Will President Joel’s Empire Crumble?
At his investiture, President Joel said that the “gems” of Yeshiva University, Yeshiva and Stern Colleges, “must be polished to shine.” He spoke of greater commitment to faculty and research funding to “ensure that they are excellent.” He promised that his “dreams and visions” would be accompanied by “choices and commitments.” And commit he did. Yeshiva University has grown exponentially under the last decade of leadership of President Joel.
Since 2003, President Joel has hired 102 new faculty members and has surrounded himself with new deans and administrators. He commissioned new buildings and renovated old ones, pouring in $30 million annually to renovate offices, expand classes and laboratories, and build meeting spaces. In 2007, he opened Stanton Hall on the Beren Campus and, in 2011, inaugurated the uptown Glueck Center for Jewish study—the first new building on the Wilf campus in two decades. He also bought more than $80 million of property in Washington Heights alone.
He rebooted the office of admissions, the career center, and the registrar’s office. He established centers for the Jewish Future, Israel Studies, Public Heath, and Ethics. He created the Presidential Fellowship program. He bankrolled millions in scholarships and funded an ever-growing cohort of Honors students. In the process, YU grew in national rankings (40th in the nation in 2005), in prestige, and, therefore in student enrollment (Almost 2,500 in 2007).
“I’m a spender,” President Joel told The New York Jewish Week last year. In 1980, the university had annual budget of $115 million (approximately $320 million today). YU now has an annual operating budget of over $700 million.
President Joel’s spending broke precipitously with his predecessor. Rabbi Lamm’s top financial officer, Sheldon Socol, who “saved” YU from bankruptcy in the 1970s, pinched pennies and froze salaries through the 1990s. His gift for balancing budgets and tracking accounts also meant that faculty and administrators suffered under his authoritative hand. When President Joel entered the scene in 2003, he reversed this trend and converted capital into department chairs, full professorships, programming, and research budgets.
Joel, however, was also a remarkable fund-raiser. When he took over Hillel in 1988, its annual budget hovered at $14 million. By the time he left in 2003, it had quadrupled to over $50 million. When he took over the reigns at YU, he launched a similarly successful fund-raising campaign.
In 2008, just two months before the recession, YU announced that it has raised $160 million in the past year—three times what Rabbi Lamm had raised in 2002. In 2006, President Joel secured a $100 million pledge from former YU chairman Ronald Stanton. In that same year, university’s endowment was then the 51st largest in the country, according to The Chronicle of Higher Education. Joel built the endowment up to $1.4 billion, a full third of this progress taking place after 2003. He was rewarded handsomely, if not fittingly, for his remarkable results.
This change wasn’t a solo effort. According to Johns Hopkins Professor Benjamin Ginsberg, during President Joel’s tenure at Yeshiva University, administrative and support personnel rose by an astonishing 351 percent, more than any university in the nation. Administrators and support staff—in the Center for the Jewish Future, in athletics, in student activities, in alumni affairs, in admissions—helped attract more students and publicize the changes happening at YU.
President Joel built the university into a veritable empire. Few could doubt the transformational change in the quality of education, the abundance of student services, the diverse array of extra-curricular opportunities, and the general tone of the university. “This last decade has seen the transformation of our academic enterprise, Torah learning environment, student and career services, athletics, infrastructure, and more,” he wrote in a recent letter sent to alumni of YU. He was right.
And then Madoff broke, Dayenu. And then the Recession hit, Dayenu. And then the mismanaged endowment suffered, Dayenu. And then MTA abuse scandal went public, Dayenu. And then Moody’s Downgraded YU, Dayenu. and then, on November 20th, this:
“Simply put, the spending required to support what we have built outpaces the income we generate and the substantial deficits that we have incurred cannot be sustained.” The money has—sadly, finally, and predictably—run out.
Just months before the 2008 Recession, YU cut $30 million from its budget to offset anticipated losses from a $100 million investment in a pool tied into the Ponzi scheme architected by Bernard Madoff, then chair of Sy Syms Business School.
After the housing bubbled collapsed in September of 2008, philanthropy and enrollment slowed. According to publicly available financial statements posted on YU’s website, the university then operated in the red. Like many small universities, it hoped the Recession would end and money would soon refill the coffers.
So, for last four years, YU accrued yearly deficits: $106 million in 2010, $46.2 million in 2011, and $105 .9 million in 2012. According to a YU’s Financial statements, during fiscal years 2008 through 2011, the University utilized a total of $110 million from the University’s investment pool to fund operating deficits of approximately $80 million related to the Manhattan Campuses, approximately $9 million related to operating deficits of RIETS and approximately $21 million related to operating deficits of YU-affiliated High Schools.
Already strained by Madoff, the endowment toppled even further. In 2007, YU’s endowment reached $1.4 billion dollars. In two years, it shrunk by $450 million, and, three years later, has only recovered by $75 million. YU’s endowment has shrunk more since its height in 2007 than all other universities with billion dollar endowments in the United States and Canada.
Growth has outstripped funds. Unanticipated scandals shook YU to the core. The “enterprise” that President Joel built is on the verge of collapse. Harvard Business School professor and author of The Innovative University Clayton Christensen wrote, “Fifteen years from now more than half of the universities will be in bankruptcy.” Will Yeshiva University be added to the list?
Yeshiva University—though it faces far greater challenges than other universities—does not stand alone in its struggle. Liberal arts colleges stand at the precipice, as the Recession stymied philanthropic support and as online competition began syphoning away students. Larger research universities that have built opulent services to attract students now find themselves unable to sustain the cost.
According to U.S. News’s Educational Supplement “tuition has generally been driven up by rising spending on administrators and student support services.” Distended middle administrative positions have driven up tuition costs while managerial inflation at Yeshiva has shifted enormous resources away from faculty to extra-curricular and other non-essential services. President Joel again, said it himself, “This last decade has seen the transformation of our academic enterprise, Torah learning environment, student and career services, athletics, infrastructure, and more.” YU has grown too big.
In the last paragraph of his book, Professor Christensen unpacks the shift in attitude that universities must adopt in order to survive the next fifteen years. His words are worth quoting:
University communities that focus their activities and measure success in terms of absolute performance rather than relative rank can enjoy a bright future. If they suppress the compulsion to have everything and instead play to their unique strengths they can achieve much more than they do now. They can be the “best” in the eyes of their own students, faculty members, and public and private supporters. They can serve more of their chosen students at higher levels of quality. They can become more expert in their chosen subjects and practice more individually customized and more influential scholarship. They can contribute more to the intellectual, economic, and moral vitality of the country and the world. If they embrace innovation and give up the ambition to have it all, they can have much, much more.
YU wanted to have it all: a large research university, a platform for Modern Orthodoxy, a Center for the Jewish Future, a museum, a yeshiva, three colleges with over 30 majors, an Institute for University-School Partnership, and many more initiatives. As we are forced to cut back, Professor Christensen reminds us that YU does not need to be—nor, sadly, can it be—everything President Joel envisioned.
If YU cannot endure as the empire that President Joel has ruled for a decade, what should it be? If, as Professor Christensen says, a university must “play to its unique strengths,” what are our strengths?
For a decade, President Joel was instrumental in crafting an expansive community institution that not only catered to students, but became a hub of Orthodox Judaism. Our strength has always been the College and the Yeshiva, but for years, we were riding high on the fortuitous expansions that President Joel pushed through bold spending and tenacious fund-raising. However, five years of crises have weakened the foundations of YU and may force this institution to contract to its former self.
YU can no longer be an empire and President Joel can no longer be an emperor.
“I will not be the leader of Modern Orthodoxy….My role is to educate the future leaders of Modern Orthodoxy,” President Joel told The Commentator after his investiture in 2003. He rightly recognized that YU’s purpose is to educate its students. At its core, YU is both a college and a Yeshiva—the foundation upon which the empire stood. If we are going to cut, we should preserve what is, ultimately, the raison d’etre of YU.