After four months of turmoil, the San Francisco Art Institute, one of the United States’s top art schools, threw a curveball in late July when it announced that it would resume degree-granting classes this fall for those within a year of earning a degree. The nearly 150-year-old school had suspended academic programs indefinitely in March as the result of a long-brewing financial crisis that was disastrously worsened by the pandemic.
Back in March, SFAI said that it saw “no clear path” toward resuming degree-granting courses anytime soon and announced that the school was planning to issue layoffs. Now, however, it seems that SFAI may have its next semester as planned for the few remaining students who are set to receive their degrees, despite allegations from members of the local art community and employees at SFAI that the board has severely mismanaged the school’s funding, potentially creating an untenable financial situation behind the scenes.
The new announcement comes on the heels of Boston Private Bank’s move to foreclose on the school’s main property, as reported by Mission Local in July. That piece of real estate, on Chestnut Street in the Russian Hill neighborhood, features a Diego Rivera mural that has been appraised at $50 million and serves as the collateral on a $19 million debt—considerable leverage for an institution that had an endowment of just $10 million before the Covid-19 pandemic and that is largely reliant on tuition to cover expenses. (At present, the endowment stands at $6.3 million.)
“No sale date of the property may be set until three months after the July 8 date of the notice of default,” reported Mission Local, which said that the school’s agreement with Boston Private “required certain amounts of cash reserves and other such measures it had not been able to maintain.”
The property will default to the Regents of the University of California if the facility ceases to be used for art education. (A media representative for the Regents told ARTnews that, since the UC Regents is a separate legal entity, it has no involvement in SFAI’s situation.) The school’s debt was incurred in 2016, in order to renovate a building on the San Francisco piers, now called the Fort Mason campus, as student studios; the board launched a capital campaign to raise $15 million but fell drastically short.
Even though the next semester will now take place after all, most students will not be able to attend classes in person this fall—and potentially, not even in the spring, either. “Most of our classes are likely to be online in fall semester, with on-campus instruction resuming in the spring, pending the status of Covid-19 restrictions,” said board president Pam Rorke Levy in a statement about the resumption of classes.
In an email to ARTnews, Levy added, “SFAI is asset-rich but cash-poor as a result of declining enrollment over the past five years and the effects of the pandemic—factors that are having a devastating impact on colleges and universities across the country, not just SFAI.”
Fewer than 80 students will return for classes this fall, since most tried to transfer to other schools following SFAI’s announcement in March. Some of the ones returning are international students who, because of pandemic-related visa restrictions, may not be able to come back to the U.S., even if in-person participation becomes possible in the spring. As for students who do return, Levy said the school will work with them in reducing tuition “substantially” in recognition of the “turmoil” the school has caused them.
The school has raised $4 million, between sources including government funding, reallocation of some previously restricted foundation support, and new individual donations. But that is far from enough, according to Levy—SFAI needs another $4.5 million to make it through this fiscal year.
In a typical year, the board has been able to raise about $1.2 million, Levy told ARTnews. Some “high-profile online auctions” are in the works to meet that goal, including works by notable alumni such as Kehinde Wiley, Annie Leibovitz and Kathryn Bigelow, she said. At the same time, the school continues to investigate possibilities for increasing its income, including leasing the Fort Mason space and “sharing” the Chestnut Street space with other arts organizations whose presence might benefit students, she says.
Another potential source of major income would be to “monetize” the Rivera mural, according to Levy. Rivera painted it on wood paneling, so the work can be taken away, but one course of action, Levy explained, would involve forming an endowment by selling the work to a major collector of Latin American art, who would then leave it in place. The school would name the gallery after the buyer and use the money to pay off the bank debt, buy the UC Regents’ interest in the campus, and bolster the $6.3 million endowment.
Asked what guarantee the school can make to the returning students that they will get a full year of instruction, Levy said, “We are committed to doing everything we can to see them through. We are going to be able to get students through this year.”
Some faculty members and former staffers who spoke with ARTnews said that the decision to resume classes was partly driven by financial necessity, pointing out that the school was obliged to honor its commitment to pay tenured faculty through the rest of the year—fees the school would fund through tuition income. Faculty union president Robin Balliger declined to be interviewed for this article. Levy confirmed via email that the school was contractually obliged to pay faculty.
“In addition to the cost of keeping the tenured faculty, inviting students back entailed expenses for enrollment systems and student services that would have been cut otherwise,” Levy said. “Given the small number of returning students, many of whom have scholarships and financial aid packages that SFAI will be honoring, the tuition revenue does little to offset the additional fixed costs of degree classes, several hundred thousand dollars that will be covered by additional fundraising activity by the Board.”
Some on staff at SFAI said they felt gaslighted by the situation, and the new developments have only contributed to their malaise. SEIU 1021, the union that represents the adjunct faculty, has, according to Mission Local, sent a complaint to state Attorney General Xavier Becerra, accusing the school and its trustees of “conflicts of interest, self-dealing, and breaches of duty of care and loyalty.” Becerra’s office declined to provide a copy of the complaint.
“For a lot of schools, Covid aggravated pre-existing problems, and people were saying that SFAI was on the brink of failure before Covid, but clearly the reason for that is that their finances were taken over by debt service,” Nato Green, a campaign coordinator for SEIU 1021, said.
The school’s critics say that little has changed on the part of the school’s leadership. Levy rebutted this, saying, “This leadership team is recruiting artists, faculty, students, alumni, staff, board, outside educators and experts to reexamine every part of SFAI over the coming months—our business model, our curriculum, our vision and values, our staffing, our campuses, our teaching platforms, our programs, our governance structure, our fundraising and marketing strategies, the types of students we serve, our commitment to diversity, equity and inclusion, and our commitment to social justice—all with the goal of delivering a highly personalized educational experience that is both transformative and affordable, helping students find their artistic voice, and preparing them for a lifetime of making art.”
Elizabeth Travelslight, head of the school’s adjunct professors union, told ARTnews, of the plan to resume instruction, “While all this sounds promising and aims to attract donors and students, the issues at SFAI that need ‘repair’ are deep, systemic, and expensive. Leadership’s handling of the escalating crisis did tremendous damage to our community.”
“I hoped the school could use this moment of collapse and reckoning for truly radical change and regeneration,” said one former administrator who spoke on condition of anonymity. “But from what I’ve seen, there is no vision, no plan, no money, no real accountability or acknowledgement of harm done, no communication with staff, and no trust. Plenty of spin and scapegoating, though.”
Update, 8/17/20, 5 p.m.: After this article was published, SFAI contested certain claims by staff. Additional comments from Pam Rorke Levy have been integrated into this article. A comment from a representative for SEIU 1021 has also been added to this article.