THE GROWING LIST OF VICTIMS THAT HAVE BEEN BURNED by the fraud scandal involving Wall Street financier Bernard L. Madoff, who is charged with orchestrating a $50 billion Ponzi scheme, has reached higher education. The impact involves institutional funds that were invested in his firm, Bernard L. Madoff Investment Securities, through J. Ezra Merkin, chairman of lender GMAC Financial Services, a close acquaintance.
The institution likely hit the hardest, both professionally and personally, is Yeshiva University (N.Y.). Madoff had more than a business relationship with Yeshiva. A New York Times article reported he had been on the board of trustees since 1996, and the university granted him an honorary degree in 2001. Also in 2001, Madoff made a major donation to the university’s Sy Syms School of Business after becoming chairman of the board the year before. He is no longer associated with the institution.
Merkin was a trustee on Yeshiva’s board and served as chairman of the investment committee; he also stepped down from his positions.
A December 16, 2008, letter from Yeshiva President Richard M. Joel explains the university had no investments directly with Madoff. Instead, officials were told that substantially all the assets of Ascot Partners, a fund managed by Merkin in which officials had invested a small part of the university’s endowment funds for 15 years, are invested with Madoff.
The letter also stated that Yeshiva’s investment was valued at about $110 million, which represents 8 percent of its endowment. Taking into account the Ascot loss, their endowment is currently estimated to be approximately $1.2 billion, down from $1.7 billion on January 1, 2008.
“Although this decreased endowment must factor into our long-term fiscal plans, it will have minimal impact on day-to-day operations,” Joel wrote.
Yeshiva was not the only institution affected. Tufts University (Mass.) is reported by The Boston Globe to have lost $20 million through an investment in a fund tied to Madoff.
In a letter dated December 19, 2008, Tufts President Lawrence S. Bacow explained that in 2005 the university’s Investment Committee authorized an investment with Ascot Partners, which in turn invested the entire sum with Madoff Securities. The value of the investment totaled slightly less than 2 percent of the university’s endowment.
Bacow wrote in a letter to students, faculty, parents, and alumni that the write-off will not significantly affect the university’s operations and that the institution will work to recoup “as much of our investment as possible. ? You have my word that we will look closely at our experience in this case so that we can strengthen our investment process for the future.” On the university’s website, a Q&A offers explanations on what occurred and how Tufts’ endowment was affected.
Other institutions that have reportedly been hit by the scandal include:
? Bard College (N.Y.), which Reuters reports as having lost about $3 million. Merkin’s Ariel Fund had invested school money with Madoff without the knowledge of institutional officials.
? New York Law School, which through its endowment entity invested $3 million in Ascot in 2006. The investment is now worthless, according to a filed lawsuit, cites a Wall Street Journal blog post.
? New York University, which has suffered a $24 million loss after entrusting the money to two of Merkin’s hedge funds. An official rejected Merkin’s suggestion to invest some of the university’s money with Madoff, according to the New York Daily News. NYU has filed a lawsuit against Merkin. ?Michele Herrmann
THE REV. JAMES PATRICK SHEA ADMITS HE MAY BE SURPRISING CHOICE AS the next president of the University of Mary (N.D.). He is 33 years old and does not have a doctorate. However, he has spent a lengthy time in academia (from graduating high school in 1993 up until his ordination in July 2002) and is well familiar with the region and the institution (having grown up 38 miles away).
Shea is presently serving as a pastor of two North Dakota churches and as a senior religion teacher and chaplain at a high school. On July 1 he will succeed Sister Thomas Welder, who has led the university since 1978.
Shea cites his best points: having strong instincts, being able to effectively deal with people, and relating to the intellectual, social, and spiritual needs of students.
University of Mary officials believe Shea will be the youngest U.S. university president. He joins a small group of higher ed leaders unlikely to have gray hair. A 2007 joint study by the American Council on Education and CUPA-HR on U.S. college presidents found the average age to be around 59, with just 0.6 percent in the age range of 31 to 40.
Raised on a farm as the oldest of eight children, Shea says that after finishing high school he wanted to get out in the world, joking that his parents would have had him home milking cows. He attended Jamestown College (N.D.) for two years, entered seminary in 1995, and then studied philosophy at the Catholic University of America (Washington, D.C.). In 1998, he headed to North American College at the Vatican to study theology.
In preparation for his new post, Shea has reached out for guidance from the heads of the Catholic University of America and the University of St. Thomas (Minn.). He also will attend an orientation-style seminar for new presidents offered at Harvard. “One of my strengths is that I realize I have an awful lot to learn,” Shea explains, “so I’ll be reaching out for help when appropriate.”
Martin White, chairman of the board of trustees at the University of Mary, says that although Shea will be new to duties such as fundraising, his background shows “he has excelled in everything he’s done.” ?M.H.
MORRIS BROWN COLLEGE (GA.) FACES A MOUNTAIN of debt and a lost accreditation, but Acting President Stanley J. Pritchett Sr. insists the historically black college is determined to survive.
Contributions by alumni and school supporters through two recent rallies came in at more than $250,000. They helped with making a $100,000 partial payment on an overdue water bill to the city of Atlanta and with supporting other urgent college expenses. By this month, the college was ordered to pay another $214,000 on the bill. As of press time in mid-January, the sale of a school building in foreclosure was stalled.
A five-year recovery plan, begun last month, is expected to restructure the school’s debt by addressing outstanding financial obligations and will help expand areas such as facilities and academics. The plan has interim financing, with $1.5 million in place. The college has up to 120 days to fully restructure its debt. The school’s total debt is $30 million.
“As with any plan of recovery, you have options to address if objectives are not met within specific timelines,” says Pritchett. “If there has to be any temporary cease of operations, the institution will handle [the situation] with the students’ and employees’ interest, well-being, and placement being a high priority.” More than 200 students were to return for the spring semester.
Elsewhere in the state, two other historically black institutions are struggling. Sen. Seth Harp (R), chairman of Georgia’s State Senate Higher Education Committee, recently caused a stir by proposing a merger of two historically black universities, Savannah State University and Albany State University, with nearby predominately white institutions as a cost-cutting measure. Black educators, politicians, and alumni voiced heavy opposition. The plan, in preliminary stages, appears unlikely to be adopted. ?M.H.
By Ross A. Webber, BookSurge, http://tinyurl.com/7bl522, 2008; 273 pp.; $15.99
NEARLY 100 SHORT, ENTERTAINING STORIES IN THE WORK life of Ross A. Webber, now a professor emeritus at the University of Pennsylvania’s Wharton School, are included in this memoir. After a short section on teaching, the majority of the book details experiences in management and administration, including Ross’ positions as chairman of the management department and VP of development and university relations.
The title essay comes from early on in Ross’ time as a VP. He spread out every departmental budget request on his dining room table so he could contemplate department priorities. “At some point, an errant breeze blew some sheets onto the floor where they were chewed up by my golden retriever Rebecca,” he recalls. While announcing the new budget, someone asked about a $100,000 request that was missing. Ross found himself using an excuse not unlike ones his former students had used about late reports: “The dog ate my budget.”
Two other memorable tales: “My First (and Only) $1,000,000,000 Check” (about donors’ hesitation on large, unrestricted gifts), and “Friendly Cutthroat Competition” (about meeting with other institutions to compare fundraising performance). ?Melissa Ezarik
THE PUSH TOWARD ASSESSMENT AND ACCOUNTABILITY BEGUN under Education Secretary Margaret Spellings’ Commission on the Future of Higher Education will no doubt continue under her proposed successor, Arne Duncan. While there can be little argument that some measure of performance and outcome is needed, just how that measure is achieved?especially at the college level?is still hotly debated.
The American Association of Colleges and Universities has issued a set of recommendations for campus action to ensure that assessment and outcome measures have real meaning.
AAC&U President Carol Geary Schneider says the debate so far has been “shallow” and does not address the fact that higher education is of a different nature than K-12 education.
“We’re challenging the notion that standardized testing and the reporting of aggregate results from those tests should be the centerpiece of the accountability movement. Some states are moving in that direction,” Schneider says. “Standardized tests can be a supplement to accountability frameworks, but they can’t be the whole story. College-level learning cannot be evaluated with multiple-choice tests.”
The group recommends that assessment be anchored in the curriculum that students are actually taking, and not based on generic tests that have almost no connection to their coursework.
In the report, “Our Students’ Best Work: A Framework for Accountability Worthy of Our Mission,” AAC&U lays the groundwork for how to design an assessment and accountability framework that will both strengthen student achievement and also show what students can actually do with their learning.
“We know that many campuses are still in the early stages of their work on assessment and accountability,” Schneider says. “Campuses are actively looking for a framework that will be educationally meaningful to faculty, useful to students, and closely tied to the goals of the institution.”
The framework is based on a full-picture approach to assessment. It identifies aims and outcomes and then adapts those to the programs students are actually studying. The results can be used to strengthen programs and practices.
“There are two strategies out there. One is the ‘send-a-number-to-somebody-soon’ strategy of assessment. The other is the use of assessment to actually improve the quality of student achievement,” Schneider says. “For that, you need a full picture approach, and we have spelled out the elements of that framework.” The report is available for download at www.aacu.org. ?Tim Goral
AS THE FALL 2008 SEMESTER WRAPPED UP, PRIVATE COLLEGE AND UNIVERSITY presidents surveyed by the National Association of Independent Colleges and Universities (NAICU) were asked about the impact of the economic crisis on their institutions. Not surprisingly, there are worries. But presidents are being proactive in protecting the financial health of their institutions as well as ensuring that they remain affordable options in the higher education marketplace.
Nearly all of the 371 member institutions completing the survey named fundraising declines, protection of endowment value, and maintaining student enrollment among their most pressing concerns. Nearly half of responding presidents were anticipating a 1 percent to 10 percent decline in enrollment for this semester, with 7 percent expecting a decline of 11 percent or more. Securing student loan availability and reducing the cost of institutional debt also rated highly as pressing concerns.
As would be expected, institutions are in cost-cutting mode, with about half taking measures such as freezing new hiring (50 percent), slowing down current construction/renovation projects (49 percent), restricting staff travel (48 percent), or giving smaller than usual salary increases (42 percent). More than one-third are delaying maintenance, and about one in five are freezing salaries or canceling planned construction/renovation projects.
They are taking a number of revenue-increasing steps as well. More than two-thirds of respondents said they were planning to increase tuition for 2009-2010 (on the other hand, 5 percent reported having frozen or considered freezing tuition levels). Nearly as many are focused on increasing enrollment. Borrowing funds and selling assets are the least popular revenue boosters among those surveyed.
When asked to comment on revenue-increasing steps, respondents mentioned adding online offerings to reach new markets and retain current students wanting to cut down on travel costs, increasing the usage of facilities during the summer, removing tuition guarantee programs, and considering borrowing funds through a bond arrangement.
The complete survey questions and responses are available in PDF form; enter http://tinyurl.com/8kaksq to begin a download. ?M.E.
IF COLLEGES AND UNIVERSITIES ARE SUPPOSED to teach discourse, why do so many have speech codes contrary to the First Amendment? That is the underlying question of the third annual report from the Foundation for Individual Rights in Education (FIRE). This year’s “Spotlight on Speech Codes” reviewed policies at 364 higher ed institutions and found that 74 percent have unconstitutional codes. The good news: This is down from 75 percent last year.
“The distinction is, universities can ask students to be civil, but they can’t require it,” explains Samantha K. Harris, FIRE’s director of speech code research. She points out that as government entities, public IHEs are required to support the First Amendment. Private institutions are judged based on their own stated commitments to free speech. Harris says unconstitutional policies are usually changed after they are highlighted. Although FIRE might be seen as an antagonistic group, Harris offers assurances that the organization is more than happy to help higher ed leaders develop compliant codes. She believes good codes, rather than the threat of discipline, encourage students to aspire to a higher level of discourse. The full report is available at www.thefire.org. ?A.M.
AS COLLEGE AND UNIVERSITY LEADERS RESPOND to the current economic crisis, the Modern Language Association warns filling their teaching roster with adjunct faculty might not save money. If an institution is paying the recommended rate of $6,400 to $9,200 per course, provides benefits on a prorated basis, and considers other hiring costs, “it is not cheaper,” points out Rosemary Feal, executive director of the MLA.
A new MLA report, released in conjunction with the Association of Departments of English, shows part-time faculty members make up 40 percent of English faculty at four-year institutions and 68 percent at two-year institutions. The problem is that many schools are paying well below the recommended salaries. “If you are going to hire skilled, trained academics to do this teaching, they should be paid and given benefits commensurate with their skills,” Feal argues.
New hires take time and effort, agrees Andy Brantley, president and CEO of CUPA-HR. “The bigger picture issue, from my standpoint, is that you are choosing to have an adjunct professor and the long-term impact [of that] on campus,” he says. Since part-time faculty often lack office space and have commitments off-campus, they are often less able to participate in campus life. “There has to be a core group of faculty who understands the larger picture,” he adds.
The trend of depending on adjuncts has been growing for decades, but Feal is seeing more “stopgap” hiring in response to the economy. More adjuncts are also being laid off, since they have the least job security. “There are places to save money other than in the faculty,” she urges. “The heart and soul of an institution are the learning that takes place and the people who deliver it.” ?A.M.
ADMISSIONS OFFICES NATIONWIDE ARE NOW AWASH IN PAPER, as the annual deluge of applications, letters of recommendation, and high school transcripts for millions of potential students has come flooding in. But at Rutgers, The State University of New Jersey, the rush of paper this year won’t be quite so voluminous.
Using a “Self-Reported Academic Record,” or SRAR, applicants can go online and enter their own transcript information. How much paper might this new procedure save? Last year Rutgers received about 33,000 applications. Out of this number, 7,275 students enrolled?so Rutgers received more than 25,000 transcripts they didn’t need.
Phyllis Micketti, director of applicant services, explains the new process: “Students receive an immediate confirmation when they submit the online academic record, and it is matched immediately to their file. This saves several days from the previous system, eliminating the multiple steps from the high school to the mailbox to the file folder.”
While admissions decisions will be based on the SRAR and not an official transcript, Rutgers won’t be relying completely on the honor system. Admitted students who plan to enroll must have an official transcript with final grades sent to Rutgers, and Micketti says every transcript will be checked against the SRAR for grades and also cumulative GPA and class rank, if provided. Students will have the chance to explain any discrepancies. “There may be valid reasons for differences,” explains Micketti, “for example, if the school changed its grading policies or used multiple grading systems.” Without a suitable explanation, the offer of admission may be rescinded. The new system, which is voluntary this year but will be mandatory next year, was used by approximately half of the first-year applicants for fall 2009.
Before introducing the system, Rutgers conducted focus groups with high school counselors and prospective applicants, and various prototypes were tested by students. Rutgers expects the system to save trees and labor and to streamline the admissions process, as has occurred in the University of California system, which has used a similar procedure for several years. ?Don Parker-Burgard
KANSAS STATE UNIVERSITY FRESHMEN DON'T LIKE JUICYCAMPUS.COM. THE WEBSITE, which allows users to post gossip anonymously, is known for its unfiltered content. “Thanks to the internet, we can act badly anytime, anywhere,” says Elaine Johannes, an assistant professor of family studies and human services. Johannes teamed with Judy Lynch, director of the Academic Assistance Center, to survey the 406 students enrolled in freshman experience classes about perceptions of bullying and cyberbullying on campus.
The overall results are fairly typical, Johannes says, but on a question about cyberbullying many students noted the website should be shut down. She expresses concern the bad behavior taking place on the internet and reality TV will eventually come to campus. There is also a trickle-down effect as high school students imitate college students. “Sometimes adults need to say that certain behavior is not acceptable,” she says. “I don’t want to be an extremist. Not everything is bullying. Some [incidents are] just poor communication.” ?A.M.
WE KNOW AUTOMAKERS ARE IN TROUBLE--THEY PAID ATTENTION to what once was instead of what will be. What could prevent American higher ed from suffering from this same hubris? Will we witness a new generation of cellular teachers and learners?
One virtual Japanese university suggests the answer is in the palm of our hand?the next small thing in higher ed. Fukuoka-based Cyber University delivers its courses over SoftBank 3G smart phones. Japanese students both old and young seem to love the idea. Travelers packed on the Yamanote subway line can take a cellular course on their way home. Here is the kicker?the first course is free, that is, if you buy into the provider, equipment, and transmission.
Several U.S.-based institutions will soon offer full-motion courses in real time, all with faculty voiceovers, student chat rooms, and self-paced tutorials. Already, state and community colleges in Louisiana and Indiana are experimenting with digital media on mobile devices.
Though Socrates might have issues with cell phones, cellular colleges are claiming new mindshare in the global marketplace. To read more about this trend, see the online version of this column at www.universitybusiness.com/viewarticle.aspx?articleid=1233
? James Martin and James E. Samels, Future Shock columnists, are authors of Turnaround: Leading Stressed Colleges and Universities to Excellence (Johns Hopkins University Press, 2009). Martin is a professor of English at Mount Ida College (Mass.) and Samels is president and CEO of The Education Alliance.
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