Brandeis Looking For Next Leader While Facing Budget Challenge
The search for a successor to Jehuda Reinharz, president of Brandeis University, is under way, but moving at a pace too slow for some. At the same time, Reinharz is fending off accusations stemming from the serious financial challenges now facing the school.
Reinharz announced his resignation last September, promising that he would stay until a new president is chosen or until June 30, 2011, whichever came first. A search committee was assembled — including Thomas Friedman, New York Times columnist and 1972 alumnus — and now the university’s faculty and students are waiting.
In the meantime, Reinharz’s record as a financial steward of the institution has been criticized. While the memory of his bungled attempt to sell the Rose Gallery collection last spring is still fresh, a Harper’s Magazine article published two months ago was so critical of the president that it prompted Reinharz to offer a fierce defense of his fiscal leadership and threaten a lawsuit against the publication.
With Reinharz’s resignation announcement now more than three months old and no search firm yet retained to begin looking in earnest for a replacement, some faculty members are privately expressing disappointment that another year might pass with what is effectively a lame duck presidency. There had been some hope that a new president might be chosen in time to start the 2010–11 school year, a prospect that observers say is unlikely because of the current slow pace of the search.
A spokesman for Brandeis responded to the Forward by saying that the search was “moving at a good pace,” and cited the two dozens sessions conducted with members of the community to assess what they wanted in a new leader. The school’s response to the recent criticism of its investment policies was consistent with other statements, that the article making the allegations offered “a profoundly innacurate and unfair portrait of Brandeis.”
Like most universities, Brandeis has felt the effects of the financial crisis. Its donor base has also been disproportionately hurt by Bernard Madoff’s Ponzi scheme: The Carl and Ruth Shapiro Family Foundation, for example, one of Brandeis’s biggest funders, lost nearly half its assets.
The school’s endowment took a serious hit. At the start of fiscal year 2009, it was worth $712 million and, according to Brandeis, had lost $125.4 million, a 17% decrease. Only two years earlier — in fiscal year 2007 — Brandeis saw an annual increase in its investment by 18%.
The Harper’s article, “Voodoo Academics: Brandeis University’s hard lesson in the real economy” by Christopher Beha, was a harsh critique of the way the current administration has handled its endowment, arguing that the school had “adopted the American corporate principles of fiscal shortsightedness and growth-for-growth’s sake that provoked the current economic fiasco.”
The most damning part of Beha’s argument was that Brandeis had shifted funds away from “low-risk, low-yield investments” and towards “hedge funds and private equity.” He also claimed that Brandeis has been “living beyond its means, paying on credit for a seemingly endless string of expansion and renovation projects.”
Reinharz — though not personally named in the piece — reacted angrily to Beha’s article, writing to the faculty a long e-mail that described the piece as “factually inaccurate” and “insulting to all members of the Brandeis community.” He closed with a warning that though “the legal process for slander/defamation is an arduous task and one that is difficult to prove,” Brandeis was keeping its options open. No lawsuit has yet been filed.
The e-mail also claimed that there were factual errors in Beha’s article, but singled out only one: Instead of a $200 million loss to its endowment in fiscal year 2009, as Beha claimed, the school had in fact lost $125.4 million. This actually put it in better shape than most foundations and endowments, which, as Reinharz noted, had a median loss of 19.14% in the last fiscal year, according to the Wilshire Trust Universe Comparison Service. Beha, in a conversation with the Forward, said that the discrepancy had to do with the lag time between when the article was written and when it was published, during which time the market improved.
Reinharz also disputed that the claim that Brandeis had been “living beyond its means,” claiming that since 1999, just under half the cost of the major capital projects — the many new buildings now dotting the campus — have been funded by gifts, while 43% had been “debt-funded,” with the balance coming from university funds set aside specifically for such capital projects.
But more than defending his leadership, Reinharz also posited that Beha’s motivation for writing the article had to do with a grudge. According to the e-mail, Beha’s aunt, Ann Beha, is the head of an architectural firm whose bid in 2004 to build the school’s arts center was rejected. Reinharz implied that the reason for Beha’s scrutiny of Brandeis had to do with his aunt.
Beha said that when he reported the story, he didn’t know about his aunt’s involvement with Brandeis, and that when he asked his aunt about this, she could hardly remember any dealings with the university.
“My decision to look into what was going on with Brandeis had to do with news reports that everyone was seeing about what was happening at the Rose, and a long-standing interest that I have about higher education and high culture in the marketplace, and it had nothing whatsoever to do with my aunt,” Beha said.
Reinharz’s e-mail, though it might have corrected the record by offering evidence that Brandeis did not do any worse in the past year than other comparable institutions, was not well received on campus. Bad feelings linger about his proposal early last year to sell the contents of the Rose Art Museum, a highly prized collection of modern art that includes works by Willem de Kooning and Andy Warhol.
An editorial in the student newspaper, The Justice, characterized Reinharz’s e-mail as “unprofessional and sent in poor judgment.” It went on to say that while Brandeis’s “economic woes may be exaggerated” in the Harper’s article, “there is no denying that Brandeis’ financial status is less than ideal; thus, another lawsuit is the last thing the Brandeis community needs straining its pocketbook.”
Even Beha seems to agree with Reinharz that Brandeis’s financial problems are not unique. But he said that what made the school worthy of being singled out is that it is very young relative to its size, and therefore it’s experiencing some of these problems more acutely. While Harvard might have lost 26% of its endowment in the same fiscal year in which Brandeis lost 17%, it still has billions in reserve, having been founded in the 17th century. Brandeis was only started in 1948.
Defenders of Reinharz say that he has been extremely responsible and done a lot of good for the university. They note that he put in place a “rainy day fund” that never existed before his tenure, and limited the annual amount that could be drawn out of the endowment. More intangibly, they also say that he has brought back a Jewish identity to the university, which was growing more secular under his predecessor, and that the school’s academic prestige has risen, with Brandeis now numbering 31 on the most recent U.S. News & World Report list of the best colleges and universities.
It should also be remembered, these defenders say, that when Reinharz became president in 1994, the endowment was only $190 million.
“When the historians write the history of Brandeis, Reinharz will be remembered as the greatest president since Abe Sachar,” said Jonathan Sarna, a professor of Jewish history at Brandeis and the director of the Hornstein Program in Jewish Professional Leadership, referring to the school’s founding president. “Jehuda raised the endowment. He brought us any number of new centers and buildings. He raised an amazing amount of money. And he also appointed very important people. It’s very sad that because of some of these financial reverses, he’s got to watch as some of it is undone. We are in the type of crisis that he himself had done everything to try and avoid.”
Contact Gal Beckerman at [email protected]