As details of our financial situation have come out, it has become apparent that Brandeis is in worse shape than many other universities. There are several well-known reasons for this. Our relative youth means our endowment is much smaller than most institutions of similar standing. The Madoff scandal affected our donor base much more heavily than most schools. However, some of the blame has to go to the financial model that Brandeis has been working under for the past few years. For those unfamiliar with Brandeis’s spending patterns, this post is the most comprehensive explanation I’ve seen and is definitely a must-read. Basically, even as we were receiving record fundraising totals, our spending was so aggressive that we took on an incredible amount of debt, and the market failure has left us with obligations we can no longer come close to meeting.
For what I gather, aggressive spending has been a common feature of Brandeis’s recent history, and though recent circumstances make it tempting to view this as a complete mistake, we must also recognize the good that has come of it. Simply put, I doubt that there is another university in the nation that has done so much with so little. Flawed as they are, the US News and World Report rankings provide good perspective on where our reputation stands. Brandeis is number 31 among national universities, an amazingly high position considering we are only 61 years old. Plus, we are much smaller than every other school in our league; the only smaller school above us is the much less diverse CalTech, and the next school with an enrollment below our 5,333 is WPI at number 71. And while the numbers obviously don’t mean everything, I think every Brandeis student realizes that we are incredibly lucky to be attending this school. Our faculty is excellent and very well respected, our facilities have been constantly improving, and we’ve enjoyed visits from the top names in almost every field of study. This kind of success doesn’t come cheap, and it’s safe to say that without our aggressive spending patterns, our meteoric rise to the upper echelon of academia could not have happened.
Yet this success was also gamble, as we see now. Yes, we had an emergency fund, but it was obviously too small for a crisis of this magnitude. And while the combination of horrible recession and Madoff could not have been predicted, I’ve seen no evidence that there was any kind of emergency plan in place for disaster, something I imagine would be elementary. Is it possible that selling the Rose was always going to be the backup plan? I doubt it. If so, it would have been carried out much better. Even if it was, it’s obviously not a very appetizing one, even if you ignore the (very convincing) arguments against using art as an ATM.
So how are we to judge the university’s past financial model? The answer will come in how Brandeis weathers the current crisis. If we emerge bruised but largely intact, then the failure of emergency planning is a mistake that will not come close to eclipsing what should be recognized as one of the greatest feats of university management in history — the development of a leading national school in just over half a century. If our reputation and standing are permanently damaged, then Brandeis has gambled away its future and made all of our degrees that much less valuable. The stakes are incredibly high.
I consider myself very lucky to be connected with a school as great as Brandeis, and I’ll view a few years of relative stagnation as a small price to pay for all the great things that Brandeis has to offer. However, if the Brandeis I leave is fundamentally weaker than the Brandeis I decided to attend, I’ll feel cheated and used. In short, my recommendation for the financial model of the future is one that is still very aggressive; in fact, as aggressive as possible while still providing a plan to help us survive lean years. However, I can also understand why some people will want to see much more caution in the future.
Let’s start this discussion in the comments. What do you think Brandeis’s long-term financial model should look like?