(page 2 of 5)
Y.U., which has had to borrow heavily in recent years, set aside half of the Block bequest — about $82 million — not for long-term building projects or endowments of the sort associated with capital campaigns, but as operating cash for Einstein, according to a recent report by the ratings agency Standard & Poor’s. Indeed, according to Y.U.’s most recent financial statement, Einstein spent $50 million of the Block funds within a couple of months of the dinner on what it called “medical research spending.”
The reality is that Einstein, the nation’s first medical school established under Jewish auspices, has been losing tens of millions of dollars a year. And for Y.U., which is facing its worst financial crisis in more than 30 years, the Bronx medical school has posed perhaps the single biggest problem.
Consultants brought in by Y.U. to solve the crisis isolated Einstein as the chief cause of Y.U.’s dire financial condition. One Y.U. faculty member who did not wish to be named said colleagues were stunned at a March 19 faculty meeting, when Robert Hershan, a consultant for the turnaround firm Alvarez & Marsal, told staff that Einstein is responsible for two-thirds of the university’s annual operating deficit.
A spokesman for Y.U. declined to comment on the specific percentage that Einstein contributes to the university’s annual operating deficit. But Carolyn McLean, an analyst at S&P confirmed the figure to the Forward for the last financial year.
That year, McLean told the Forward, $43 million of Y.U.’s total operating deficit of $64 million was attributable to Einstein.
McLean declined to reveal Einstein’s operating deficits for the previous three years. But Y.U.’s overall deficits for those years were $106 million, $47 million and $107 million, respectively.
In recent weeks hundreds of Einstein employees have been faced with buyout offers or the risk of layoffs, according to a May 21 report in the Bronx Times.
The Bronx newspaper also reported then that rumors were swirling among Einstein staff of a possible merger between Einstein and Montefiore.
Asked whether Y.U. remains pledged to retain Einstein long-term, a spokesman for the university told the Forward on May 20: “Our answer to that question is, Yes.”