Students I have talked to seem to agree that today’s presentation by Pres. Jehuda Reinharz, COO Peter French, and Provost Marty Krauss was productive. There was a massive student turnout (the room was packed), and a lot of important questions were answered. I feel relieved that I’ve finally been given substantial information, but also some resentment that this presentation, which was prepared in December, could not have been shown to the student body earlier. It seems crazy to hold back explanatory and even comforting information while the student body frets.
Here is a paraphrased summary of what we were told regarding the closing of the Rose. More summary to come regarding details on endowment return and other areas of the presentation.
Brandeis lost 25% of its endowment between June 30 and December 31, falling from $712 million to $549 million in market value. Peter French’s projections predict the endowment’s value will reach an all-time low of $468 million in Fiscal Year 2009. After that, the endowment will begin to recover, but until it surpasses its original principal, no withdrawals can be made due to Massachussets law. Proposed changes in academic structuring and student/faculty ratio will help to close gaps, but not by a lot. Selling the Rose, as sad as it makes the Board of Trustees, is the only feasible large-scale cutback.
So, what exactly will happen? There are 7180 works of art in the Rose collection, with an estimated worth at about $350 million before the crash. It will take months or years to sell the paintings, as we must wait for the art market to recover, as well as examine the terms of donation or purchase for each and every work to see if its sale would be legal. A full sale of the Rose collection is thus nearly impossible and undesirable. If, by some miracle, the economy recovers and philanthropy picks up, Pres. Reinharz said that there may be no sale at all.The actual shut-down of the Museum will have little effect on budgetary savings. The direct operating expenses for the Rose (salaries, exhibitions, etc) and its operating revenues even out; both costs and proceeds from the Museum are somewhere between $1 and $2 million per year. In addition to direct expenses however, there are approximately $600,000 in indirect expenses (heating, lighting, water, maintenance) which would be saved by the closing of the physical Museum.
So, why was this decision kept secret? According to Pres. Reinharz, the Board of Trustees did not want a widely-publicized discussion, and they wanted to “protect” the director of the Rose, Michael Rush, who could not have been expected to collaborate on the decision to close down the museum he is responsible for. Along these lines, the Rose’s Board of Overseers was also not alerted.
What are the alternatives? According to Peter French, the Rose could only stay open if Brandeis drastically increased tuition or donations. The university has no capacity to take out more debt, or make sufficient cuts without neglecting vitally important services. An idea came up to close buildings temporarily, but according to Dan Feldman’s analysis, we would need to close about half of the campus’ buildings. If the savings expected from the Rose were to come from additional personnel cuts, we would need to cut approximately 270 more staff members or 200 more faculty.
Some students brought up creative ideas to save the museum, such as attempting to sell the pieces of art back to the donors themselves, so that we could restore our collection in more prosperous times. To this, Pres. Reinharz responded, “If it works, cool!”
Feel free to post your own thoughts on the presentation.
6 responses to “Report on today’s administrative presentation: The Rose”
Well, they are actually relatively set for the next two years, due to the $100 million reserve fund accrued by Pres. Reinharz over the previous decade. After FY 2010, however, we’ll be in serious shit, given current trends. Even with all the changes and cost savings, we’ll still be running a deficit, and the chances of recovering all the money we need through fundraising is near to impossible. This is where the art comes in – to bail us out in several years. We have enough funds due to the current cuts, reserve fund, and planned cuts to last us till then.
The Rose closing is not a stopgap measure because we need cash now. It is intended to recapitalize our endowment earlier, thereby allowing us to draw from it before FY 2014 under current law and avoiding other cuts.
Whether this is the best plan…. I don’t know. I’ll elaborate more on that tomorrow.
As an biology alumnus in Maryland, I appreciate the posting of this summary, as though I care about this issue, I was not able to attend this forum. Thank you for your posting.
Though I am not a financial expert, something seems off to me in the projected timings reported here.
Why is there a disconnect between the projected low of the endowment this FY09 followed by a recovery, but then the sale of art that takes *months to years* based on the recovery of the art market, which I imagine would either coincide or follow (but not precede) the general market recovery? The art market is a luxury — isn’t it the early to fall and late to recover, similar to vacation real estate? So why are they counting on a rebounding art market to sustain them when the endowment, invested in the rest of the market, would have already recovered?
Also, there is the issue of the $10M budget gap, which I would imagine could be closed through a combination of fiscal conservation and aggressive fundraising within 2009. The ~600K operating expenses for the museum, I would imagine, could be covered through increased ticket prices/sales and other alternatives. Personally, I prefer trying to recover the endowment via donations, which it appears is not entirely out of the question.
I am disappointed by the way in which Brandeis made this decision and announced it, without consulting either the Rose Art director, Board of Overseers, or the students, all of whom this greatly affects. It was cowardly to make this decision behind the backs of those who the Administration and Board of Trustees perceived would disagree. Furthermore it did not consider the creativity and concern of the Brandeis community, which has come up with many innovative solutions since the announcement, based upon the limited available information. With better communication, perhaps a less painful solution could have found earlier on that would have diffused emotions and reflected better upon the reputation of Brandeis as a nationally recognized institute of learning and culture.
While the space would be lovely (as the initial plans for new Fine Arts work/learning areas were dropped), what people fail to realize is that the Rose Art museum is to a Fine Art student what a Lab is to a Pre-Med. The Rose is where we go to look, to touch, to explore and gain real life experience. Without the Rose, we are left in a dark room with a slide projector.
aimy, that’s really interesting. Why is that?
Hi, I’m one of the UDRs for the art department and I just wanted to clarify on something Marty Krauss said after President Reinharz left the briefing. She said that the “silver lining” of this situation is that the Rose will be converted into gallery space and studios. We may have lost funding for a new art building, but no one from the art department supports this plan.
[…] After giving this daunting presentation, French stepped aside to let President Reinharz answer student questions. Much of this conversation focused on the closing of the Rose Art Museum, which Liza covered in her recent post. […]