The Committee to Save Cooper Union

THE STATE OF THE COOPER UNION

Dear Alumni and Friends,

The following is former Trustee Mike Borkowsky’s statement to the Board of Trustees in response to Richard Lincer’s email dated July 18, 2014. We thought this would be of interest to anyone supporting the Committee to Save Cooper Union’s efforts.

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THE STATE OF THE COOPER UNION

From the beginning of his presidency, once he grasped the severity of the financial situation, Dr. Bharucha poured a great deal of his energy into building a rationalization for imposing tuition. He thoroughly reviewed the history of the school and the writings of Peter Cooper to find support for the preconceived “vision” that tuition was the only solution to the financial problem. While he talked of tuition being the “last resort”, his actions proved it was the first resort. The same amount of energy was not put behind the cost reduction alternative. The prime example of that is the creation of the Cost Reduction Task Force. It was created ostensibly to solve the deficit problem, but given the charge that it could not consider any cost reduction which would involve union negotiations. Since the vast majority of costs would involve the unions, it had no chance to provide a viable cost reduction alternative. The second major example was the effort of The Working Group. It was authorized by Dr. Bharucha as one of the negotiated agreements to end the occupation of his office. Yet, it was not only not supported by him or the members of his administration who were appointed to the group, it was obstructed at every point. And its findings were rejected out of hand without any discussion with members of the Working Group.

That is the fundamental issue here. This is not a battle between The Committee to Save Cooper Union and The Cooper Union’s Board of Trustees. It is a battle between The Cooper Union as a unique and extraordinary institution of higher education and The Cooper Union as just another college. A majority of the students understands that. A majority of the faculty understands that. A majority of the alumni understands that. A majority of the Board of Trustees does not.

The Charter and the Deed of Trust give great latitude to the Board of Trustees to preserve and manage the institution. Whether or not it binds them specifically and legally to maintain free tuition is a debate for others to have. But I believe that they are bound, as are all college trustees, to at least maintain if not improve their institution’s standing within the very competitive framework of American higher education. The full scholarship and pure meritocracy that has defined Cooper Union for the past 100+ years may not be precisely aligned with Peter Cooper’s original vision, but it has become unequivocally essential to the school’s high standards of excellence in both reputation and academic performance. It is on that measure that Cooper Union’s current Board of Trustees has not fulfilled its fiduciary responsibility. It has not done all that was possible to maintain the unique character and heritage of the institution. Instead of a conscientious and disciplined effort to live within its means—to bring operating costs in line with its projected revenue stream--it has jettisoned Cooper’s unique competitive strength for the expedient alternative of a tuition revenue stream.

The communication of July 18, 2014 to the Cooper Community from Board Chair Richard Lincer outlines the rationale for its motion to dismiss the Committee to Save Cooper Union’s lawsuit. It includes three major points:

• new plans of action under the tuition plan which, in the Board’s view, actually enhance the school’s competitive standing,
• the historical nature of the financial challenges that the school has faced, and
• the apparent “success” of the new plan in terms of the results achieved with the entering class of 2014.

There are issues with many of the statements made in the letter. Having served on the Board for 17 years and having authored a financial history of the school at Dr. Bharucha’s request, I cannot allow misstatements to be circulated throughout the Cooper community without challenge.

Financial Support Under the Tuition Plan

The letter states, “…the new plan retains the basic principle of admissions based solely on merit and provides for supplemental need-based aid…..” The fact is that President Bharucha committed to the meritocracy for only the first year, until the school generated experience with the impact of the tuition plan on admissions and student body quality. That hedge will allow the pure meritocracy to be abandoned whenever the tuition revenue falls short of projections. As is the practice in many colleges, admissions policy incorporates “ability to pay” as an important criterion for applicant selection. As the meritocracy is abandoned, the quality of the student body will diminish. The combination of tuition charges and a decline in the school’s reputation will further diminish the number of applicants and, therefore, the school’s reported selectivity. This is the beginning of a downward spiral that is inevitable. The imposition of tuition has no chance of improving Cooper Union’s reputation or its academic quality. In fact, it is guaranteed to do exactly the opposite.

The promise of increased access for the economically disadvantaged was a unique and important one when Peter Cooper founded Cooper Union. It is still important but certainly no longer unique. Cooper Union evolved to a pure meritocracy as other colleges began increasing access to the economically disadvantaged. It is both the full scholarship and the pure meritocracy together that created and sustained Cooper Union as a unique and extraordinary institution. Now one of those pivotal characteristics has been lost and the other is doomed to follow.

The Cooper Union’s Financial Challenges Are Not New

They certainly are not. But they do not go back 50 years as the letter states. They go back 150 years. There were deficit years and surplus years. Revenue varied depending on donations, bequests and market fluctuations which are difficult to project with certainty. In fact, in the Autumn, 1964 edition of “At Cooper Union” (page 15) then president Dr. Richard Humphreys discussed the financial issues. I quote him: “It is a startling fact that in the 67 years between 1859 and 1926 there were 35 deficit years—in effect, in one year out of every two the income was insufficient to meet the expenses.” So, while deficits were a consistent historical problem, they were of short-term duration until the early 1990’s when a drop in revenue from the Chrysler building created a chronic operating deficit gap. The gap needed to be filled each year by pulling funds from the endowment, a disastrous issue if done year in and year out The failure of the administrations and boards of the past 20+ years to respond adequately to the lost revenue by reducing costs has been the fundamental cause of the financial crisis. That was compounded by the failure of an unrealistically ambitious $250 million capital campaign and the impending failure of a heritage-destroying imposition of tuition.

President Bharucha has repeatedly claimed that cost reduction was a failed strategy and that the school had to sell off properties in an effort to sustain the full-tuition scholarship. That is misleading in its lack of completeness and in its implications. The truth is that there were often other considerations in the decision to sell off properties. And a more realistic interpretation of those actions would be that historically the Trustees of Cooper Union have truly considered tuition to be a last resort and did everything they could to sustain the full scholarship because they recognized the devastating impact tuition would have on the reputation and unique qualities of the school.

The reality is that cost reduction is not a failed strategy because it has never been implemented or even tried to be implemented on a level significant enough to eliminate the structural deficit that originated in the early 1990’s. There has not been an administration or a board of trustees willing to take on the challenge of creating a well-thought-out change in the operating cost structure that was significant enough to eliminate the structural deficit. Jay Iselin, while a capable and very well-liked president, was rarely inclined to turn down spending requests. George Campbell’s enthusiasm and unbridled optimism produced a wholly unrealistic fund-raising goal and a presidency dedicated primarily to getting the new academic building built. Campbell committed to a significant operating cost reduction (10%) in the Cy Pres document in 2006, but he never accomplished it. Jamshed Bharucha has also chosen the path of generating revenue rather than the more difficult but more certain path of living within our means. But he has chosen to pay the most serious price for that decision—the destruction of the mission, the excellence and the uniqueness of Cooper Union.

The Future and the Class of 2018

A classic strategy when engaged in an inevitable lost cause is to declare victory and go home. The Board has carefully selected some data to support its declaration of victory even before the first class to pay tuition has enrolled. There is no mention of the fact that the number of applicants for this class declined significantly. An earlier communication added the phrase, “as was expected”, as if that made it a non-problem. But it is a problem because as the school’s standing among the top tier of colleges on selectivity declines, it will negatively impact the application decision of the top high school students in future years. So that downward progression has already begun.

The yield percentages, particularly in Art and Architecture have also declined. Clearly the decision to attend Cooper if admitted is no longer a virtual certainty in those schools. And what will happen when the students who are required to pay the full tuition amount arrive on campus and realize that there is no campus? No gymnasium…no cafeteria….virtually no amenities at all. While that fact may not have been critical to Cooper students in the past, it is less than certain that it will not be an issue to those who are paying a significant amount of tuition to attend.

The letter concludes with the statement by Mr. Lincer that he is “absolutely confident that we have acted in the best interests of the institution”. That confidence is not shared by students, alumni or faculty, the three most important constituencies of the institution. It is not shared by all current board members or by many former board members. But this board has chosen to plunge ahead with its decision because the president has no interest in attempting any alternative and the board has no interest in seeking a president who would be. This was clearly demonstrated by the reaction to the Working Group plan. If tuition was viewed as a last resort rather than a direction of choice, there would have been a willingness to support the Working Group effort and thoroughly review specific elements of the plan with members of the Working Group. Cost reduction and change are extremely difficult things to accomplish, particularly in an academic environment. But there was unprecedented support within the institution to reduce costs and to effect change because so many realize the damage that will be done to this institution by the tuition decision. It seems to be only the Administration and the Board of Trustees that has failed to grasp the legacy of destruction that their action will bring.

Michael Borkowsky
July 24, 2014