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.”
Thank goodness the NYS Dept. of Education protected the future integrity of Paul Smith’s as a college, when its own Board clearly was prepared to give the school away. Apparently contrary to law. The entire Board should do the decent thing and resign. How can it possibly stay on? Paul Smith’s College and every holder of political office in the North Country should start a PUBLIC campaign to press for Paul Smith’s to be absorbed by SUNY.
Agree with everything you say up to the “absorbed by SUNY” part. All of higher ed is struggling – not just small private colleges. Take a look at the finances of SUNY Colleges from Albany->north, it’s not a pretty picture. We’ve witnessed something alarming and spectacular at the same time. Struggling rural communities and their systems are being gobbled up by predatory companies. We could have seen something very different. Envision the same set of resources, more capital, and corporate ownership. Then witness the economic stratification that has historically occurred in many rural north country communities. A class of local elites suddenly owns the valuable land that surrounds a small community, which is a hub to the surrounding hamlets and towns. We’ve seen these communities will not actually have the capacity they have the potential for. The base economic structure does not change, and the residents are left struggling worse off than they were. PSC has survived another turn. We are so proud to call ourselves a Smitty family (3 alumna) today. We fully support the decision to discontinue the partnership.
I agree completely with your analysis. That said, Paul Smith’s needs financial help and an increase in enrollment – from some place, somehow. It is not enough for supporters of Paul Smith’s to reject Joan Weill’s millions, or to be saved from Fedcap by the grace of the NYS Dept of Education, and then do nothing but watch the situation deteriorate. Pride alone does not pay the bills.
A NEW board must undertake a robust and PUBLIC campaign directed at the Governor to secure the integrity and the future of Paul Smith’s. Every elected representative and every PS supporter must be on board.
This is probably Paul Smith’s last chance to save itself on its own terms. Think of it as an Adirondack rescue, which folks up here understand and do very well.
I would love to collaborate on fundraising campaigns for the secure future of this incredible learning institution. How can I/we help?
Please post the June 30 letter from NYS Dept of Education.
Clearly, what was being proposed by Fedcap was not the future of small college education, but rather, something unlawful. I wonder whether the PS Board – which has a fiduciary duty to act in the best interests of Paul Smith’s – ever considered this basic legal concern.
Tuition costs are high for what the students are getting. Dorms are not kept up, pool hasn’t been opened in years and teachers don’t care about their students who struggle.
The infrastructure of the college has been deteriorating for many years. It’s over 100 years old and is constantly hammered by lakefront and regional weather that does a lot of damage. I don’t agree with comparing the infrastructure and need for capital improvements to the quality of teaching. The faculty at PSC has been under tremendous stress (remember they’re people with families and bills to pay) as non-tenured employees in higher ed. I assure you they are giving all that they are to their students and trying to create for them the best opportunities possible in an arena where a lot of things have been impossible.
Hard to understand why a college with a focus on the environment isn’t thriving considering the issues facing the planet right now.
Allen Beals, Paul Smith’s tried to turn itself into a 4 year liberal arts college in the forest years ago. It used to concentrate on forestry and the environment and hospitality. Two fields which enhanced the area very successfully. I think the Weill case which a court decided in favor of the Smith family heirs who resisted a name change was a setback and Covid was a set back but in the end I think the location which is too remote and isolated ( hey, don’t be mad at me as my daughter graduated from St, Lawrence University so I know “remote”) and the size was too small to compete. Parents who are paying tuition are looking for a college that is growing, not shrinking. The Watershed Institute at Paul Smith’s is stellar and should be supported in the turmoil ahead. This Governor is much more positive about SUNY so don’t count them out. But I think the Board should be realistic and focused on perhaps dissolution down the road.
Anyone who has watched this slow motion train wreck at Paul Smith’s should realize this situation has been going downhill for some time (Dr. Mills was probably the last time things were sort of OK). When they made it a 4 year school it began to struggle. As a 2 year school, especially with the hospitality aspect, it was a regional school with a real purpose. There were numerous things that they could have survived with like nursing/healthcare, and certain other much needed occupations up there, While going to a 4 year college sounds very respectable it doesn’t work well financially and therein lies the rub. When Dr. Dove came in (she having worked with the Weill’s in NYC) she was CLUELESS on the history of Paul Smith’s and the day they announced the Joan Weill name change she shot herself and the college in the foot. The wound has festered, she’s long gone but the damage was done. Good luck. IMO if Joan Weill had any class, she would have forgone the name change and given the $20 million. Klass with a Kapital K? Sorry, I know they have given a lot of money up there, but did they give without strings attached? The wonderful thing about the “old days” and old money fortunes that made LP/Saranacs what is was (and to some degree still is), they gave without expecting anything in return. A true “gift” has no strings attached. Just a heads up folks, this is an institution with financial problems. Hey maybe Harlan Crow will buy it and endow the Judge Clarence Thomas school of finance? Sorry for the sarcasm, but that’s the kind of billionaire you have living up there now.