Pittsburgh Technical College lost $8 million in net assets for the fiscal year ending June 2023 and the school may not recover, according to a Dec. 11 audit of the school’s financial statements obtained by the Post-Gazette.
"The college’s recurring operations losses and reduction in net assets raise substantial doubt about the college's ability to continue,” the audit states.
The 75-year-old college in Oakdale received $20 million in COVID relief but lost $14 million in revenue from declining enrollment in the fiscal year that ended in June, the audit found. The school responded by significantly cutting operating expenses, a move that “may not be practical” in the years ahead, according to the McClintock & Associates analysis.
Recently, the school received a forbearance on its bonds and engaged the Royal Bank of Canada to explore two options to stabilize its finances: a debt refinancing through the U.S. Department of Agriculture or some sort of sale — either through merger or acquisition.
RBC found two banks interested in helping the school refinance, according to the audit.
Six other parties were interested in the merger/acquisition option, with an agreement planned to be finalized by Sunday.
“It is standard operating practice to regularly evaluate all potential operating models that would allow us to strengthen our mission and educational services, ultimately for the continued success of current and future students,” the college said in an emailed statement sent through its public relations firm Wednesday. “Now and forever, our focus is on PTC students and their success.”
PTC had 1,066 students enrolled in the fall of 2022, according to the school’s website. The school, formerly called Pittsburgh Technical Institute, was restructured as a nonprofit in 2017. It offers certificates and associate and bachelor’s degrees in more than 30 fields, including computer programming, nursing, welding, HVAC repair and culinary arts.
Its president, Alicia Harvey-Smith, previously told the Post-Gazette that she was brought in to the college in 2019 to “save a troubled institution” that was “more than $50 million in debt.” She said she had worked “day and night” to do right by PTC’s students and staff.
The news of a potential sale comes as two regulators are questioning the school’s financial leadership.
The U.S. Department of Education gave Pittsburgh Technical College a score of 0 on a scale of 0 to 3 for financial responsibility this year, according to the audit. In one instance, the department “did not receive timely notification from the College in order to monitor the institution for compliance with the general standards of financial responsibility,” the audit states. PTC said last week that it had not yet received the official score.
Institutions participating in Title IV programs — a form of federal financial aid to students — must demonstrate compliance with several regulations in order to retain federal funding.
“Depending on the severity of a regulatory violation, a regulator can initiate repayment of the applicable funds awarded, transfer the College to a delayed method of funding, or begin proceedings related to suspension, limitation, or termination,” the audit states.
In this instance, the audit said, “it is likely” the department will require Pittsburgh Technical College to post a letter of credit and be placed on heightened cash monitoring, which includes greater scrutiny of student Title IV disbursements.
The school had a similarly low score in 2020 and was forced to post a $2.3 million letter of credit — about 10% of the college’s Title IV aid funding. The audit said that action initiated a heightened cash monitoring period that lasted until September 2022.
Separately, the school’s accreditor, Middle States Commission on Higher Education, has also raised alarm — questioning the school’s compliance with several standards, including ethics and integrity; planning, resources, and institutional improvement; and governance, leadership, and administration. The accreditor also said PTC failed to provide information on time.
Middle States originally sent compliance questions on Oct. 31, five days after the Post-Gazette reported that Ms. Harvey-Smith had sent a letter threatening whistleblowers. That threat came after the leak of an independent investigation into the school’s president that had found evidence of potential misconduct and concerns she was leading the school as an autocrat.
Ms. Harvey-Smith denied those allegations and hired a separate law firm to refute them. Several board members and top administrators left the school during the controversy.
Oakdale Mayor Steve Trusnovic was one of six new trustees brought in as replacements. When he started in October, Mr. Trusnovic said he hadn’t yet seen the report on Ms. Harvey-Smith or the full details of the school’s finances.
“I might have jumped in a little deeper water than I thought,” he said last week.
The board has been meeting weekly with investors to work toward a resolution, he said. “They're trying to remain positive.”
Mr. Trusnovic said last week that he knew the school had missed one of the deadlines deadline but wasn’t sure why. As for Pittsburgh Technical College’s future, he wasn’t entirely sure.
“You'd hate to see it fold up,” he said. “It's been an asset to the community."
A subsequent report documenting on why PTC failed to comply with all applicable policies and regulations is due to Middle States by Jan. 5. The accreditor is also requiring “immediate notification… of any changes to the status of the institution.”
Evan Robinson-Johnson: ejohnson@post-gazette.com and @sightsonwheels
First Published: December 31, 2023, 10:30 a.m.
Updated: December 31, 2023, 6:50 p.m.