NYU 2031 is a mammoth of a plan, but is it all necessary? Does NYU really need to rule the world via its Global Network?
I studied abroad in Shanghai in Spring 2012 and was one of the last batches of students to study at the East China Normal University campus. Objectively speaking it was a pretty lackluster space that we had there – a single floor with an office and classrooms laid out along a hallway that could serve as a backdrop in an Asian high-school horror flick. Linoleum flooring and brown doors, fluorescent lighting of a somewhat unnerving tint, and a bathroom at the end of the hall that I dreaded going to. I lived off-campus and it was a slight commute to school – a 20 minute public bus ride if memory serves me right. It was basically impossible to walk, and the shuttle provided only left off-campus housing twice in the morning. If you had no morning classes as I did, you had to make your own way.
Yet, my experience in Shanghai thoroughly challenged what I thought of as a good educational experience. I was never more invested in the classes I took – two especially stand out, one on the Chinese Diaspora and another on law in China. I was deeply interested in pursuing the subject matter, and the professors were challenging, engaging and extremely experienced in their fields. We ran into the administrative staff often because of the floor’s simple layout, and they always showed a genuine concern to get to know us. There was something about having a college administrator know you by name that was something profoundly different – students were more likely to go up to the administration to seek advice, and administrators resolved student issues far more quickly too. The level of mutual accountability was that much higher than here in the main campus, where going to the administration is more of a chore.
Most of us were college sophomores and juniors starved of a sense of community. The off-campus housing was the closest I think I’ll ever come to living in a traditional dorm – everyone was pulled in a million different directions in New York, but being in a new place with only one another as company forced us to get closer than we ever could have in New York. Those were fast, exciting times as we took in the sketchy food stands and explored the city and reveled in cheap cab rides (made even cheaper when we went in fours and routinely snuck in a small fifth person) en route to the party destination for the night. There are less exciting times that I think back on fondly, like everyone crammed in the living room getting takeout and bubble tea, watching new Game of Thrones episodes that we had bought from the pirated DVD store across the apartment – in our pajamas. That clearly would never happen in New York.
There in Shanghai I caught a glimpse of what it might have been like to go to a remote school of 200, as much as I love the city and the countless opportunities that it has given me, I wonder what it would be like if I went elsewhere with a greater sense of place. I think about the new NYU Shanghai campus in the newer, modern Pudong district – west of the river when we were east of it in the older, more colourful city – and I wonder what kind of experience they will have, spending most of their time in that sterile environment. Did they really have to build a massively expensive campus for 300 full-time students as a ‘degree-granting institute’? It begs the question that runs throughout the NYU 2031 plan – that of lavishness and excess.
Earlier this week, I made a financial model for a non-profit start-up as part of an entrepreneurship class. I was struck by the differences in projecting revenues and expenses for a non-profit venture. In a for-profit situation I’d model for year-on-year surplus to be as large as reasonably possible, but I felt a sense of conscientiousness not to do so in a non-profit environment. In my opinion, to accumulate massive surpluses is hardly the point, and more importantly there was an onus to ensure that the excess profits get reinvested into the organization that was set up to serve its stakeholders.
That’s how I feel about NYU as a non-profit institution. That we will eventually spend 7% of our annual operating expenses on debt servicing hardly seems right – 7% is a number more usually seen in larger, aggressive corporations that can afford to raise risky, higher-yield debt. NYU’s ratio of “expendable financial resources to direct debt” – also known as its viability ratio – of 0.51 is flimsy at best, and is only expected to fall to 0.31 as the plan gets underway. That a non-profit institution really will have only 31 cents available for every dollar of debt it raises is straight-up irresponsible.
There is nothing inherently wrong with leverage, especially if that’s what a company’s shareholders desire. But as our leverage increases, the cost of raising future capital becomes more expensive and its terms, less flexible. Most significantly, the institution has less room for maneuvering in a rainy day when something goes awry. If our operating surplus should fall, NYU’s largest revenue stream – its students – will then have to bear the burden of servicing two debts: their own, and the school that they took on debt to attend.