PROVIDENCE – Nearly two weeks before the fall semester started at Rhode Island College, officials at the school announced plans to take extraordinary steps to close a $10-million deficit. They said they would reduce operating expenses by 15 percent, which included executive pay cuts, layoffs, and a hiring freeze.
With the spring semester scheduled to begin next week, the cost-saving measures continue, but now Rhode Island College is getting a little help from a $76,000-a-week consulting firm that will provide “analysis and recommendations related to programmatic, operational and financial improvements,” according to a contract obtained by the Globe.
The New York-based firm, Alvarez & Marsal, was hired by the state Council on Postsecondary Education on Dec. 14, and will earn $76,000 a week until its contract expires Feb. 28. That means the firm will be paid at least $760,000 during its review.
“The need for this analysis stems from operational and financial challenges caused by the COVID-19 pandemic, which has exacerbated structural issues at the college,” the contract states.
Alvarez & Marsal is being paid by the office of the postsecondary commissioner – not directly by Rhode Island College – and the council was not required to put the contract out to bid, according to Council on Postsecondary Education Chairman Tim DelGiudice.
“We are concerned about the magnitude of the deficit at RIC as exasperated by COVID, so we wanted the review and actionable data available before the governor submits her fiscal year 2022 budget,” DelGiudice said. “A&M was already engaged with other parts of state government, therefore are in a unique place with access to data and resources to move RIC forward quickly and smartly.”
Indeed, Alvarez & Marsal has become deeply familiar with Rhode Island in recent years.
Records show several state agencies paid Alvarez & Marsal $1.25 million in the 2020-’21 fiscal year, $1.4 million in the 2019-’20 fiscal year, and $936,000 during the 2017-’18 fiscal year, including the Department of Administration, Department of Children, Youth and Families, Office of Health and Human Services, and the Department of Health.
The firm was also hired by Lifespan, the state’s largest hospital network, in 2019 to craft a correction action plan as the organization faced significant budget challenges.
At Rhode Island College, the firm has five tasks: program review, enrollment strategy, operational review, federal grant optimization, and COVID-19 response.
The firm will study all of the programs offered by the college and craft a “suite of optimization recommendations” by March 1. It will also analyze optimal tuition levels for the next five years and recommend “cost-saving, efficient options that consider expansion, consolidation, impacts on student life, and other applicable options” as part of its operational review, according to the contract.
As part of the agreement, Alvarez & Marsal will provide at least four full-time employees to conduct the review.
DelGiudice said the seemingly high weekly rate was common for consulting firms like Alvarez & Marsal, but state Representative William O’Brien said he was “absolutely shocked” to learn that a consultant was being paid that much to review the college.
O’Brien, a North Providence Democrat, said “we had to struggle to find an extra $600,000” for Rhode Island College in the state’s last budget, and suggested the money would have been better spent on scholarships for students.
In-state tuition at Rhode Island College is $10,260 for the current school year, and $76,000 a week works out to seven full scholarships a week, O’Brien said.
“It’s absolutely ridiculous. Whoever is responsible for that made big, big mistakes the taxpayer’s money,” O’Brien said.
Rhode Island College President Frank Sanchez said he will take all the help he can get.
The college ran deficits totaling $13.7 million between the 2017-18 fiscal year and the 2019-20 fiscal year, and the pandemic left the school with a projected $10.4 million shortfall for the last fiscal year. Earlier this year, Sanchez said the college was expecting a 10 percent reduction in student enrollment. It currently has 6,300 undergraduate and graduate students.
The college said in August that it would also close the Henry Barnard School, a private, elementary lab school located on its campus, as part of the cost-cutting measures. Parents successfully convinced the college to allow the school to remain on campus for a maximum of five more years.
Sanchez said he’s hopeful that Alvarez & Marsal can assist the college in becoming more efficient. He said the college doesn’t have the resources to conduct the same kind of review internally.
“These are one-time dollars that I think can help us get some of our major projects done,” Sanchez said.