Financial Update: Jamshed Bharucha

Marcus Michelen (BSE ‘14) and Saimon Sharif (CHE ‘15)

There are many rumors circulating that concern the future of Cooper. With anxiety surrounding the upcoming meetings of the Board of Trustees growing at uncontrollable rates, we reached out to President Bharucha to give us a more clear picture of Cooper’s future.

The Cooper Pioneer: The last Board of Trustees meeting was on September 19th. Could you summarize the outcome of this meeting?

Jamshed Bharucha: The outcome was to set the stage for the next meeting (the December meeting) by setting out the timeline I had communicated to the deans and the faculty of the three schools. November 15th would be the date by which the faculties of the three schools would agree on a plan to go forward. I would integrate those plans and take them to the board meeting in December. That was basically the outcome of the meeting – a timeline.

The board would then digest the plans. including my own recommendations, and they might take some time to do that. So there won’t be an announcement in December, but in the New Year at some point we would announce any decisions that might have been made. At the board meeting, we talked about the three criteria that should be considered in the strategic planning that the faculty are engaged in.

The first is maintaining academic excellence. Cooper Union has the finest student body, bar none, in my opinion, and that is our great asset. Together with the excellence of the education and the excellence of the faculty, Cooper has an unparalleled learning community.

The second point is vision. The plans should be not just to solve a financial crisis, but an opportunity to position our schools and programs for the future. The future of the city, the future of the country, the future of the world.

The third is that the plans must be financially sustainable. All three go together and I’m happy to elaborate on any of those. So the board discussed all of those pieces, what might a vision be like, what constitutes sustainability, and why.

TCP: Is the financial sustainability criterion specifically just quantitative or is it also based on reliability?

JB: Sustainability has to include an assessment of the risks of that plan. Any plan has risks. And any plan has pros and cons. A lot of people come in every day telling me what the cons are and what the problems are about any given option, but a lot of people also come in with solutions and plans that are not only viable but very exciting. I think we need to focus on those.

TCP: In the event that the Board of Trustees decides to close one of the three schools, what would happen to current and incoming students?

JB: I said when I spoke in Rose Auditorium a year ago in October, quite forcefully, “I’m not here to close a school.” I’m a teacher, I’m an educator. I’m here to ensure that Cooper Union thrives. Thriving, to me, means that we continue to operate and we do so in a vibrant way.

Obviously, we’re in a tricky situation. We have to be mindful of all possibilities, but we have already stated in April that the class coming in the fall of 2013 would be admitted without any alteration of our policies and that would see that class through. Should any of our current policies change, they would only affect classes beyond that, except for the master’s degree in architecture. That degree, which is well established and attracts top students from around the world, would have a change in policy, starting in the fall.

TCP: I understand that it’s your role to make sure the schools do not close, but it is my understanding that in December, it is the purpose of these financial plans to decide whether the three schools are going to stay open. Is this correct?

JB: It’s more complex than that. It’s more subtle than that. The goal is to stay open, to survive and to thrive. In order to do that, the plan has to be sustainable. It’s almost axiomatic that if the plan is not sustainable, it cannot be sustained. I’ve said and I believe very deeply as a faculty member that the faculty is at the core of our educational enterprise. I don’t think any faculty member would disagree with that. I cannot impose a plan, nor can the board, and I have made it clear to the board that neither of us could impose a plan over the objection over the faculty ; it won’t work because the faculty are teaching the students. The faculty have to believe and support not only the educational programs that they provide, but also the philosophical basis of those programs.

So the purpose of the faculty focus this fall is for the faculty to find where they can agree on a model that has these components. Faculty agreement on a sustainable model has to be a foundational assumption, it seems to me, in order to be sustainable because you can’t have a successful institution if it is operating in a state of dissent.

Lincoln said: “A house divided cannot stand.” It’s the same thing at Cooper Union. Obviously there’s going to be disagreement, and not everybody is going to support every piece of every plan, but I think the faculty of each school must (and they are doing so with admirable commitment) come together to support a plan that is appropriate for that school. It’s also not a one-size-fits-all. Engineering is quite different from Art, even though we are a union.

I want to work very hard to find ways for greater collaboration between the schools, to bring the advancement of science together with the advancement of art. But the fact of the matter is that you are enrolled in a particular school and there’s a curriculum Even as we try to bring the schools together, it’s really the faculty of each school that understands best what’s appropriate for that school. Faculty support for a viable, strong solution that is academically excellent, visionary and financially sustainable is the goal here and is a prerequisite for what we do.

TCP: If one of the schools fails to meet one of the three criteria, however, what would then happen?

JB: It’s my job to make sure that it doesn’t happen. I’m not just waiting until November 15th. I’m working with the deans and the faculty. We’ve provided them with the resources in terms of expertise and consultants to cost out various plans and to look at the benefits and the risks. I’d say that this point, all three schools have bought into the process. We are committed to making something that works.

So there’s no point talking about the “what-ifs”. We can talk about all kinds of “what-ifs” but I think we’re here to make it succeed. I would say, as of today, we’re already at a point where the faculty are engaged in constructive dialog. Obviously if a school comes up with a plan we think is not viable, then I think the first thing we do is go back to the school and say, “this is a problem. Let’s try and fix it together.”

As long as there’s that will to engage in vigorous civil discourse and overcome differences, we’ll find solutions. Will they be easy? No. If you’ve seen some of the financials, you’ll see why. We can’t be sanguine. There might still be pockets of our constituencies who feel that there are solutions that don’t involve difficult decisions, or who feel that the financial problems are caused by this or by that, by the building or by an administrative bloat or so on and so forth.

I think you’ll see if you actually go through the numbers, that there is a long standing disconnect in the budget that goes back at least forty years that was greatly exacerbated in the early 1990s because of the falloff of the rent streams from the Chrysler building. That has been overcome through the years because of super-charged stock market returns, because of selling assets, because of borrowing, and now we’re at a point where there are no stock-market returns and we don’t have that many assets left to sell.

We’ve borrowed a lot of money and now it’s time to say, “Let’s make it sustainable.” The principle source that has funded the Cooper Union since the Chrysler building was built in the 1930s does not keep up with inflation, even with the lowest assumptions about inflation. Expenses are exponential, because of inflation. Higher education inflation is around 4% to 5% annually.

Even if we assume a 3% inflation, which would be the consumer price index for items other than healthcare, and then 7.5% a year for healthcare. Remember that benefits are roughly 9 million dollars out of our 60 million dollar budget. If the healthcare benefits are growing at 7.5%, you’ve got an exponential function where the expenses are compounding by a blended inflation rate that’s 7.5% per year for healthcare expenses and roughly 3% to 4% for other things. We can talk about shutting down this, or cutting that cost, and we’re looking at all the possible ways to cut cost.

But in the end, cutting costs brings down the y-intercept and shallows the exponential growth; but eventually the exponential function catches up. On how Cooper Union is funded, there are many funding sources, but the main one is the Chrysler building. There are two components to that: the rents and the tax equivalencies. The rents are on a step function with a flat portion of the step that goes for ten years. Now the next step up is 2018-19, when we get a big boost in rent. But there’s a mistaken belief out there that that solves the problem.

The reason it’s mistaken is that after that it’s flat again, the exponential cost function eventually overtakes that no matter what assumptions you make about spending cuts. The following step-up in 2029 is so small as to not be able to mitigate inflation, and you’ve got a situation of mounting deficits as far as the eyes can see. Actually this problem was known as early as 1969. It’s just that the institution took a number of steps: they closed Green Camp, they closed the physics programs, they sold the Bowery Bar, got rid of the Cooper Hewitt museum.

Those were all well-intentioned decisions to try to preserve the full-scholarship for all enrolled students. But as I see it now, we are at a point where we have to come up with a sustainable model. We have the time to do it while preserving academic excellence and being visionary. But if we wait too long, it becomes harder and harder to do something that’s visionary.

TCP: I don’t want to go too far into the “what-if”, but is it true that regardless of what happens with the Board of Trustees decision later this year or early in 2013, that all current students would be able to finish their education at the Cooper Union?

JB: Yes. All current students would be able to get degrees from Cooper Union, assuming they meet the requirements.

TCP: Last year, it was announced that the engineering grad school would start charging tuition. Where are with that plan now, exactly?

JB: Actually, that wasn’t quite accurate. The announcement was that we are going to lead with the hybrid model which was, and still is, the idea that the more revenues you can get from programs other than the undergraduate programs, the smaller the problem becomes. If you ever do have to go from 100% tuition scholarships to something less than that, the burden is greatly lessened by these other programs. The architecture graduate program will start contributing to their revenue target. If the engineering faculty decide that that’s not the place to go, that there are maybe other ways, then that’s an option. We have not actually decided that engineering master’s program will start charging tuition. It may happen. It may not happen. There may be new programs. There may be changes in our current policy. All of that is part of the planning process under way.

TCP: Do you have any closing comments that you would like to say?

JB: I do. I think that it’s really important to remember that in spite of all this, Cooper Union has a brilliant future. I assure all of our current students and former students that your degrees will be ever more respected and worthy as time goes on. We will overcome these challenges, not without controversy, not without difficult decisions. Anybody that tells you there is a straightforward path forward, I believe, does not understand the problem. It is complex and only can be understood if you’re prepared to understand the complexity. But we will overcome it.

The community is coming together as we’ve gotten more information out, through FAQs and other means. [Vice president] T.C. [Westcott] has met with people and continues to, and I meet with people every day to facilitate communication. Cooper has a brilliant future.

New York City is going through a renaissance. It’s the most exciting time in New York City’s history in easily half a century. I go to lots of meeting at the mayor’s office and with business leaders and educational leaders in New York. As you know, the mayor has launched this technology initiative to make New York a leading technology innovation city. New York is already a design center.

We at Cooper have, in some sense, many of the ingredients: we have a school of engineering, a school of art, a school of architecture and a faculty of humanities and social sciences.

If we can bring those together in exciting ways, which we will, we can position ourselves within this new New York renaissance, particularly since we’re in such a hot neighborhood as well as being one of the most exciting institutions contributing to the city, the country and the world.

I see this as opportunity – not without a lot of hard work and not without some bumps in the road. I can assure you that whatever plans we announce in January, they’re going to need modification because whenever you’re doing new things, you learn as you go along. We will come out at the end an even stronger institution. We will attract the very best students. We will provide an exciting education.

Looking back people will say that this was opportunity seized in the wake of a crisis. I hope that people will join me in doing that. I do think that in terms of the discussion in the community, understandably, there was anger and indignation because it was quite a bit of surprise that Cooper Union had these challenges.

But I think that as we go forward, the tone has become a lot more positive and constructive as people approach it from the point of view of “how can I learn the facts” and “how can we brainstorm solutions” and “how can we come together”.

Even though we might have differences, in a civic debate, however vigorous, if we can have those conversations as we are having now, in a constructive and respectful way, we should be able to demonstrate to the world that the country should be able to solve its problems. We are an educational institution. We can set an example for how people can come together, and perhaps our politicians can follow our example.

Peter Cooper wanted students to learn how to engage in democratic civic discourse, which means disagreeing vehemently but respectfully, based on fact and reason. People ask me, given all the protests, what motivates me, I have one word answer: it’s the students. Every time I get to meet with the students, whether it’s on Cape Cod with the athletes, whether it’s with the origami club or the class that I teach, or meetings that I have with students, I’m reminded of that. That’s why we’re here, is for the students. That’s why we will succeed.

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