So, we’ve managed to get rid of Einstein, and with it two-thirds of our debt. Of an estimated $150M annual deficit, we’re now down to $50M – Einstein supposedly accounted for $100M. Which begs the question: how do we fill a $50M hole? More specifically, how do we fill it with sustainable and increasing cash flows?
As always, it comes back to increasing revenues and decreasing costs. Let’s start with the former. In my conversations with President Joel, the president pointed to two specific revenue-raising initiatives: increased donations, and YU Global.
Obviously, fundraising is not a long-term plan. No university can survive on acts of generosity alone – no matter how generous. In 2006, YU received a $100M gift from businessman Ronald Stanton. Of that $100M, one must wonder how much is left, considering that $250M of our valuable New York City real estate is currently collateralized against debt.
Nor is YU Global a real remedy. The grant-funded program hopes to cut costs by offering virtual “blended courses” across YU’s campuses and raise revenues by granting online degrees to the East Asian market, a part of the globe that has long held a unique fascination with Judaism and its Jews (think Koreans studying Talmud). Whatever YU Global is – and I don’t think the program’s leadership has quite defined it yet – I cannot imagine that it is a sustainable solution. For one, it competes against much larger rivals, with deeper pockets, bigger faculties, and more robust online education platforms. Why get a degree from YU when you can get a degree from Harvard, MIT, or Princeton? Why use YU’s fledgling platform when you can use Harvard’s well-developed classroom forums? For another, what does it say about our brick-and-mortar education if YU’s savior is an unproven online startup? Ultimately, such an initiative tarnishes YU’s reputation in the murky waters of global e-commerce.
More realistically, short-term revenue will have to be raised by involving YU’s real estate holdings. As mentioned, approximately $250M of it is currently collateralized against debt, out of a total of approximately $1B if we include Einstein’s $500M Resnick campus. This means that we can’t sell a large portion of our real estate. However, we could raise revenue in other ways, perhaps via leasing. Still, though, artfully managing our real estate is not a long-term plan.
Then there’s the other side of the equation: cutting costs. Alvarez and Marsal (A&M), the consulting firm hired by YU to turn around the institution (for an estimated $9M – $12M over the course of 14 months), believes the solution lies in cuts. While A&M stresses its focus to maintain the continued excellence of the undergraduate and graduate programs, there is no doubt that the YU of the future will be heavily stripped down.
For students, cuts mean a number of major changes. Class sizes will be larger, and the small student-to-faculty ratio that traditionally served as one of YU’s major draws will increase, detracting from an intimate educational experience. Departments will be cut and merged, with smaller morning and afternoon offerings. Student leaders can expect less money to plan events, of which there will be fewer in total.
For faculty, the situation looks worse. Teaching loads will increase, allowing less time for research. While tenured and tenure-tracked faculty will stay on, large numbers of contract faculty will be replaced by adjuncts that cost a fraction of the price and can only add a fraction of the value. To illustrate, adjuncts typically make between $3,500 and $6,500 per course. The average adjunct, then, must teach 12 courses to receive an income of $60,000. The average New York City-based adjunct will therefore be teaching hundreds of students spread across 12 courses at – for example – Fordham, City College, Manhattan College, Columbia, and YU. Cutting contract faculty for adjuncts can only mean a lower quality “fast food” education.
Further, using adjuncts might not prove as cost-efficient as hoped. A recent article in the Wall Street Journal highlighted the unionization of adjuncts at universities across the country, where adjuncts have increased from 43% of total US college instructors in 1975, to 70% in 2011. According to the article, the National Labor Relations Board – the same board famously overruled by a 1980 Supreme Court ruling in NLRB vs. Yeshiva that allowed YU to deny its tenured faculty unionization – has pushed for more union action at private religious schools, among others. This means higher pay for potentially unionized adjuncts, reducing ultimate cost savings.
Granted, there seems to be no alternative at this late stage. We do have to cut costs, and personnel do make up a large percentage of our overall cost structure. However, shouldn’t our teaching staff be the last to go? Instead, shouldn’t we be taking a harder look at our top-heavy administrative body?
In writing this article, I found myself returning to one question raised often in my conversations with faculty, administration, and students: what exactly is Yeshiva University? More precisely, are we a small liberal arts college, a vocational school with Sy Syms at the fore, or a Yeshiva with some secular courses thrown into the mix? YU used to be the only real option for Modern Orthodox college students. It no longer is. Orthodox students looking for quality liberal arts or business educations can join strong Hillel communities at Columbia, Penn, and NYU. Less expensive yeshiva options exist at Landers and Queens College.
President Joel would say that our mission is to “ennoble and enable”, and President Emeritus Rabbi Norman Lamm might point to “Torah u’Madda”. However, neither gives an ironclad reason to attend or support YU, given its high price tag and the number of viable alternatives.
A recent article in the Observer quoted one unnamed faculty member at a recent meeting suggesting that YU “stop trying to be all things to all people [and choose] between the Harvard and the Touro.” I would agree. Before YU Global, before sweeping cuts to our undergraduate education, let’s figure out exactly who we are. Defining ourselves concretely will provide us a more accurate barometer by which to measure the difficult choices that lie ahead.