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Business Officer Magazine

Retooling a Region's Economy

Harrisburg University is breaking ground on more than its academic center. This workforce-focused start-up is setting new standards for preparing students and partnering with employers.

By Eric Darr

Harrisburg University, an independent nonprofit institution located in Pennsylvania, is the nation's only comprehensive university that integrates an affiliated college preparatory high school and a business accelerator. HU is also at the heart of a regional renaissance, providing science- and technology-focused education while encouraging and supporting technology-oriented businesses. Our model may offer insights for how existing institutions can partner more boldly with business and government neighbors and area institutions to drive an educational agenda that serves regional economic needs.

If You Teach It, They Will Come

With a confluence of railroads and interstates, central Pennsylvania is a major distribution hub and boasts as much warehouse space per square mile as anywhere in the world. While the region enjoys low unemployment, the mostly lower-paying warehouse jobs don’t represent the kinds of long-term industry that many business leaders want to see emerge and expand. During the late 1990s, a group of about 1,000 business, government, and community leaders from the region convened to discuss what was needed for the next 100 years in terms of education, industry, transportation, taxes, zoning, and so forth. Among the group’s conclusions: the need to link education to economic development. Specifically, with too few technology-educated workers available, the region’s economic growth would continue to depend heavily on sectors with lower-paying jobs and dimmer long-term prospects. The need for strong science and technology education was evident.

As the state’s capital, Harrisburg is home to all the information technology that services Pennsylvania governmental agencies, so the commonwealth itself has a huge appetite and need for technology professionals. Regionally, a growing number of health-related industries, including managed-care and health-care information management, were quickly emerging, as were IT and information security companies. Yet, the entire capital area and its two million residents did not have a science-and-technology-focused university. Despite a strong community college and several excellent liberal arts institutions in the area, prospective students interested in studying these disciplines essentially had to look west to Pittsburgh, look east to Philadelphia, or leave the state altogether.

In light of this education gap—and coupled with the fact that Harrisburg was the largest state capital in the nation without a four-year university—the group of leaders recommended creating a four-year campus within the city to focus on science, technology, engineering, and mathematics careers: the STEM disciplines. Initially, several existing higher education institutions in the region and the Pennsylvania state system of higher education were approached about expanding their curricula and campuses to better focus on these disciplines. In a time of shrinking commonwealth appropriations and severe budget pressures, none took up the charge. Undaunted, Harrisburg’s mayor and a small group of visionaries who possessed significant higher education experience moved forward to create HU.

Starting From Scratch

Based on the strong business and community development components of the initiative, the commonwealth of Pennsylvania granted $59 million in capital funding to the university for construction of start-up facilities. From the outset, there was a clear vision that this new venture was not only educational; the mission of HU would be centrally linked to business development and workforce needs.

While this level of capital funding was greatly appreciated and needed, a key challenge was figuring out how to turn this seed capital into unrestricted operating funds so we could pay salaries and keep the lights on. In some respects, the university’s early balance sheets looked more like a land development initiative than the launch of a higher education institution. Using $9 million of state funds that we matched with a commercial bank loan, we spent $17 million rehabbing an abandoned YWCA. We then sold this asset for $12.5 million to the Harrisburg school district as the home of SciTech High. This magnet high school focused on science and technology is a central component of HU’s broader mission to cultivate science and technology professionals to fill regional workforce demands. (See sidebar, “The Learn-Work Continuum.”)

We have since rolled another $28 million from the commonwealth into the land for and construction of our $73 million, 16-story academic center, for which we financed the remainder by closing on an $89 million tax-exempt bond offering in December 2006. Other funding sources have emerged since our launch. The Harrisburg school district awarded the university an $8.5 million grant for services rendered by our faculty and staff to establish SciTech High and to develop its science and technology curriculum. We also received $1.8 million in earmarked federal monies from the Department of Education and raised another $1.3 million from private and corporate sources. An additional $22 million in capital funds from the state is still available for construction of the next, yet unidentified, university facility.

While HU is still in its early stages, we have accomplished much during our first five years. Specifically, the university’s success can be measured along four important institutional dimensions: program, operations, finances, and human capital.

It’s What and Whom You Know

One huge milestone for us has been quickly achieving candidate-for-accreditation status. While this recognition does not ensure our accreditation, it acknowledges evidence of sound planning and the resources to implement programmatic plans and attain our goals within a reasonable time. We believe this hard-earned status is also testament to the university’s diligence in program design.

Currently HU offers bachelor’s degrees in biotechnology and bioscience, computer and information systems, geography and geospatial imaging, and integrative science. We also offer a master’s degree in information technology project management and certificate programs in biotechnology, computer and information science, community health, and forensic biotechnology. Because rapid development of science- and technology-based programs demanded by the marketplace is critical to HU’s long-term viability, we plan to introduce at least one new program each year for the foreseeable future.

Also crucial to our effectiveness is building collaborative relationships with area institutions of higher education. In particular, we are partnering with Harrisburg Area Community College (HACC) in several important ways to address the education and community development needs of the capital region. Both institutions are partners in the Capital Area Biotechnology Partnership, a workforce development project. The goal is to interest high school juniors and seniors in biotechnology fields so they will continue their education at HACC and then transition to HU or another area university. We are also developing a formal articulation agreement to ensure a seamless transition for HACC students, particularly in the areas of e-business, computer science, and health sciences. Students aren’t the only ones to benefit from our close collaboration with HACC. Both institutions and SciTech High School are participating in a series of daylong events that feature hands-on experiments and workshops in biotechnology and nanobiotechnology. The events are designed to help educators keep current with scientific discoveries and developments in these fields.

Additionally, we believe that a key element of ensuring our students’ performance and maintaining community support for our programs is to link students with business leaders. From the time students enter a program of study, they are connected with business mentors based on a profile match. Our mentors agree to spend time with students at least once each month to discuss courses and career goals and to give students a chance to ask questions about industry. Once each trimester, the university sponsors a student-mentor mixer. Although this purely volunteer program carries specific time requirements, we are currently oversubscribed with mentors—a clear indication of the level of interest in cultivating the future workforce in this region. Business leaders can also influence what the students are learning through our mandatory student internship program.

Technology for the Road Ahead

From an operations standpoint, the university initially functioned with a series of unconnected administrative technology applications and databases that could not easily and securely share data. Students and parents were inconvenienced with paper forms they had to complete in university offices, employees wasted valuable time re-entering data, and student data accuracy and security were becoming a significant concern. We desperately needed a better, more integrated, more secure way of managing student data and accounts.

One decision we struggled with early on was whether to implement an enterprise resource planning (ERP) system. While we could have continued with inexpensive point solutions, we realized that we didn’t yet have an abundance of data. If we waited another three or four years, we would have a lot more data and would likely spend millions of dollars on data conversion. We also didn’t yet have solidly established policies and procedures in place, which, if we waited, might require a significant change-management initiative to get everyone on board with a new system. During the past year, we implemented an ERP system, integrating our admissions, registration, financial aid, business office, grants management, and advancement functions. The rules and processes in each functional area have been clearly defined, and internal control and data integrity across university functions have improved significantly.

Spending $500,000 for an administrative system that we didn’t need was a hard sell at first to some of our trustees. Ultimately they were convinced by our calculations that waiting to implement an ERP system might mean spending upwards of another $3 million in the long run. Another convincing argument was that by putting in place an ERP system that met industry standards, the regional accrediting bodies could check that box in our favor. Rather than relying on a homegrown system to safeguard our data, an industry-leading ERP system offered much better security standards for sensitive data such as financial aid records.

The Learn-Work Continuum

As an original approach to higher education, Harrisburg University of Science and Technology aligns traditional undergraduate degrees with science- and technology-based economic development and innovation. HU is achieving this unique mission by co-locating a magnet high school, four-year comprehensive university, and business accelerator.

Prepping students. Early public- and private-sector investments allowed HU to construct an 80,000-square-foot science-and-technology-focused college preparatory high school. The high-tech SciTech High opened in September 2003 and is operated in cooperation with the Harrisburg school district. This regional high school provides students with an integrated math and science curriculum developed in concert with HU’s programs of study. SciTech High students can earn college credit while still in high school through the university’s dual enrollment program, and graduates are granted automatic admission to HU.

Courting future business leaders. Located two blocks from the university is the 14,000-square-foot SciTech Center, a business accelerator specializing in the support of technology start-ups to further address the capital region’s economic development needs. The facility can house up to 60 employees. Entrepreneurs in residence at SciTech Center can tap the intellectual talent of HU’s faculty and students. In return, tenants must mentor high school and university students through activities such as career counseling, job shadowing, and internships.

Sharing intellectual space. While HU’s students will continue to use the classroom and laboratory facilities located at SciTech High, the university’s faculty and staff will reside in nearby temporary space until our new academic center opens in January 2009. The tower will include 24 classrooms, six scientific teaching labs, 12 student team meeting areas, six seminar rooms, a 20,000-volume library, a one-stop student services center, a 125-seat auditorium, and hundreds of parking spaces. To reinforce HU’s commitment to addressing regional workforce needs and to fostering excellence in science and technology education, the center will be home to several working groups. These include the National Science Foundation’s National Center for Science and Civic Engagement, the NSF-funded Science Education for New Civic Engagements and Responsibilities (SENCER) program, and the Capital Area Biotechnology Partnership funded by the Pennsylvania Department of Community and Economic Development.

Strength in Numbers

During the first several years of operation, a start-up university represents a unique business model. If managed properly, student tuition revenue can grow dramatically without an associated significant increase in fixed expenses. During its first year of operation, HU generated about $3,000 per student in net tuition revenue with 113 total students. During our second year of operation—and with our candidate-for-accreditation status in hand—the university generated approximately $9,000 per student in net tuition revenue with 150 total students, including 90 new students and 60 students retained from the first year. Because of access to federal and state scholarship monies and the significant increase in our enrollment, HU tuition revenue grew six-fold over the first year of operation, while operating expenses grew by only 30 percent for that same period. Our FY07 annual operating budget is $6 million.

Additional measures of financial solidity include those tied to advancement activities and our ability to leverage capital markets. Currently the university is on track to exceed its fundraising goal of $1.5 million for FY07 by 200 percent. Increased community visibility has led to a dramatic increase in individual donor contributions. As community-based companies are exposed to HU’s internship program, more are contributing scholarships. Finally, we are now able to use state and county grants and commercial bank support to enhance HU’s credit history.

Well-Rounded Human Capital

While my biggest responsibility as chief business officer may be to make financial ends meet, I worry more about the individuals we hire. Much of our long-term viability hinges on whom we bring on board to lead this venture. Since bad hires are quite expensive in multiple ways, it is critical to conduct each interview with an eye toward where we want to go as an institution rather than how we’ll fill an immediate slot.

Just as important as attracting high-quality faculty and staff are enrolling bright, motivated students and building a dynamic board of trustees.

Faculty. Our faculty model is one area in which HU distinguishes itself from many traditional institutions of higher education. From the start, we’ve been intentional about maintaining a 50-50 ratio between full-time faculty and corporate faculty. Our 10 corporate faculty have full-time jobs within industry and come to campus with extensive professional expertise in our program fields of study. These individuals may be company CEOs, project leaders, research scientists, or clinicians. We expect our corporate faculty members to bring their experience to bear not only in the classroom but also through development of course content. This creates a real-life learning situation for students and allows business leaders the chance to directly shape the education of their future workforce. For instance, two engineers from a geographic information systems business in Harrisburg teach several courses in that program. They have developed their own teaching curricula and are free to make course adjustments based on changes occurring within their industry.

As for our nine full-time faculty members, all have doctoral degrees and experience or training in multiple disciplines. For instance, one faculty member has a doctorate in organic chemistry and a master’s in geology. By purposely hiring faculty with expertise in multiple subjects, we benefit from having professors who can teach across disciplines. Serving on the faculty of a start-up is not for everyone; our expectation of full-time faculty is that they will do many things in addition to developing and teaching courses. They may act as admissions recruiters, develop connections to the business world, or write grants. At the same time, they play a part in creating the faculty charter and establishing norms for everything from how classroom behavior is conducted to how grades are assessed. One clear indication to us of the interest in our model is that, for every open faculty position, the university receives hundreds of resumes from individuals currently serving at respected, top-tier institutions.

Staff. In the same way that faculty are hired for their breadth of subject expertise, we seek staff who can do many different things. Our current mix of 47 full-time and part-time staff reflects a range of talents that we use to our advantage. For instance, our registrar has prior experience working for a learning technology company, so he is helping with our move into distance learning technologies. In addition to making sure our network and telecommunications run effectively, our chief information officer also teaches a course on project management.

Students. HU is attracting students from across the Mid-Atlantic region. Student inquiries for fall 2007 are three times greater than in 2006. Approximately 59 percent of students represent minority populations, primarily African American. This reflects our urban environment and is in keeping with our mission to prepare members of our region for desirable local jobs. About 96 percent of students demonstrate financial need, and 100 percent of full-time students receive some form of institutional financial assistance. For FY07, this amounts to nearly $400,000 in institutional financial aid expenditures. Current tuition and fees for 2006-07 are $14,000 for undergraduate and graduate students.

Trustees. One area in which HU is similar to most colleges and universities is our governance model and committee structure. While our 27-member board of trustees may seem large for a still-small start-up, our primary objective is to involve the full community in this initiative. Our trustees represent the key government and business segments that encompass the disciplines we teach. During the past year, we augmented our all-volunteer board with two CEOs of publicly traded companies.

From a financial standpoint, our resourcefulness in tapping staff expertise and our 50-50 faculty split allows the university to pay only about half the overhead that it would with traditional faculty staffing. From a philosophical standpoint, these approaches are core to our mission and reflect the fundamental entrepreneurial focus of HU.

Paying for Performance

In a number of ways, our core business model has similarities to the corporate world in terms of our strong focus on accountability. For instance, we do not offer tenure to faculty and have no plans to do so. We offer only 12-month renewable contracts as a way to hold faculty accountable for their performance on an annual basis.

We also operate with a strong reliance on outsourcing. By assigning course development to our corporate faculty for the classes they teach, we keep variable the cost on functions or activities that a traditional university might consider part of its core activities. For instance, while some might consider curriculum development to be the sole role of full-time faculty, we believe that our corporate faculty are best suited to develop courses that focus on industry-specific topics.

We also are one of only a few universities in the nation that use a top executive search and staffing firm to facilitate internships for our students, help students with resume preparation and interviewing skills, and even present their resumes to prospective employers. Not only does this eliminate our need to hire staff, it also gives students access to exceptional career guidance and internship prospects that can lead to long-term employment after graduation.

As a rule, for each new business initiative, we look for partners to provide specific services and functions in more cost-effective ways, and we are not afraid to outsource large pieces. We put a high priority on flexibility, and we think long and hard about adding fixed costs.

Marching Toward Maturity

From its earliest days, HU has garnered high-level support. Pennsylvania Governor Edward Rendell has suggested that, in 20 years, Harrisburg University will be viewed as the most important strategic economic development effort ever undertaken in the city. Ray Simon, deputy secretary of the U.S. Department of Education, has lauded our concept as a model for the rest of the nation.

During the next five years, we plan to become a more mature institution. While interest certainly exists from the business community for research opportunities, our primary focus is to further strengthen HU’s teaching capabilities. In the meantime, we will continue adding programs that fit the business needs of the area and the interests of students. Several new programs on the horizon include a bachelor’s degree in e-business and management and a master’s degree in learning technologies. Based on employer response, we are also looking to add a health-care IT management program that will introduce sophisticated and differentiated systems for management of health-related data.

By the time we occupy our new academic center in January 2009, we anticipate that our student population will increase to 575 students—more than one third of the way toward our projected capacity of 1,600 students. One implication of a rapidly growing student population is that we must begin thinking now about student housing and expanded student services. Once again, we are fortunate in being able to take advantage of our immediate surroundings. We are already in conversation with a local Hilton Hotel operator to identify properties near the university where we could build a mixed-use facility to include residential housing and a student union. Likewise, our new academic center will connect via an above-ground walkway to an existing shopping mall that already has more than a dozen restaurants, a gym, and a post office. These local services and businesses will no doubt expand as we provide a growing student customer base.

A favorite saying we have at HU is that the city is our campus. As we look toward the next five years, we will develop new programs and services in conjunction with the partners in our midst. In return, we will deliver a new generation of highly trained and educated workers to the region.

ERIC DARR is executive vice president of Harrisburg University of Science and Technology, Pennsylvania.