New York's most amazing story - Charles NyanGiti compillazions

It is the most amazing story imaginable. Yet it is a story featuring a long list of some of the most famous people
and landmarks. It is a New York story, a quintessential New York story, one that New Yorkers love to read
about. And it is, in every way, a story about money, which is why it is both an amazing story and a quintessential
New York story....continued

One of Cooper Union’s most famous graduates, Milton Glazer, was recently featured in a The Village Voice
front-page story about what it means to be a New Yorker. If you don’t know who Milton Glazer is, you don’t
deserve to be called a New Yorker. A simple phrase will suffice: I Love New York.

It was Milton Glazer who provided the opening statement in The Great Hall at an event called “Free Cooper
Union: A Community Summit.” The event featured students, faculty, and alumni of The Cooper Union, all
uniting for the same cause: preserve free education at The Cooper Union. Milton Glazer, a trustee emeritus of
the college, a specialized college that offers undergraduate degrees in art, architecture, and engineering, gave a
speech that was different than all of the other speeches. His speech had been vetted by the administration of the
school. He reiterated to the crowd what the newly-appointed president of the college had told the “Cooper
Union Community” and the media – that charging tuition at the “full scholarship” school was truly a “last
resort.” Out of respect, he wasn’t booed.

The speaker originally scheduled to open, the president of the alumni association, Peter Cafiero, whose day job
is Chief of Operations Planning for New York City Planning, undoubtedly one of the toughest political jobs in
the city, graciously agreed to close instead. The event dragged on for far too long. A clock that was supposed
to let speakers know when their allotted time was up kept seizing up. A bell was rung instead and was routinely
ignored by presenters. The speakers were supposed to be done by 8pm; instead, with no intermission, it
dragged on until 10pm. Many in the audience had left. And when Peter Cafiero told the crowd that they
shouldn’t concentrate on the past, on the disastrous decisions that had brought them all to the present, but
concentrate on the future, on solutions to rescue them from the precipice, he was booed.

The organizers of the Community Summit had to pay for use of The Great Hall. They sold T-shirts in the
lobby, with the design of a volunteer Cooper alumna, to defray the costs. The T-shirt showed a wolf suckling
Romulus and Remus, the founders of Rome, with the words “Keep Cooper Wild” emblazened at the top. To
many, the pictoral reference may have been too esoteric. For others, the slogan may have reminded them of the

Diller and Scofidio, the visionary architects of the HighLine, are Cooper Union royalty. So are Daniel
Liebeskind, master planner of the World Trade Center site, and Nanako Umemoto. The long-time dean of the
architecture school was John Hejduk, the theoretician who has imbued in all graduates of the architectural
school a Cooper Union style that is immediately recognizable – to architects who look at architectural drawings.
Hejduk’s projects were primarily theoretical, but they were brilliant and world-renowned. One project he did
get built was a renovation of the interior of the Foundation Building, the landmarked structure that was the
original home of The Union when it opened in 1859. He ripped out its guts and installed a white, modernist
interior. He shifted the axis of The Great Hall, where Abraham Lincoln made the “Might Makes Right” speech
that catapulted him to the national scene and led to his presidency. He installed in a round shaft a custom
elevator. Peter Cooper, who designed and built the original building, assumed that someone would eventually
invent an elevator. He just presumed it would be round, which is why the shaft had stood vacant for 110 years.

It was David Gersten, a protege of John Hejduk, who could be counted as an alumnus, a faculty member, and as
an administrator, as he had also served as interim dean of the architectural school after Hejduk’s retirement,
who delivered the most eloquent speech of the evening. Using architectural metaphors, he said, “It is not that
The Cooper Union holds up free education but that free education holds up The Cooper Union.”

Cooper’s art school is associated with its share of big names: Hans Haacke and Lee Krasner and Alex Katz and
Eric Drooker (famous for his cover art for The New Yorker). Augustus Saint-Gaudens, who sculpted the statue

of Peter Cooper at the Foundation Building entrance, was an early Cooper grad. In the field of graphic design,
there is Herbert Lubalin, Louis Dorfsman and, of course, Milton Glazer.

Half of “The Union for the Advancement of Science of Art,” the original name of the school, is an engineering
school, and engineers are not so famous, but can be as accomplished. Albert Nerken and Irwin Chanin, Mischa
Schwartz and Stanley Lapidus.

Not all architects become starchitects. Most artists don’t make it, and it is rare for a graphic designer to attain
the fame of a Milton Glazer. Engineers may use engineering to rise from the lower class to the middle class,
but most don’t become famous inventors or entrepeneurs. Because of its specialized schools, because of the
nature of the three disciplines, The Cooper Union has a 1% problem. The philanthropy of the 99% cannot meet
the philanthropy of the 1%. That’s all right. As Marilyn Hoffner, the retired director of development and
alumni relations put it, “You get to keep your first million, Cooper gets your second million.” As its founder,
Peter Cooper, the inventor of things and inventor of philanthropy put it, “If now and then some of us don’t give
a little too much, how shall we make up for those who give too little?”

It is the rearrangement of millions of dollars that led Cooper to its current precipice. Cooper experienced a
similar crisis in the recession of the seventies, just as it was carrying out Hejduk’s gut job of the Foundation
Building. It eliminated its graduate program. It eliminated its Physics degree program, which allowed it to lay
off tenured faculty but led to the creation of a faculty union. And it sold off Green Camp, a thousand acre tract
in Ringwood, New Jersey, that become a beloved site for survey classes, camping trips and reunions. Like
Bronx residents and Robert Moses, there are still some alumni who will never forgive President White for
selling off Green Camp to save the college.

At the millenium, Cooper faced a similar set of problems. It owned the Chrysler Building, a gift from Edward
Cooper, Peter Cooper’s son, and Abram Hewitt, Peter Cooper’s son-in-law. Under a unique deal with New
York City, The Cooper Union collected rent from the Chrysler Building, and also its property taxes, as assessed
by the city’s Department of Finance. Historically, half of Cooper’s revenues had come from this single gift, and
the rest had come from its non-real estate endowment, the “quasi-endowment.” And that was the problem.
Unlike other colleges, Cooper couldn’t just raise tuition during tough economic times. It sold off other real
estate assets. It sold off equities and depleted its quasi-endowment. When Dr. George Campbell arrived in
2000 to become president of the college, income from the quasi-endowment was at an all-time low, as was the
quasi-endowment itself, about to fall below $100 million, not a desirable state for a college with an operating
budget of $40 million, with only $12 million coming in from the Chrysler Building rent and PILOT (Payments
In Lieu Of Taxes).

In hindsight, it may be easy to criticize what transpired between 2000 and 2006. A lot was risky, but risk was
needed. Reviewers from the Middle States Association, in charge of the accreditation of the school, wrote in
the summer of 2003, “Many financial plans for the college have come and gone without achieving their goal of
balanced budgets and financial health. This one must and should succeed....[The financial plans] are ambitious.
If successful, they will finally put the institution on a sound financial footing. If not successful, the institution is
in peril.”

In the same report, the reviewers wrote, “The Periodic Review Report includes a mission statement that was
approved in 2000. It reconfirms the traditional picture of Cooper Union as committed to outstanding programs
in its three schools, offered to gifted students without tuition, and enhanced by the urban setting. It also
reaffirms the commitment to being an intellectual and cultural center for New York City. This mission is
appropriate to the institution and in line with the missions of the three schools. It is not entirely clear what role,
if any, the mission statement played in developing the institution’s strategic plan for 2001-06. They are not
inconsistent, but neither does the mission seem to strongly and explicitly guide the strategic plan. It may be that
there is such strong internalization of the elements of the mission that it was not necessary to be explicit about it
in the strategic plan.”

In 2006, the Middle States Association was satisfied and renewed the colleges’ accreditation. In 2008,
President George Campbell bragged that Cooper had achieved its first balanced budget, and was given a
significant performance bonus by the Board of Trustees of the college. In 2011, the new president of the
college, Dr. Jamshed Bharucha, announced that the college might go bankrupt in two or three years, that the
mission of the college might have to be changed, that the college needed to “reinvent” itself to survive. What

The strategic plan, known as the Master Plan, had “several interconnected initiatives,” in the words of Alan
Halperin and Maria Vullo of Paul, Weiss, Rifkind, Wharton & Garrison, LLP, Cooper’s attorneys. A capital
campaign was launched to raise $250 million; by 2006, it had already raised $129 million. The administration
committed to reduce operating expenses; by 2006, it could be shown that operating expenses had not risen as
much as the higher education price index (HEPI), an index created in 1971 by the Commonwealth Institute to
help trustees justify why it was okay to let college prices rise faster than the consumer price index (CPI). The
college vowed to increase annual giving; the director of external affairs bragged that 30% of Cooper Union
graduates gave back to the college in 2008, more than twice the national average for specialized colleges.

$90 million of the capital campaign was to be placed into a building fund to create a new engineering building
at 41 Cooper Square, across Third Avenue to the East of the Foundation Building. Here’s where the
interconnection really starts. After three years of work with Community Boards 2 and 3, followed by a seven-
month Uniform Land Use Review Procedure (ULURP), Cooper got permission to tear down the Abram Hewitt
Building at 41 Cooper Square and build a New Academic Building (actually referred to as the NAB). The old
engineering building at 51 Astor Place, across East 8th Street to the north of the Foundation Building, would be
torn down and sold to a developer, who would include 40,000 square feet of space reserved for academic use,
presumably to relocate the administration offices from 30 Cooper Square, on the other side of Fourth Avenue to
the south of the Foundation Building. Meanwhile, in 2002, Cooper got the Related Companies to finance a 21-
story luxury condominium at the site of a parking lot across Fourth Avenue to the west of the Foundation
Building. The Cooper Union owned the building, but Related got a 99-year lease, paying Cooper $11 million
the first year but just one dollar for the remainder of the lease period. Related also paid its property taxes to
Cooper instead of to the city, just like the Chrysler Building.

This is also why the Middle States reviewers were so confused. The three schools at Cooper, art, architecture,
and engineering, are individually accredited by three accrediting agencies, NASAD, NAAB, and ABET,
respectively. There was criticism of the lack of individual studio spaces for the non-freshman art and
architecture students, but no criticism of the engineering building facilities. In the New York City real estate
market, it was understood that providing shared studio space was inevitable. How was creating a new
engineering building going to serve the mission of the college?

Similarly, prior to the Master Plan, Cooper had leased space from the Kamenstein Holding Company to build
student housing. Traditionally a commuter school, Cooper got the Dormitory Authority of the State of New
York to issue $18 million in 1996 bonds to finance the building of the dorms, including a new space for the St.
Mark’s Bookshop. Whether the Residence Hall was intended to increase geographical diversity at Cooper,
increase the number of applicants to make Cooper appear more exclusive in its admissions policies, or get
access to a better pool of student applicants was unclear. The Residence Hall did include an AlumniSpace
which was often used as a free hotel room for potential donors from out-of-town.

Cooper also got $11.5 million in 1999 DASNY bonds for a major renovation of the landmark exterior of the
Foundation Building. Luckily, the college was subject to restrictions in taking on additional long-term debt.
But that’s where the final interconnected initiative of the Master Plan came into play.

In the words of Cooper’s attorneys, the college proposed to adopt “investment strategies designed to invest
prudently liquid assets to maximize returns while preserving principal.” In November of 2005, the Middle

States Association accepted the monitoring report and reaccredited The Cooper Union. Their next visit wasn’t
scheduled until the 2007-2008 academic year. On September 6, 2006, The Cooper Union, which had just
convinced the Middle States Association that its Master Plan was on track, that operating expenses were under
control, told a very different story to the Supreme Court of the State of New York. It filed a cy pres petition for
relief from the New York Estates, Powers and Trusts Law. Cooper wanted to mortgage the Chrysler Building.

In the cy pres petition, the Cooper attorneys told the Supreme Court that Cooper was in a “grave fiscal crisis.”
It had an “immediate need to modernize facilities ... which may challenge its accreditation.” The attorneys
made a series of statements which, individually, were true, but inferred that it was the engineering building that
threatened Cooper’s accreditation. Certainly, reasoned Carl Distefano of the Attorney General’s office,
Cooper’s “ability to maintain its accreditation will be seriously compromised” if they opposed the cy pres

Back in 2003, Cooper did something else that it never told the Middle States Association or the Supreme Court
of the State of New York about. In fact, it was so well hidden that it has confused The New York Times for a
year. It “changed its accounting policy for recording the value of investments in real estate,” according to
audited consolidated financial statements recently released to the press. Instead of valuing its real estate at cost,
it would use the “fair value” of its real estate. This added $146 million to the endowment. This also allowed
The Cooper Union to invest $3 million in a hedge fund.

Investments by educational institutions in hedge funds had become very popular. But hedge fund managers
know how risky these investments are, so they insist that their institutional investors have at least $100 million
in their endowments before they’ll allow them to invest. The Cooper Union only had $80 million in its quasi-
endowment. Now it suddenly looked like it had $226 million.

Aside from providing housing for students from out-of-state, Cooper had a complex about its status. Sure, other
artists, architects, and engineers had heard of the place and knew about the quality of its graduates, and it
routinely was at the top of lists of prestigious undergraduate colleges, but the national and international stature
of Peter Cooper, whose death in 1883 plunged the entire city into mourning, had lapsed into relative obscurity.
In 2009, The Union would celebrate its sesquicentennial. Opening the NAB in 2009 would be the perfect 150th
birthday present.

Construction prices were rising, and Cooper had gotten Thom Mayn of Morphosis to design the first LEED-
Platinum building in New York City. There was only $60 million in the $90 million building fund, but by
mortgaging the Chrysler Building, Cooper could take out a $175 million loan from MetLife. It retired the
DASNY bonds. It arranged for a Guaranteed Maximum Price with Sciame for construction of the NAB. It
poured $75 million, then $100 million into the hedge funds. It renegotiated a 150-year lease for the Chrysler
Building struck in 1999 with Tishman Speyer Properties to lock in a $25 million hike in rent in 2018, with
additional hikes every 10 years. 2018 was also the year that it would start paying down principal on the $175
million loan. It got $97 million in advance in lieu of rent from Minskoff Equities to develop the old engineering
building site. The 2007-2008 budget was balanced. In January 2009, The Cooper Union would launch a year-
long celebration, culminating in the opening of the NAB. The large fees it had paid to pull off all of these real
estate deals and bond retirements and loan agreements and reward the investment managers were worth it. But
then, between the end of the academic year in June 2008 and the start of the birthday party in January 2009,
something very bad happened: the crash of October 2008.

It took only three years for everything to go wrong. Instead of $250 million, the capital campaign raised under
$200 million. Somehow, despite the $115 million Guaranteed Maximum Price, the NAB ended up costing
$165 million to build. Renovating the interior of the Foundation Building went over-budget, as well. The old
engineering building, intended to be replaced and paying property taxes by 2012, wasn’t even demolished yet.
Annual giving declined with the stagnant economy.

The two last pieces of the interlocking initiatives of the Master Plan are the most disputed. How much money
did the quasi-endowment lose in the hedge funds? The version told to the Wall Street Journal and CNBC, that
Cooper did better than other colleges might be true, but other colleges had larger endowments. A new trustee
told the Cooper Union Community that Cooper lost all of the gains in 2006, 2007, and 2008 in the crash. One
thing is clear: the quasi-endowment, after the capital campaign, the loan, and the Minskoff deal, was only $140
million in June of 2011 - $106 million in 2000 dollars, using the CPI (much less using HEPI).

The other matter under dispute is how out-of-control the operating expenses of the college rose between 2006
and 2011, once the Middle States Association stopped their monitoring. As long as the quasi-endowment was
growing, it didn’t seem to matter that expenses were rising right along with them. After the crash, expenses
continued to rise, and at rates well above the CPI and the HEPI. Most of the dispute centers around how much
of the rise is “paper,” non-cash accounting items like depreciation. The bigger part of the dispute is how much
of the rise is due to the hiring of non-academic personnel, including a new development office whose job it is to
compensate for the failed capital campaign and the quasi-endowment losses. And, although the NAB is energy-
efficient, operating it, including a beefed-up security staff, given its public stature, is expensive.

To add confusion to the mix, President Campbell announced his retirement, and The New York Times ran a story
about how he had balanced the budget in 2008 before the crash (probably true) and increased the endowment
from under $100 million to over $600 million (apples and oranges, given the change in accounting policy). The
work of a presidential search committee came to naught, either because no one wanted the job, or the Board of
Trustees didn’t like any of the candidates.

Then, in one weekend, a new president was hired. Trustee Stanley Lapidus, an alumnus, successful inventor,
and teacher at Tufts, called up their provost, Dr. Jamshed Bharucha, on a Saturday morning, and met him for
lunch at a Chinese restaurant in New Hampshire on Saturday afternoon. Dr. Bharucha was flown out to New
York City the next day to meet with the Board of Trustees, and offered the job that evening. The amazing story
is told by Dr. Bharucha himself in a YouTube interview with someone from Tufts.

In this interview and in subsequent interviews with Education Update, trustee Daniel Okrent and WNYC’s
Brian Lehrer, Dr. Bharucha was less than discrete. When asked about his accomplishments at Tufts, he listed
items that are echoed in his subsequent calls to implement a “reinvention strategy” at Cooper. When asked
about the full scholarship for all policy at Cooper, he refers to it as a “cherished aspect” of the institution that
isn’t as important as “access” for the lower class. Media coverage of Cooper was fixated on the failing St
Mark’s Bookshop, which Cooper was subsidizing to the tune of $100 thousand a year. To stop the negative
publicity, President Bharucha struck a deal with Manhattan Borough President Scott Stringer to increase the
subsidy to $130 thousand for one more year.

President Bharucha also decided to teach a class. He chatted with his students about how the Deed of Trust
didn’t require that the day schools be free. The college historian cast doubt on whether Peter Cooper actually
said that education should be “as free as air and water,” a quote attributed to Cooper on several occasions by his
son-in-law, Abram Hewitt. Someone changed the mission statement on the college’s website, somehow the
students found out that the date of a Board of Trustees meeting had been moved up, and a panic ensued amongst
rumors that the Board would suddenly announce that Cooper would start charging tuition. On Halloween 2011,
President Bharucha simultaneously announced to the students (and some alerted alumni) and The New York
Times that, without serious action, the college might have to close in two or three years. All attention was
focused on the revenue side. President Bharucha also announced a hiring freeze, except for those positions
“absolutely critical to the reinvention strategy.” The students demanded a meeting with a representative of the
Board of Trustees, and a week later Chair Mark Epstein, accompanied by a lawyer, answered questions at an
open forum, blaming alumni for the crisis. The press was not allowed in, and Epstein, a former Alumni Council
president, had scheduled the open forum at the same time as an Alumni Council meeting. Later, the
administration would claim that they did this so that alumni attending the council meeting would be in town for

the open forum. Epstein hoped to calm the students by telling them that they had a contract with Cooper, that
all students currently enrolled would have a full scholarship until graduation.

A profusion of social media websites sprung up once the rumors were confirmed. The alumni were in shock.
Many alumni taught at the college, and there was a multi-generational tradition as well, with alumni hoping to
send their children to Cooper. The backlash was much stronger than anticipated.

Perhaps the biggest miscalculation was the most obvious. The low admissions rate meant that Cooper only
accepted and graduated the best students. The students and alumni and faculty were smart and creative. The
students staged a protest, mounted an art show, created a satirical website and a hilarious YouTube video. The
faculty union provided financial information. Alumni performed research and published exposes. Meetings
closed to the press were tweeted and posted to YouTube. The community summit in the Great Hall was front
page news in The Villager, and an adjunct professor wrote a passionate and well-researched piece for Brooklyn
Rail. The Village Voice first mocked the students, then wrote that preserving the full-tuition scholarship at The
Cooper Union was “inevitable.”

The alumni learned quick. By holding meetings at college facilities, they attracted faculty. By offering free
food, they attracted students. They scheduled a second Community Summit in The Great Hall with a
prestigious panel to announce publication of a 30-page document unifying the stakeholders of The Cooper
Union called “The Way Forward.”

The new president had other plans. Short-circuiting his own process, a week before the second Community
Summit, he asked the Cooper Board of Trustees for permission to charge students tuition. Two days before
release of “The Way Forward,” he announced the decision to The New York Times and The Wall Street Journal.
AP picked up the story and it went national. To cover up the mismanagement of the school by his predecessor
and themselves, the Board would unilaterally change the mission of the college. To divert attention away from
the “reinvention strategy” language, the change at Cooper would be called a “framework.”

The press has assumed there was no alternative. Who has time to read a 30-page document created by the
consensus of scores of students, faculty, alumni, and staff? The new president even had the guts to claim a
silent majority, presumably amongst the few uninformed out-of-town alumni whose only source of information
was the Cooper website, Cooper e-mails, and the press. Alumni President Peter Cafiero got his revenge by
writing an e-mail to all of the alumni embracing the “framework,” although he had spoken at the first
community summit, watched the alumni council unanimously vote against tuition at Cooper, and knew that
members of the council and of his own executive committee had created “The Way Forward.”

Only in New York.