PROVIDENCE – At the tail end of a legislative inquiry earlier this month into why the state hired a $76,000-a-week consultant to study Rhode Island College’s finances in December 2020, the college’s president, Frank Sanchez, sought to make one thing clear to the lawmakers.
“We certainly did not ask, we didn’t request, we didn’t seek engagement with A&M,” Sanchez told the House Oversight Committee, referring to Alvarez & Marsal, a prominent New York-based consulting firm that has been paid millions of dollars by various Rhode Island state agencies over the last year.
Sanchez did ultimately sign the contract with Alvarez & Marsal in December, but the firm was initially engaged by the state’s higher education office with a recommendation from aides to then-Governor Gina Raimondo, according to Timothy DelGiudice, the chairman of the Council on Postsecondary Education.
The no-bid contract to review the college was cancelled in January after the Globe first reported on the agreement, but the firm was still paid more than $334,000 to produce a seven-page draft report that offered unsurprising findings including that enrollment has been declining for several years, graduate programs are costly, and the COVID-19 pandemic has created challenges for the college.
The straightforward observations coupled with the disclosure that Sanchez had little involvement with bringing in the firm – he also told the committee that he didn’t see the firm’s findings until this month – perplexed lawmakers who grilled Sanchez and DelGiudice during a tense two-hour hearing on March 18.
“It’s nothing more than a sham scam,” said state Representative Anastasia Williams, a Providence Democrat who went on to accuse the firm of “being given the hook up from the floor up,” on the backs of taxpayers.
Brushing off the hyperbolic statements made by some committee members, DelGiudice defended his decisions to hire the consulting firm and cancel its contract following a public outcry.
He said that the college was facing a structural deficit of between $8 million and $15 million and he believed Alvarez & Marsal could help make budget recommendations that would shore up the college’s finances over the long term. He said aides to Raimondo – including then-Department of Administration Director Brett Smiley – said the council would not need to put the contract up for bid because the firm was doing work elsewhere in state government.
DelGiudice also stressed that the funds to pay the firm came from the Governor’s Emergency Education Relief Fund, which was part of the first federal stimulus package passed by Congress last year to address the COVID-19 pandemic.
“COVID is not the cause of any of the issues at RIC,” he said. “However, COVID has exasperated all of the concerns at RIC, and at URI, and at CCRI, and at UMass, and any other college across the nation. It has certainly put fuel on the fire.”
DelGiudice said he canceled the contract after Raimondo was nominated to be President Joe Biden’s commerce secretary because he didn’t believe it was fair to ask the incoming governor, Dan McKee, to include the firm’s recommendations in his first budget proposal.
“While it was expensive, it was smart money invested in the future of the college and the system,” DelGiudice told the committee.
If the firm contract had run from Dec. 14, 2020 until Feb. 28, it would have been paid at least $760,000 by the state, but it ended up receiving $334,000, according to DelGiudice.
In its report, Alvarez & Marsal stated that it conducted more than 50 interviews and gathered “significant amounts of institutional, peer comparison, and demographic data within the state in order to develop a comprehensive plan for viability.”
And yet, its initial findings seem based on easily accessible data. The firm found that enrollment at the college has dropped from 7,446 students in fall 2015 to 5,998 students in fall 2020, and it suggested that a deal to offer a reduced out-of-state tuition rate to residents of neighboring states “has not had an offsetting impact on enrollment or dorm capacities.”
The report also found that while undergraduate programming is covered by net tuition, graduate programs “appear to cost more than the average cost per credit hour.”
In terms of recommendations, the firm suggested obvious courses of action: RIC should develop new strategies to proactively recruit new students within Rhode Island, make it easier to transfer from CCRI, improve student retention, revamp its marketing strategy, and maximize its federal grants.
It’s unclear whether the firm produced other research that didn’t make it into its final report for the state.
The state budget proposed by McKee earlier this month does not include most of the recommendations, and but RIC is scheduled to ask the state Council of Postsecondary Education approve an early retirement incentive package at a meeting next week. A RIC spokeswoman said the college expects between 25 and 35 employees to take advantage of the buyout.
Despite DelGiudice’s confidence, members of the House Oversight committee expressed disappointment with his decision-making.
Rep. Julie Casimiro, a Democrat from North Kingstown, said she wanted to know why “during a pandemic, when people are facing food insecurity, paying their bills and not knowing where the money is coming from and not paying their rent, and landlords are not getting paid, the state needed to spend $76,000 a week on the consulting.”
Rep. Jose Batista, a Providence Democrat, asked if there was any precedent for colleges in the state hiring a consultant at a similar rate. DelGiudice said there has not been similar agreements during his time chairing the council.
Williams said the committee should have taken advantage of its ability to place DelGiudice and Sanchez under oath during their testimony, because she had questions about how honest they were being.
House Oversight Committee Chairwoman Patricia Serpa, a West Warwick Democrat, said she wanted to believe the leaders were being honest with the committee, but she said that “I do believe that there was another agenda afoot here.”