Yeshiva U. Faces Growing Fiscal Crisis Amid Downgrades and Abuse Suit
Storm Gathers: Yeshiva President Richard Joel has warned the flagship Modern Orthodox institution faces dark fiscal days ahead. Image by yeshiva u.
By Paul Berger November 22, 2013
Anxiety is building at Modern Orthodoxy’s flagship institution, Yeshiva University, as rumors swirl of looming cuts to address a financial crisis.
Y.U.’s official student newspaper, the Commentator, reported November 20 that the school’s president, Richard Joel, “may announce mandatory furloughs to Y.U. employees” pending an emergency meeting of the University’s board of directors.
School officials have declined to confirm or deny the report.
The Commentator story followed hard on the heels of a memo Joel sent out to faculty and staff a day earlier, warning of dire financial challenges ahead. The email was first reported by the JTA.
Several sources close to Y.U. have told the Forward that the school’s board will hold its emergency meeting early next week.
Y.U. board members did not respond to calls or emails for comment on November 19 and 20. Michael Scagnoli, a Y.U. spokesman, declined to comment on whether the meeting is taking place.
“We are talking about internal things at the university,” Scagnoli said on November 20. “So currently I am not going on the record to confirm anything like that that’s happening.”
Scagnoli said that he would have to look into whether he could provide a copy of Joel’s email to the Forward because it was private.
According to a copy of the email that the Forward obtained independently, Joel told staff: “We intended to achieve a balanced budget by this year so that we could then begin to reverse the trend of cutbacks. Despite our best efforts, we have not yet succeeded.”
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.
Between 2008 and 2009, Y.U.’s net assets fell $439 million — a 17% decline. Pay freezes and staff cutbacks followed.
This year, Y.U. staff received modest pay rises of 2% and additional tenure track jobs were authorized.
But the upbeat mood appears to have been short-lived.
“Austerity measures will no doubt continue to plague Y.U., contracting student offerings when, unfortunately, there really doesn’t seem to be any more room to contract,” said Gavriel Brown, a senior at Yeshiva College and the editor of The Commentator.
“Skeletal course offerings, decreased opportunities to study and travel abroad, and fewer student services will translate into pretty unhappy students.”
Y.U.’s deepening financial uncertainty comes ahead of the highlight of the university’s fundraising year, Y.U.’s annual Hanukkah dinner, which will take place on December 8 at New York’s Waldorf Astoria hotel.
This year’s keynote speaker, and the recipient of an honorary degree, is The New York Times columnist David Brooks.
Contact Paul Berger at [email protected] or on Twitter @pdberger
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