Financially Flawed: The New School’s Troubling Lack of Transparency

There is something very curious about an institution that constantly touts its commitment to democratic citizenship and public engagement, but refuses to share even basic information about how decisions are made within its walls. This is exactly the case at The New School, which, despite its progressive reputation, continues to make budgetary decisions behind closed doors. The administration does not allow its citizens — that is, its faculty and students — to participate in allocations. It will not even disclose how, when, and by whom these decisions are made.

Budgetary allocations are the fundamental means by which priorities are determined within the university — how much goes to student services, how much to salaries, how much to one program or another. And yet our administration does not trust us to partake in that process. This creates an enormous problem of transparency and accountability.

It also might explain why, according to The New School’s annual report, the university dedicated only 37 percent of its total operating expenditures to “instruction and departmental research” in the 2009-2010 academic year, the most recent year for which such figures are available. During the same period, a category called “institutional support,” which seems to mean administration (the other two categories are “student services” and “academic support”), including the salaries of top executives, accounted for 25 percent of the total budget. By comparison, the National Center for Education Statistics reported that other private, not-for profit universities allocated, on average, 44 percent of their expenses to instruction and research, and only 14 percent to institutional support during the same academic year.

During a series of town hall meetings this semester, President Van Zandt was asked to clarify these categories and explain how, exactly, the budgetary pie is cut. On both counts he demurred, stating that he was not familiar with the annual report figures and could not comment on their meaning.

Is Van Zandt really uninformed, or is he simply unwilling to shed light on major steering decisions? Either way, given that The New School collects more than 90 percent of its revenue from student tuition, such a patent lack of transparency is deeply troubling.

Without budgetary transparency, the university community can only speculate about the school’s financial decisions — decisions that are all the more significant at a time when we are being told to make sacrifices. More than 20 hiring lines to replace retiring full-time faculty have been frozen, the adult extension division of Mannes is being closed, as is the foundation department at Parsons. It is hard to tell if the executive of the school is making the same sacrifices. Van Zandt likes to point out that the office of the president recently trimmed $2.5 million from its budget, but one might speculate that these savings took place by simply releasing Bob Kerrey and Jim Murtha from the university’s payroll. Without a more transparent budgeting process, it is impossible to assess these isolated bits of information. We don’t know their impact on The New School’s academic and institutional priorities. We do know, however, that from 2008 to 2009, as the university’s endowment decreased, the salaries of the top administrators increased.

The university’s commitments to third parties are also unclear. At a town hall last May, when asked why tuition is increasing by a staggering 5 percent each year, President Van Zandt revealed that tuition increases were partially tied to promises made to bondholders, in $300 million in securities that were issued to build the new flagship building at 65 Fifth Ave. This means, in effect, that a portion of student tuition is being used to service debt, and thereby generate profit, for private and presumably wealthy investors.

Such things are possible because, unlike most other institutions, The New School has no budgetary committee — no body that can be held accountable for financial decisions, no body on which students and faculty can demand representation. For an institution with such a staunch commitment to radical democracy and social engagement, this is rather embarrassing. It is also extremely worrisome for the university’s long-term and short-term financial health.

Thus, for example, Van Zandt has informed the university community of a projected $17 million shortfall in this year’s budget, and has said that “nothing is off the table” in terms of the cuts that may be made to make up for this deficit. From whence did this shortfall come? And to what extent could this be remedied with cuts to executive salaries which, in 2009, totaled a cool $12 million? In other words, why can’t the cuts be made in the remuneration of those who, in all likelihood, caused these financial problems in the first place?

As we all learned from the latest economic crisis, it is a well-worn and particularly deplorable tactic to take a financial shortfall caused by executive mismanagement and transform it into an argument for social austerity in “these difficult financial times.” We have no way of knowing how severely The New School’s finances have been mismanaged, because we are not privy to the information we would need to make that judgment. All we do know is that we are being told to pay the price — tuition is going up yet again next year, as more programs are being cut — while forced to remain in the dark.

It is time for The New School to remedy this black eye in its commitment to democracy and transparency. The university must establish a budgetary committee, and it must have student, staff and faculty representation.

The Student Action Network is a group of politically engaged New School students organizing around issues in education, from tuition and debt to making our university a more democratic and hospitable place to study and work. It was founded last year in solidarity with Occupy Wall Street and other student movements in New York and around the world.