Why Cooper Union can’t be trusted
Remember the murky finances of Cooper Union, which went from healthy to disastrous in no time at all? There’s a lot of controversy about what went wrong, where exactly the problems lie, and what’s the best way to fix them. But one thing’s abundantly clear: the management and trustees of Cooper Union have been unhelpfully opaque about the college’s finances for years, and the college’s students and alumni are fed up with the “trust us, we’ve worked it out this time” approach.
The first thing that’s needed, before any big decisions about things like tuition fees, is transparency about Cooper Union’s finances, and generally much more openness and clarity from management. After all, this is the place where contractor Jonathan Rose got a $2 million contract to oversee the new flagship academic building,
while before* his mother Sandra Priest Rose sat on Cooper’s board of trustees — all without any kind of disclosure as to how he was selected. Was Sandra Priest Rose’s pledge of $5 million towards the building contingent on her son getting that contract? No one knows.
But transparency, it turns out, is exactly the opposite of what we’ve ended up getting. Yesterday, Cooper Union’s president, Jamshed Barucha, posted a “framework for action” on the college’s website. In it, we’re told that something called the Revenue Task Force has released an “interim report” which has “recommended” that Cooper “explore” charging fees for “academic programs that build on our unique strengths”, which “may include master’s and other professional programs”.
All of which sounds rather tentative, but in principle the timing here is propitious. Tomorrow sees the Second Community Summit at Cooper Union where the Task Force’s report could be discussed and debated.
Except, discussion and debate isn’t really what Cooper is looking for here. Barucha has not released the Task Force report, and shows no sign of doing so. And for all the qualifiers in his note, it’s quite clear that the decision has already been made. “Cooper Union to Charge“, says the WSJ; “Cooper Union Will Charge Tuition for Graduate Students“, says the NYT.
The WSJ is a good guide to the official Cooper Union line:
The school’s economic troubles date to the early 1990s, when rent it received from the land it owns under the Chrysler Building decreased from $13 million to $11 million while school expenses increased.
It’s far from clear that this is even true: Barry Drogin, for one, who has looked into this issue very deeply, says quite unambiguously that “the Chrysler Building rent and payments in lieu of taxes (PILOT) have risen steadily every year, with large increases scheduled every ten years starting in 2018.” In any case, the Chrysler-building-rent problem is long solved. Revenue from the building will be $32.5 million in 2018, $41 million in 2028, and $55 million in 2031. Cooper’s fiscal problems have nothing to do with insufficient income from the Chrysler Building, and the fact that Cooper still seems wedded to that storyline is worrying.
And then there’s this:
Mr. Bharucha said he has received backing for the plan in recent discussions with faculty and alumni nationwide. “There is very strong, if silent, majority who are highly supportive of a plan that energizes the institution,” he said.
I love the idea of a “very strong” majority which is “highly supportive” of this plan — and yet, for all their incredible support, are somehow completely silent. Bharucha might as well have said that pigs fly when you’re not watching them: his statement might be unfalsifiable, but at the same time it’s also completely implausible. Cooper’s stakeholders are incredibly mistrustful of Bharucha and the trustees, and it’s hard to see how even a silent majority could be supporting a plan which exists only in the vaguest possible form.
After all, we’ve been here before. In 2006, Cooper Union filed something called a cy pres petition, in a successful attempt to get New York to allow it to borrow money against the Chrysler Building. That petition only came to light years later: the whole process, at the time, was shrouded in secrecy. And you can see why that might be: even as Cooper was loudly proclaiming its health in public, the petition was saying that “The Cooper Union currently faces the possibility that it will become unable to carry out its statutory mission in the not-too-distant future”; that it “currently faces a grave fiscal crisis”; and that even faced a real risk of losing its academic accreditation.
As part of that petition, Cooper committed to implementing something called a Master Plan, which involved cutting spending, raising $250 million, increasing the amount that alumni donate to the school, and other things, none of which really happened. As the board of trustees reported in 2011, “three key components of the Master Plan were not achieved as anticipated” — all of which were vastly more germane to the current fiscal crisis than any change in Chrysler Building rents in the early 1990s.
In other words, there’s really no reason why anybody should trust Bharucha or the trustees — to have any faith that they’re being fully truthful with the rest of the school, or that they’re in any position to successfully execute on their promises.
And what of the huge new $160 million (ish) academic building? The trustees still say that it has nothing to do with the fiscal crisis, despite the fact that it’s responsible for some $10 million a year in interest payments:
It is also important to state that 41 Cooper Square was not the cause of the current financial dilemma. Its construction relieved Cooper Union of the costs that would have had to be incurred to renovate the old engineering building and the Hewitt Building to make them acceptable sites for a 21st century education and meet accreditation standards.
This just doesn’t pass the smell test. There’s some small possibility that it’s true, but unless and until the trustees show how they arrived at this conclusion, I have no reason to believe them. The engineering faculty actually voted against the construction of the new academic building, saying that they were more than capable of staying where they were at significantly lower cost. (This fact was, of course, not included in the cy pres petition.)
More to the point, there’s never been a coherent account of how exactly Cooper Union ever intended to pay off the massive $175 million loan it took out to construct the new building. It needed its income from the Chrysler Building to pay its annual costs; and of course it doesn’t have any tuition revenue, since it doesn’t charge tuition.
This is the main thing that has never been adequately explained — by constructing the new building, Cooper Union added on a permanent $10 million annual expense, without any stated means of being able to cover that expense. The new academic building is a sunk cost at this point, of course. But until the trustees explain their logic surrounding its construction, it’s going to be extremely difficult to trust them to do the right thing going forwards.
*Update: Finally, some clarity on the Jonathan Rose/Sandra Priest Rose question. Tellingly, it comes from Roxanne Donovan, a representative of Jonathan Rose Companies, rather than from Cooper Union. She says that Jonathan Rose was hired more than a year before his mother was invited to join Cooper’s board; she also says that there was a formal RFP process for the selection of Jonathan Rose Companies.
Why Cooper Union wasn’t able to be transparent about this itself simply baffles me, and really makes my point. Just because you’re being secretive doesn’t mean you have something to hide.