YU In Debt, Says Current Financial Structure Not Sustainable

President Richard Joel says ‘everything is on the table.’

11/26/13
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Yeshiva University is on the financial ropes, struggling to meet payroll.

President Richard Joel sent out a letter last week alerting the YU community that the Modern Orthodox institution’s financial situation is dire and in need of immediate support. On Monday a special board meeting was held to discuss steps that need to be taken in the short term.

“Everything is on the table,” Joel told The Jewish Week on Tuesday, with discussions said to have touched on increased tuitions, reduction of faculty and the sale of property.

Noting that many private universities are “under siege” in these difficult economic times, Joel said YU was “under greater siege,” given its unique role in providing a dual curriculum of both Jewish and secular studies in multiple locations, at a discounted tuition, and with full scholarships for rabbinical students.

The current financial structure is not sustainable, he said, adding: “We are a strong asset-laden university that is asset-rich but cash poor.” The “serious issues of liquidity” have to “raise real concerns about our future direction.”

Several people knowledgeable with the situation confirmed that the issue is critical — “a matter of meeting payroll,” one said. They added that the school has sought to get its house in order after operating in a “hand-to-mouth” manner financially for decades, and is now running significant deficits that cannot be sustained.

At issue, they asserted, was whether the Jewish community, and particularly the Modern Orthodox community, is prepared to step up and ensure the survival and sustainability of its flagship institution. If not, they said, it may not continue “as we know it.”

They and others believe that there is sufficient wealth in the Modern Orthodox community to keep YU viable, though acknowledging families are under great stress in meeting increasing day school tuitions. “It’s a matter of matching support to need,” one insider said.

It has been reported previously that YU, which was hard hit by the Madoff scandal in 2008, had a deficit of $30 million. No figure was given as to the current situation. In addition, Moody’s recently downgraded the school’s credit rating and for the last year it has faced a $380 million sex abuse lawsuit.

In his letter last week, Joel noted that in the last five years the school “downsized administration, froze salaries and decreased retirement contributions and departmental budgets.

“We intended to achieve a balanced budget by this year so that we could then begin to reverse the trend of cutbacks. Despite our best efforts, we have not yet succeeded.”

He noted that staff and lay leaders are working to “reframe the way we educate and dare to think outside of the box. Our new strategic vision must focus on our core, look to further integration and efficiencies between schools and find new programs and revenue producers, including online education.”

Scott Goldberg, recently appointed vice provost, will specialize in global education opportunities, and a new provost, with an expertise in online education, is being sought over the next several months.

Joel’s letter said YU is exploring “all aspects of our operations to increase revenue, improve operational efficiencies and manage costs. We require more support and more philanthropy. We must distribute financial aid more deliberately.”

Now in his 11th year as president, Joel is generally given high marks for the innovations and spirit he brought to YU. Early on he focused on committing to excellence, improving the quality of education through increased tenured positions and extending YU’s reach by creating the Center for the Jewish Future, which broadens the school’s role in the community and exposes its students to the wider Jewish world.

But five years ago Joel’s grand vision ran up against the Madoff scandal directly — YU had invested heavily with Madoff and lost well over $100 million. Since then some supporters have questioned Joel’s ambitious plans, and he has had to modify his goals to fit the times.

Some now see the Center for the Jewish Future as a luxury while others note that the student-faculty ratio of 6-to-1 must be increased. Suggested cost-savings ideas also include charging tuition for rabbinic students, reducing student services and cutting back on the number of credits students get for their post-high school year in Israel yeshiva study.

While YU is anchored in, and helps define, the Modern Orthodox community, it also serves other segments of the community, particularly in its graduate schools, which include the Albert Einstein Medical College and the Benjamin N. Cardozo Law School. Funding has come from a wide range of philanthropists. However, several of the major foundations in the Jewish community do not support YU financially, based on their assumption that the Orthodox community is growing, and thriving in many ways, and does not need their support.

No doubt YU’s administration would argue, in light of its current difficulties, that such thinking is shortsighted. 

gary@jewishweek.org

Last Update:

12/03/2013 - 18:49

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YU is no longer needed.Touro can fill in the gap. We live in a changing world and Modern Orthodox is old school.

YU, like many Universities, seems to be a tale of two cities with "rich schools" (e.g. Einstein and Cardozo) subsidizing "poor schools" (e.g. Yeshiva College and RIETS). In this case, though, the "rich schools" are not intrinsically part of YU's primary mission; and yet, without them, the Centrist Orthodox mission of YC and RIETS could not be met.

Perhaps it is time for unorthodox solutions. For example, perhaps RIETS should be funded by the revenues of OU Kosher since its primary Roshei Yeshiva are not really Modern Orthodox in any case.

"with full scholarships for rabbinical students"
Does this even make sense?

Tens of thousands of Jewish undergraduate students in the US would be proud to attend a Jewish "Notre Dame" if one existed. A large, modern, open-minded Jewish university that welcomed all kinds of Jews. One that endeavored to train graduates to attend to the needs of the entire Jewish community, and dare I say, world community? Modern Orthodoxy doesn't need to hide away in the Heights, safe from all those "misinformed" Jews of the world. The Orthodox believers at YU need to think bigger, and allow the institution to jump, head first into the marketplace of ideas and withstand the upheaval that a transition of this sort would surely cause. If "truth" really lives on YU's campus, there aught to be along with it the confidence and responsibility to share that truth, and teach the whole next generation of Jewish parents why grasping dearly onto their Jewish identity and lifestyle is a mission every bit as important and life-improving as the study of any major.
To set off on this path, would not only move YU to a position where it could experience growth and financial sustainability, but it would also act as a life preserver for the shrinking North American Jewish community. Stubbornly looking backwards in an effort to keep the flimsy walls of the shtetl standing will bring us all one step closer to the end of North American Jewry; and If the Messiah doesn't come by then, we'll put a blanket on the horse, load up the wagon, and move on to the next medinah.

Fire Joel - He FAILEd.

As I previously suggested perhaps Sheldon and Miriam adelson can assist.There are no
major elections now so perhaps they can divert millions from campaign contributions to saving a great university and it's mission.
Also, even in good times, the salary and perks the school president receives is outrageous.
Finally-there are thousands of successful YU business people,doctors, lawyers,etc
who owe their success to YU and now must contribute heavily to get the school back on a sound footing.The school president has to raise many more millions this way.
Bringing in Jewish stars such as the adelsons,Lieberman,sacks,spielberg and hollow-wood , NBA, etc., to form a world-wide committee.
Qwetching alone won't do it !!

Tell Joel to kick back some of his million dollar a year compensation.

YU should be closed down. YU covered up the abuse case and treat their students like second class citizens. The top YU managers reap huge salaries.

Richard Joel is not a scholar, either rabbinic or secular. He was brought in as an administrator and fundraiser. As an administrator he did not prevent Madoff. He seems to be unsuccessful as a fundraiser. He seems to be a nice guy, but why does he still have this job? How about Senator Joe Lieberman, or Malcolm Hoenlein for fundraisers? Or Robert Auman for a prestigious scholar? I assume Jonathan Sacks would not take the job.

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