Yeshiva U. Faces Growing Fiscal Crisis Amid Downgrades and Abuse Suit

Richard Joel Admits Problems as Rumors of Cuts Swirl

Storm Gathers: Yeshiva President Richard Joel has warned the flagship Modern Orthodox institution faces dark fiscal days ahead.
yeshiva u.
Storm Gathers: Yeshiva President Richard Joel has warned the flagship Modern Orthodox institution faces dark fiscal days ahead.

By Paul Berger

Published November 22, 2013, issue of November 29, 2013.

(page 2 of 3)

Joel did not spell out how Y.U. might achieve a balanced budget, other than to say that Y.U. needs to “increase revenue, improve operational efficiencies, and manage costs.”

Y.U. has suffered chronic financial issues for years.

The university’s annual operating deficits for the past three years were $106 million, $47 million and $107 million, according to financial statements posted to Y.U.’s website.

These large deficits, along with weak cash flow and the likelihood that Y.U. would break its covenant with a creditor for the second time in two years, led Moody’s to downgrade Y.U.’s debt rating in October to Baa2 — the agency’s second lowest investment grade.

The school’s rating had already been downgraded twice before during the last two years. Moody’s also stated that its current Baa2 rating remains under review. That means that Y.U. risks a further downgrade when Moody’s reevaluates its position in the next couple of months.

Moody’s said the university’s problems are compounded by uncertainty related to a $380 million lawsuit brought by former students of Yeshiva University’s High School for Boys, in Manhattan. Thirty-four former students are suing Y.U. over claims that the university covered up decades of sexual abuse allegedly committed by former staff members, Rabbi George Finkelstein and Rabbi Macy Gordon. Both men have denied the charges.

A federal judge in New York is expected to rule shortly on whether the case can proceed.

Y.U. staff and students had hoped that 2013 would turn out to be better than the past few years. In 2008, Y.U. was struck by the twin blows of the national financial crisis and the multibillion dollar investment fraud committed by Bernard Madoff, with whom the school had invested substantial sums.



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