Penn State receives accreditation warning

Setting the nature of the crime aside...This is pretty interesting.

Penn State receives accreditation warning - Yahoo! News

 

to big to fail?

 

Thanks for sharing! I sent this article for my best friend, who is currently a Penn State's student. He'll graduate next year with Bachelor of Science in Business Administration.

 

If I am reading the article correctly this "warning" is more about financial, governance and integrity failings than it is academically based. Wow, still not good news for PSU and it's alumni.

Interesting.

 

That's how I read it as well. I guess "when it rains it pours" for them right now.

 

My thoughts exactly.

 

Too big to fail, probably. I think Middle States is doing two things; 1. Keeping tabs on the schools finances and also the progress they are making. 2. Well, we better do something also before people ask why we haven't. IMO, unless Penn State makes no progress on meeting the recommendations and requirements they will remain accredited.

 

Seems just a bit over the top, this had nothing to do with academics. I mean its still an incredible school education wise. Great engineering programs I was told. I think its a case where everyone is jumping in on the parade, and looking like they are doing something.

 

Accreditation isn't about academics only. It also includes financial issues, governance, mission, etc.

This scandal relates directly to those issues, even if the events were not in the classroom.

 

Yep.

Penn State is a massive state university. It will have zero issues with recovering from this.

 

Penn State now faces potential financial liabilities for civil damages. There is no way to know the exact amount, but they could be very large; one estimate puts them in the $100,000,000+ range. A financial hit of this magnitude has the potential to affect the school's ongoing budget and operations, and could therefore indirectly affect academics.

 

The school can pay that out and still have $1.7 billion left in the endowment fund.

 

I am actually somewhat surprised and pleased to see Middle States taking this action. Regional accreditation comprises hundreds of criteria, among them institutional control and governance, integrity, legal compliance, and financial solvency. And I know that other regional accreditors have withdrawn accreditation for issues of governance and control before, so this isn't just a slap on the wrist.

While I'm confident that the school will do absolutely everything required to maintain accreditation, I see this as Middle States saying, in effect, "You aren't going to be able to go back to business-as-usual and allow your athletic programs to control everything that goes on in the school, and your administration best not be asleep at the switch in the future." If Middle States is smart, they will keep Penn State on warning status for some time to ensure that meaningful change has actually happened, rather than lip service to change.

This is also somewhat interesting in that some of the trustees of Penn State are now trying to go back to the NCAA and appeal the sanctions levied against them in light of the Sandusky scandal. I think the action of the trustees speaks volumes, in that they're saying, in effect, "Oh, we don't think what we did was so bad, so let us off with a lot less," while their own president acknowledged and agreed that the sanctions were appropriate and necessary.

I think it's going to take an awful lot to change the culture of college-sports-as-primary-importance, and perhaps between NCAA, Middle States, and whatever other sanctions come about will finally get this through the thick heads of the folks that allowed this to happen in the first place.

 

It took Penn State more than 150 years to build up the endowment to that level. If they now owe $100,000,000+ in damages, plus $60,000,000 in NCAA fines, then roughly 10% of that endowment would be wiped out. This would not bankrupt them, but would be a huge financial setback.

The question is whether or not Penn State would actually have to pay those damages out of their endowment. They do have insurance; however, their insurers are claiming that coverage should be denied because Penn State failed to make full disclosures about its potential liability.

 

If accreditation was purely about academics, I doubt Ashford University would be having all the trouble they are at this moment.

 

According to ESPN, the 60 million is equivalent to what football program generates in revenue in ONE year. I found that pretty shocking.

 

That number is approximately correct. However, keep in mind the following points:

- That number represents revenue, not profit. The football program obviously has expenses, so the profit is lower. In fiscal 2011, the revenue was $58.9 million, but the profit was $43.8 million. OK, that's still a big number.

- On the other hand, most of the profits from the football program are used to subsidize the other athletic programs. All other Penn State men's teams, except for basketball, run at a loss. All Penn State women's teams run at a loss.

- So the total profitability of Penn State athletics is not as amazing as one might think. Overall, Penn State athletics generated $116.1 million in revenue in fiscal 2011. But the operating profit was only a fraction of that total, at $14.8 million.

 

That's a tough pill to swallow for the other programs. I think it's going to be a while before they are even anywhere close to generating that type of money.

 

My first thought on reading of the accreditation review was that maybe Penn State had been giving academic credit to athletes for little or no work.