By: TJV News Staff
As colleges and universities across the country continue to struggle to maintain the safety of students safe during the coronavirus, many of these institutions of higher learning are also experiencing a panoply of financial challenges due to a significant drop in student enrollment.
Previously, the Jewish Voice had filed a revealing report about the scandals and financial hardships of Yeshiva University; the flagship college of the modern Orthodox movement in the United States.
Once considered a highly prestigious college that boasted top national rankings among universities, YU has taken a nose dive in the rankings due to several factors.
As was reported, financial scandals have rocked this venerable institution to the core and undoubtedly contributed to the significant drop in national rankings for YU.
In June of 2014, Business Insider reported that Yeshiva University lost an estimated $105 million with convicted Ponzi schemer Bernie Madoff, who just happened to be a trustee of the university. The article also intimated that according to the credit-ratings agency known as Moody’s, the school would eventually find themselves in a permanent state of insolvency.
At the conclusion of a two-year investigation by The Jewish Channel and renowned journalist, Steven I Weiss of Takepart.com, evidence emerged about YU’s mishandling of investment funds and the colossal losses that they sustained.
At one point before the 2008 financial crisis, the university allocated 65% in hedge funds, which was the third-highest of any university endowment, the June 2014 report said.
According to the Takepart.com story:
“The school lost more than $500 million on its high-risk investment portfolio—after selling off nearly $500 million of ultrasafe U.S. Treasury bonds when the new regime took over a decade ago, plowing the proceeds mostly into hedge funds and corporate stocks. Assuming the strategy of increasing risk in its investment portfolio would pay off with higher returns, the new president and the board that hired him took on a bevy of new expenses, spending down their cash reserves and resting much of Yeshiva’s fate on their hedge fund gambles. Now that those investments have proved to be losses, Yeshiva faces more than $550 million of debt, and it appears to have been tapping into the principal of its investment portfolio to cover annual deficits. On their own, any one of these changes—the half-billion-dollar hit to its portfolio, the diminution of liquidity, and the mass of debt—would be a significant, though bearable, difficulty for a university; together, their effect has been devastating.”
The report adds that in order for YU to stay “in the black” financially and avoid the insolvency crisis, the school would need to become creative in devising ways to generate growth in the school’s student and donor base, such as tuition increases, expansion of student enrollment and funding solicitations. The report emphasized that these efforts would need to be sufficient in terms of balancing its budget and paying down its debt, while slashing its budget and selling off assets while trying not to slow its growth.
The 2014 Business Insider report indicated that the two-year investigation involved the review of more than 10,000 pages of legal and financial documents, dozens of interviews and many New York State Freedom of Information Law requests and it showed precisely how Wall Street titans helped create these devastating losses for YU.
Taking these financial woes into account, what is more than shocking is a fairly recent report that indicates that the salaries and compensation packages for YU top administrators are among the highest in the country.
According to an August 6, 2020 article that appeared in the YU Commentator, the university’s finances as well as salaries being paid to senior executives at the university were disclosed in Form 990 tax records for the fiscal year of 2018. The school newspaper received the public filing on July 31st.
Federal law requires that all non-profit organizations and institutions make their financial disclosures public.
According to the YU Commentator report, “The tax record revealed that YU President, Dr. Ari Berman made nearly $750,000 in aggregate compensation in 2018. Berman’s salary consisted of a $592,834 base with over $150,000 in other compensation, totaling $747,392. This aggregated sum was $160,000 higher than his $582,000 total compensation for the first ten months of his presidency in 2017.
Dr. Berman is also provided with a parsonage house in Teaneck, New Jersey, which YU purchased for $1.8 million upfront more than three years ago.
Former President Richard Joel, who currently teaches on a part-time basis in the Sy Syms School of Business, received $665,889 in aggregate compensation in 2018, including a base salary of more than $500,000, the tax record revealed. This was in addition to the use of his university-owned residence. During the final years of Joel’s tenure, he was among the highest-paid university presidents in America.
In response to The Commentator’s inquiries on Joel’s pay and other related matters, a YU spokesperson said, “Other than what is required by law to be disclosed in the Form 990, the university does not disclose confidential salary or benefit information of individual employees.”
Vice President for Legal Affairs and General Counsel Andrew Lauer’s total compensation was over $700,000 — about $50,000 less than his pay reported in YU’s 2017 filing — ranking him the highest-paid senior staff member after Berman. Jacob Harman, vice president of business affairs, trailed behind Lauer with approximately $655,000 in total pay, making him the third-highest paid employee of the university listed on the filing.
As The Commentator previously reported, for the 2020 payroll year, President Berman is taking a voluntary 20% cut through December, while other senior staff members are voluntarily taking a pay cut between 5 and 10 percent.
The 2018 Form 990 also included key financial information about the YU’s expenditures and fiscal positions. According to the document, the university spent roughly $2.5 million in advertising in 2018 — around $1 million more than it spent in 2017. Additionally, more than $3 million was spent on travel costs in 2018, and roughly $5 million was spent on outside consulting costs, including fundraising consultants, third-party legal and lobbying firms as well as outside accounting services. The university spent over $3.75 million on food in 2018, and office expenses exceeded $6 million.
According to the filing, in 2018, over $95 million in grants and assistance went to student financial aid, scholarships and fellowships, including “emergency assistance student grants.” This marked a more than $7 million increase from such assistance disbursed by the university in 2017.
The university spent more than $9.16 million on security services in 2018, the overwhelming majority of which went to a $9 million contract with Securitas, which YU contracts with to provide security personnel for its campuses.”
The Jewish Voice editorial staff is of the belief that it is fairly easy to conclude that YU’s financial burden’s need to be evaluated and assessed by professional financial advisors.
The salaries of senior staff members and administrators need to be substantially reduced by the board of directors of the school. And that brings us to our next question. Just who in on the YU board of directors? How long have they served in this role and what is motivating them to grant such ridiculously high salaries to administrators when the school is struggling to stay afloat financially?
We might also ask if it is fair to students and their families to increase tuition rates without providing the kind of student services that many other colleges provide.
A searing and thorough internal examination needs to be conducted to save this school’s reputation.
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