By Jimmy Chin
While NYU administration continues to try and will the 2031 plan into action, the final say on the plan’s legality will be coming soon when the New York State Court of Appeals hears the case on its legality this June.
Despite claims by President Sexton and 2031 supporters, indications from the finances of the plan point to significantly increased burdens on student and faculty if the plan is carried out. NYU already has one of the highest tuition rates in the country during a time in which the nation’s collective student debt is over $1 trillion, and unfortunately, 2031 will likely just exacerbate the problem.
The Corporate University
Universities in the United States are becoming more and more corporate, with the global network university leading the pack. As the cost of attendance for college has skyrocketed, precarious practices pursued by these increasingly business-minded schools include the exploitation of adjunct faculty, ballooning of administrative spending, and the focusing of university funds towards marketing and recruitment. As if they were acting like multinational corporations, universities like Georgetown, Cornell, Northwestern, Carnegie Mellon, Johns Hopkins and a slew of others (list from 2008) have established their outposts abroad just like NYU has in Abu Dhabi and Shanghai. Why? Former Brown University President Ruth Simmons candidly told Brown Alumni Magazine: “Our competitors are internationalizing at a much faster rate than we are. As a consequence, they are making themselves more attractive on the global stage.” I’m glad that is what’s most important to her.
Thus, in light of what’s been happening to American universities, it’s not unexpected for NYU to pursue a plan that is, in essence, a real estate deal designed to attract applicants and increase prestige while secondarily meeting the needs of students right now. (The phrase “real estate deal” comes directly from a member of the Board of Trustees. According to Professor Mark Crispin Miller, Trustee Leonard Wilf said explicitly in a conversation with him and Professor Bo Riccobono that 2031 “is not an academic plan. It’s a real estate deal.”)
The Need for Space
The university claims that there is a dire need for academic space, which may very well be true right this moment. Some have called for more classes on Friday to alleviate the space problem, but the University Space Priorities Working Group Final Report argues: “Increasing utilization of Friday — and especially Friday afternoons and evenings — would not address the current deficit of classroom space, alone or in combination with other strategies.” In fact, we have little way of knowing whether this claim is true, because NYU has failed to release a comprehensive list of alternatives spaces, which includes owned buildings (with the amount of academic space in them) and other properties for sale. For example, the report neglects the former Rubin Hall cafeteria (just now being refitted for classrooms), and the properties at 404 Lafayette and 708 Broadway that were purchased last fall, even though the report stated only two other buildings were available for purchase. This prompts the question: have we really taken an adequate enough look at the alternatives?
The 2031 plan originally even proposed the building of a hotel. What does that say about their priorities?
Where Will the Money Come From?
What about how they’re going to finance the plan? Where is this money going to come from? University spokesperson Beckman has claimed 2031 is “well within the University’s financial means,” but many are skeptical. Page 43 of the Working Group Final Report shows that the committee projected a $2.195 billion to $3.13 billion increase in outstanding long term debt from 2012 to 2017. A 2031 financial presentation shows that NYU’s debt service (the yearly cost of paying for the debt) will increase from $114 million to $235 million in that same time span. That’s higher than the Trustees’ self-imposed debt service limit of 7 percent of annual operating expenses (which is $195 million in 2015).
For his part, Beckman reminded NYU Local that the Working Group concluded that the 10 year plan for the Coles site could be accomplished within NYU’s capital budget framework and was similar in magnitude to the last 10 year plan ($3.01 billion versus $2.95 billion). But remember that this is just half of 2031. Not included are plans expected after 2022 on the north superblock.
The administration should know, since they frequently remind us how small NYU’s endowment is, that this debt will be a signficant burden on the school. This year, Standard and Poor’s found some concerns about the university’s debt financing in an “AA-” rating.
“The rating reflects low financial resources and a high debt level for the rating category, mitigated by the university’s comprehensive nature and global presence,” the report stated. “We believe that significant additional debt beyond the current plan without commensurate growth in financial resources could pressure the rating.”
Now, this “AA-” rating reflects according to S&P a “very strong capacity to meet financial commitments,” but the key caveat is the maintenance of “commensurate growth.” Where exactly will this come from? (Keep in mind S&P hasn’t quite given out accurate evaluations in the past. They were one of the “Big Three” rating agencies that partly drove the country into the 2008 recession because of their misleading “AAA” grades.)
The Students
The only logical way for NYU, which relies on tuition for approximately 57 percent of its annual revenue, to have the “commensurate growth” to finance 2031 is either to significantly expand the student body or hike the tuition. (Northwestern University by comparison relies on tuition and fees for 27.7% of its revenue.)
According to the Working Group Report undergraduate tuition will not increase “as sharply as in recent years.” “Average debt upon graduation at NYU has been decreasing for several years,” Beckman has also said, writing that it is has gone down more than $10,000 in the last five years. In addition, he has pointed out that the average NYU student debt is lower than the national average for private, 4 year colleges ($30,688 versus $32, 600 for 2012–2013).
Presumably, this is evidence to assure people that 2031 will not adversely impact the cost of attendance, but this is a straw man. While decreasing the student debt is laudable, this kind of talk is somewhat distracting because it doesn’t address the source of the problem: tuition (which has caused the cost of attendance to climb over $70,000 for some students). Whatever the average student debt is, rising tuition will increasingly make NYU unaffordable for middle class families who aren’t eligible for aid and forced to pay in full. Furthermore, government assistance to cover those who are eligible will just be placing more burdens on the taxpayer.
Sexton pledged in his last town hall that there were no plans to “grow the size of the New York student body by any dramatic amount,” although I’m sure our definitions of “dramatic” are different. While the Working Group states the university will significantly slow down the rate of growth relative to the late ’90s and early ’00s, it will still increase at a predicted rate of 0.27 percent for undergraduates and 0.21 percent for graduate students (about 1,000 kids each year).
By the working group’s own admission: “If undergraduate enrollments (including NYUAD and NYUSH) do not increase after 2013 (through 2022), budgeted operating surpluses will decline, with the shortfalls growing larger over time; operating surpluses would become negative for the years 2017–2020.” Thus, if student population growth is low, then tuition is bound to significantly rise, and if not, we continue our expansion into an already NYU-dominated Village and risk running into another shortage of space scenario.
NYU claims that it’s saving money by building on property that it already owns, but the school could save the most money by abandoning the project all together. Whatever good the plan can bring (like an upgraded dog run, and much needed gym and performing arts spaces) is heavily outweighed by the potential harm not only for those at the university, but our neighbors as well. The university has grown enough. If something has to change, we should be trying to reduce the size of the school, reduce the burden on the students, and reduce NYU’s footprint on the Village. Not the other way around.
