PSC explores other opportunities.”
Fedcap, which provides job and workforce readiness training to people described as being left behind by traditional educational organizations, hopes to find college programs to be integrated into its nonprofit operations. “We remain committed to opening the door to higher education for the many communities we serve and will continue to explore and strengthen other partnerships with colleges and universities,” Fedcap said.
The situation for Paul Smith’s continues to be a challenge as tuition revenues fall with the sharp reduction in enrollment. The school’s enrollment is hundreds of students short of capacity of more than 1,000 enrollees. The school listed 593 students at the start of the spring semester and warned of potential layoffs, Kelting told faculty a few months ago.
In a recent letter to the state, Paul Smith’s and Fedcap leaders described the acquisition plan as a model for other struggling private colleges.
“It is the only option that allows (the) college to survive and thrive while retaining its core identity and character,” the chairmen of the school and of Fedcap said in a jointly signed letter to the State Education Department.
If the state would not permit such combinations as proposed by Paul Smith’s and Fedcap, the chairmen said in their May 24 letter: “Small nonprofits like the college, that can best serve students facing the greatest barriers to education, will vanish.”
The education department had been telling the school and Fedcap that the charter for Paul Smith’s needed to be changed for the acquisition plan to be approved.
A department official said that the parties informed the state of their intention to discontinue their plan on June 30. He added: “The College has withdrawn its request for NYSED’s review and approval of the combination.”