The Einstein Equation
By: Arieh Levi
There’s a fine line between pessimism and realism. Where a pessimist sees a half-empty glass – careful to emphasize ‘empty’ in describing the glass – a realist sees a single cup holding water. No superlatives or adjectives are necessary to describe the realist’s world; data is simply collected, questioned, and forged into reasoned analyses. It is a mechanical and computational process, most effective when performed divorced from emotion.
Our data-driven society straddles this human divide between pessimism and realism. Forward-looking pessimists – cynics – assume the worst about an event before it has occurred, painting a dark outlook. This cynicism has become fashionable in our postmodern culture, as we read the data of our past and present to arrange the tealeaves that tell our future.
Yeshiva University is not immune to such cynicism. In my time here, I’ve seen it bandied about with abandon. It invades the classroom and Shabbat table, as conversations between both students and faculty orbit around YU’s attempts to invigorate its aging curriculum, or around courses no longer offered by departments with tightened belts. More often, talk circles around the current financial crisis and associated restructuring. Historically, this publication has joined the fray.
However, such cynicism is poisonous and ultimately harmful to the broader YU community. Instead, we must engage with the data and not shy away from difficult decisions ahead. Realism is our only option. Cynically judging our storied and beloved institution’s future must not be tolerated. This is not to say that our current situation is rosy. To the contrary, the numbers are difficult to grasp – frightening, really – and do not lend toward optimism by any stretch of the imagination.
Here’s the current situation: (1) according to Moody’s, we’re facing a liquidity crunch that threatens YU’s daily operations; put simply, YU is running out of cash, with diminishing revenues and increased expenditures. (2) To compensate, YU is drawing on a $175 million line of credit, (3) has hired consulting firm Alvarez & Marsal to the tune of purportedly $10,000 per day, and (4) is selling off valuable real estate in both midtown and Washington Heights.
Here’s how we got here: (1) increased spending, (2) decreased revenue, (3) and investments gone sour. In a recent sit-down with The Commentator, President Joel pointed to a lack of effective financial controls as contributing significantly to our current situation. I find such blame misplaced; aging accounting systems don’t put a university on the verge of bankruptcy.
No doubt our current situation has more to do with President Joel’s well intentioned spending initiatives, which lost the necessary funds in 2008 as risky investment decisions took a big bite out of YU’s endowment and cash-at-hand. Rising college tuition nationally, sinking household income nationally, and inexpensive local alternatives (e.g. Queens, Landers) lowered revenues and created the perfect storm. A lawsuit spun things out of control.
Which brings us to today. Toward the end of last semester, the broader YU community received word that the Einstein-Montefiore deal, which would have handed off the financial burden that is Einstein (two-thirds of YU’s operating deficit) to Montefiore, had collapsed. As Moody’s reported, YU “delayed implementing significant expense reductions at the medical school […] during the six months of negotiations.”
While the exact reason for the deal’s failure remains confidential, one can imagine it had something to do with price and governance of Einstein. An article in Crain’s noted as much, citing a YU statement that pointed to “Einstein's governance and operation” as a source of contention. In my conversations with President Joel, the president expressed his determination to keep YU the degree-granting body for Einstein.
However, YU is in no position to make demands, as Einstein’s survival – and by extension YU’s survival – hinges on Montefiore’s cash and its willingness to assume Einstein’s debt. By simultaneously missing this deal and not addressing Einstein’s structural problems during the same negotiations, YU has lost all bargaining power and any hope of gently jettisoning its heaviest cargo.
A recent unanimous vote of no confidence in Yeshiva University by the faculty senate at Einstein emphasizes this situation’s urgency. According to one faculty member quoted in the NY Daily News: “If the deal does fall through for good, the fear is that the research programs would be shut down [and] hundreds of people could lose their jobs because of this.”
Either Yeshiva gets rid of Einstein and stays afloat, or Einstein brings down both institutions together. Looking to the future, as students and faculty brace for inevitable cuts and drawbacks, we must maintain our sense of community and invigorate our collective optimism. While the facts and figures do not paint a pretty picture, we must believe that the vibrancy and urgency of our mission warrants its continuity.