Over the last week and a half, students and alumni have reacted angrily to the possibility of an end to the school’s century-plus policy of free tuition for all students, currently numbering about 900, which has long been funded principally by income from real estate holdings. Citing a worrisome 28% annual deficit, Bharucha, who took office in July, chronicles a growing financial crisis that has been kept under wraps for decades.
With his reserved manner, rimless glasses and gray slacks and blazer, the soft-spoken Bombay native might look more at home in Cooper’s engineering school than among its artists, but drawings and paintings by students and alumni line the walls of his airy office on the seventh floor of the school’s Italianate brownstone Foundation Building, on Astor Place. The office’s windows look to the south and west, onto the school’s sleek new $150 million academic building, finished in 2009, designed by Thom Mayne of L.A.’s Morphosis Architects. It houses the entire engineering program, as well as some facilities for the college’s art and architecture programs.
The school’s twelfth president since its founding in 1859, Bharucha is a 1978 graduate of Vassar College, where he majored in biopsychology. He went on to earn an MA in philosophy from Yale and a PhD in cognitive psychology from Harvard University. Later, he held academic and administrative positions at New Hampshire’s Dartmouth College, and, for nine years before taking office at Cooper in July, served as provost and senior vice president at Tufts University, in Massachusetts.
BRIAN BOUCHER Were you aware of the extent of the school’s financial problem before you took office?
JAMSHED BHARUCHA I knew there was a deficit. You have to spend a lot of time with an institution’s finances to fully wrap your brain around them, and I’m still learning more. But while the community is plunged into a difficult discussion, I wouldn’t want to be anywhere else. I love challenges, and what makes this well worth waiting out is the extraordinary nature of the institution. The students here are smart and creative—I knew that. But they are also totally committed to their work and to a community of learning and creativity.
There is, understandably, a lot of anger, and some raw nerves have been touched. There is so much that the students want to fight for. And I want to fight along with them.
BOUCHER Was addressing the financial situation your first order of business?
BHARUCHA I’ve been discussing it since the day I started. During my first week, I talked about it with the executive committee of the alumni association, and later with faculty forums around this very table.
BOUCHER So the financial problem was known about before you arrived but it just wasn’t discussed publicly?
BHARUCHA Apparently not much was known by the Cooper community, and that is one of the many sources of anger. But if you have a financial problem, you need to put that out there, along with all the possible options, even though some of the solutions under discussion may cut at the core of the identity of the institution for a long time.
BOUCHER What are some numbers that would make clear what the financial situation really is?
BHARUCHA For the last fiscal year, ending June 30, 2011, the true structural deficit was $16.5 million. For such a small institution, that is a huge number. It’s nearly 28% of the budget, which was about $60 million last year. Records reveal that most years have been deficit years going back four decades. The deficit became very wide in the early ‘90s, when rents from our real estate assets dropped relative to the cost of operation.
BOUCHER How was the deficit bridged in those years?
BHARUCHA Three ways. One is through supercharged returns on the stock market in the ‘90s and early 2000s, which provided windfalls that could be used over and above the endowment spending policy. While other colleges were, for example, building gymnasiums and hiring more faculty, Cooper Union was using that money to mitigate the deficit.
Another is retrenchment of assets. When you’re trying to preserve a principle as extraordinary as free tuition for all, you sell off an asset. So we sold the development rights for 51 Astor Place, where the old engineering building was, for $90-some million. And it was cheaper to locate an engineering building at 41 Cooper Square, the site of the Thom Mayne building, because we pay a discounted rent for that site.
The third mechanism was to borrow money. All these things were done to preserve the principle of free tuition for all. But we can’t continue to rely on supercharged stock markets or sale of assets or borrowing. The stubbornness of the current global economic crisis has brought Cooper’s problem to a head. There are no more assets to tap.
BOUCHER Is there a misperception that the school is wealthy? Since Cooper Union receives an amount equivalent to the taxes payable on the Chrysler Building property, which would typically be paid to the city, people must imagine the school is rolling in money.
BHARUCHA There is a huge misperception. In earlier decades, the Chrysler Building covered all scholarship costs. But, again, starting in the early ’90s, the rents dropped relative to rising costs. At present, excluding real estate, the financial portfolio of the endowment is roughly $120 million.
BOUCHER The possibility of charging tuition is the one proposed solution that has drawn the most attention. What are some other solutions that are realistic but more palatable?
BHARUCHA Obviously we’ll strengthen our fundraising, though that isn’t easy in this economic environment. There’s a tendency to think that will solve the problem. But does that option scale up to the size of the problem? Annual expendable gifts account for about 6% of our budget. That includes the annual fund, which accounts for about 4%, and 2% of other expendable gifts. We just e-mailed all these numbers to our alumni this afternoon. Currently, about 20% of our alumni contribute.
BOUCHER How does that compare with other institutions? Is that a good number or a bad number?
BHARUCHA It’s a bad number. Thirty percent is a good number, 40% would be great. But a school that offers a free education should have the highest number in the country. We will increase that. Alumni will rally. And we are grateful for that.
We will also seek large gifts, but those tend to be for the endowment, so they don’t help the deficit directly. There are misperceptions about fundraising: “Just get someone to give you $16 million!” Well, people who give that kind of money typically don’t give it to close a gap.
We could also become more successful at getting research grants, mostly in science and engineering, from the National Science Foundation, National Institutes of Health, Department of Energy and so on. But that will take investment. That’s a long-term revenue stream.
BOUCHER What are you doing in the short term?
BHARUCHA I’ve appointed a revenue task force. Students in all the schools are coming up with amazing ideas. Not just technological innovation and entrepreneurship, but in the art world–how we can leverage our creative work to the benefit of the institution. The task force will gather ideas from all sources–alumni, students, their parents, faculty. They’ll be charged to make a recommendation early in the spring semester for a robust revenue stream with dollar targets.
BOUCHER When will the roster of the task force be made public?
BHARUCHA I hope to announce it this week. Students from each school will be represented, along with the faculty-student senate, the president of the alumni association and other alumni with financial and entrepreneurial skills. As Cooper people, they will know that you don’t tread lightly on a principle like free tuition for all.
BOUCHER It seems like people are blaming the cost of the new building. Should they?
BHARUCHA The trustees will be distributing a statement to the community in the next few days, providing an analysis of its financial impact. It did reduce the total footprint, which brings savings. It’s a platinum LEED building, the first such academic building in New York City.
BOUCHER But did the spending get out of hand?
BHARUCHA The market crash occurred at a time that clearly was not helpful. But it’s a landmark building with extraordinary features. Also, the old engineering building was not fit for educating engineers. It was built before central air-conditioning, never mind computers. So it was constantly being retrofitted. One of the mandates to Thom Mayne was to make the best academic use of every single space in the new building, and to make it flexible to be reconfigured for rapidly changing technology.
BOUCHER But should people be blaming the building?
BHARUCHA The underlying model has been unsustainable. I seem to be the first person saying this. In the bigger picture, the federal budget needs to be sustainable if we want to preserve Social Security, Medicare and Medicaid, and access to health care. A balanced budget means you’re not depriving future generations of their rights and privileges. It’s the same for an institution. If you draw down the endowment too much, you deprive future students of access. My responsibility is to steward the institution for the future.
BOUCHER You talk about sustainability, and the hard question people are asking is, is the full-scholarship model sustainable? You refer to it as a principle.
BHARUCHA It’s been a defining feature of the culture for over a century.
BOUCHER What’s the likelihood you will have to charge tuition?
BHARUCHA It’s on the table as a last resort. We have to explore everything first. There should be no taboos. Raising a taboo subject gets people angry. There is a lot of anger in this city and in this country about financial structures on which we’re dependent but in which we may not have a lot of confidence. There’s understandable anger about what happened here. I’m angry too.
BOUCHER What makes you angry?
BHARUCHA I’m angry about the global financial collapse. Banks were betting against themselves, pooling mortgages, upgrading their ratings, all of that. So the anger is valid. And the anger here is valid. But I’m committed to transparency. When you tell the truth, sometimes it hurts.
BOUCHER As a way to address the anger, what about an audit of the finances?
BHARUCHA I’ve asked the trustees, in response to legitimate questions and demands, that they articulate to the community the institution’s financial history and that they make themselves available in a public forum. That is being planned for Monday night, Nov. 7. Mark Epstein, the chairman of the board, will appear and answer questions.
BOUCHER Are you going to change up the board, since a lot of these problems are long-standing? Essentially you report to the board, but they’re responsible for the finances of the institution.
BHARUCHA I’m trying to set a new tone of openness and transparency. When you start that, there’s going to be an emotional reaction among the community. Students and alumni should know if we’re experiencing financial difficulties. And that’s something of a cultural change.
BOUCHER People are very concerned that the caliber of the school will decline if you begin to charge tuition. Do you think that’s true?
BHARUCHA Cooper Union will become stronger when we have a sustainable financial model. Our commitment to access for students who most need it will be even stronger. Our financial aid packages for living expenses will be stronger. And I’d like to invest in strengthening the institution, for example, to support the work of our faculty. When you’re in a deficit, every penny is pinched and you can’t unleash people’s potential.
Incremental change will not work. We need fundamental change, and we have to innovate. Academic institutions tend to be reluctant to innovate organizationally.
Peter Cooper’s fundamental commitment was for this institution to be free for the working classes and poor women. Those were the constituencies he was most concerned about. No matter what we do, we must reaffirm our commitment to access to the finest education for those who have the least access to it, particularly at a time when access is an increasing problem, and not just in terms of financial aid.