Thursday, March 14, 2013

A vote of no-confidence in the President of New York University: Exploring the dynamics.


The Arts and Sciences faculty members of New York University (NYU) have voted to consider a vote of “no confidence” in their president, John Sexton, in the coming weeks. Sexton, by all accounts, has been an extraordinary fundraiser and has launched a major effort to position NYU as a global university with branch campuses and study sites throughout the world. He has, without a doubt, raised the standing of the faculty, attracting worldwide talent, Nobel Prize winners, and superb medical researchers. The school also attracts undergraduates who believe that, despite the high tuition, an NYU education in the heart of downtown Manhattan is a plumb opportunity. As one report notes, “Sexton has also overseen growth in the university’s profile. In 2004, he announced a plan to increase the size of the faculty of the College of Arts and Sciences by 20 percent – an additional 124 positions. Three NYU faculty members have won the Nobel Prize in Economics since 2001. Applications grew to more than 44,000 in 2012, the fifth consecutive year of record applications.” So, why the vote?

There is to be sure, one very contentious issue. Starting in 2002, Sexton “identified a lack of physical space as a critical issue to be addressed. That led to a plan called ‘NYU2031’ in honor of the university’s bicentennial – to develop 1.9 million square feet on two blocks in Greenwich Village owned by the institution.” Many faculty members, close to 40% of whom live in the area, believe that the construction, which will last almost two decades, will disrupt life in the neighborhood significantly, and deprive them of much valued parkland and gym facilities. They also believe that the breadth and scope of the building plan is both unwarranted and too costly, and will require NYU to raise tuition to levels that will make it uncompetitive with its peers. 

One question I want to raise is whether or not this issue alone accounts for the faculty’s discontent or whether, instead, it has come to symbolize some wider anxieties about Sexton’s leadership and the institution’s direction. 

Consider NYU’s “business model.” Its endowment at $2.5 billion is small relative to its competitors.  Columbia University, its uptown neighbor has an endowment of $7.8 billion, Yale has $20 billion, and Harvard, $32 billion. NYU has grown rapidly in size and prestige by charging high tuition, limiting the amount of financial aid (scholarships) it offers, and spending the funds it raises on facilities and programs. The business model in effect is “tuition driven.” By contrast, “Princeton University funds nearly half of its operating budget with its endowment, while at NYU, the figure is 5 percent.” Moreover, in order to amass the capital it has needed to increase the faculty, expand its footprint, and establish a reputation as an academic powerhouse, it has to admit a higher percent of its applicants. Currently, NYU has over 22,000 undergraduates and accepts close to 1/3 of its applicants, while, as one NYU professor notes, “…the Harvards, Princetons, Columbias, have fewer than 6,500 undergraduates and admit only 10%.” Even though NYU is not nearly as selective as some of its peers, its location in downtown Manhattan, (Greenwich Village) its scale, and the reputation of its faculty leads students to pay high tuition to attend.

The same professor, in assessing NYU’s real estate expansions plans, goes on to ask, “What makes NYU think that bigger is always better?" But ironically, John Sexton did not invent the “bigger is better” strategy. Rather, this phrase accurately describes NYU’s strategy since its rebirth in the 1960s when it nearly went bankrupt. NYU was then a low prestige, “commuter (non-residential) school" when it incurred enrollment declines, and a growing deficit. Under the then President John Bradamus’ leadership, NYU sold its Bronx campus (at the time, a secondary borough of New York city) and “rebranded itself as the school in the heart of downtown.” Bradamas launched a billion-dollar fundraising campaign, “but contrary to conventional doctrine, NYU socked little of the money away, instead going on a spending spree, expanding the university's Greenwich Village footprint, (in lower Manhattan) and upgrading its existing facilities.” Sexton in this sense has been pursuing a strategy – using current income from tuition and fundraising to grow in scale and thus in prestige-- that Bradamus established half-a-century ago. Moreover, this strategy has been to date an unqualified success. So once again we can ask, why the discontent?

Perhaps one realistic worry is that the strategy of “bigger is better” rests on the ability and willingness of students and their parents to take on significant debt to finance their NYU education. This is the only way in which NYU can charge high tuition to finance its growth. Otherwise, an NYU education would be unaffordable for all but the very rich. As one faculty member noted, “Our average graduate owes around $41,000—some 40% above the national average.” In fact as one-report notes, “NYU creates more student debt than any other nonprofit college or university in the country.” While student debt does not formally show up on NYU’s balance sheet -- students borrow from private lenders and the federal government --if we integrated students’ balance sheets with NYU’s we would most likely see a system that is substantially leveraged. Moreover, we have learned since the financial collapse of 2008, that overleveraged institutions are at risk of failing spectacularly. This suggests that the business model of growing prestige by growing volume may have reached its limits. This is one reason that faculty members from the University's economics department and the business school worry that the debt NYU will incur to finance its real estate expansion in downtown Manhattan will push tuition up to unsustainable levels.

One counter argument to this grim scenario, is that in in its next phase of development, NYU will grow in scale by growing its foreign branch campuses and study sites. It opened a campus in Abu Dhabi in 2012 and is opening up one in Shanghai. “The campus in Abu Dhabi initially attracted an elite group of students -- on a 1600-point scale, the median SAT score for this year's entering class was 1460 -- from all over the globe. The 151 students in the Class of 2016 come from 65 countries. All told, there are currently about 450 students, of which the two largest groups are North Americans (25 percent) and UAE nationals (7 percent). Once the college moves to its permanent campus, under construction on Saadiyat Island, the plan is to grow undergraduate enrollment to 2,000 to 2,200.” The royal family has subsidized this development. As Sexton noted, “We couldn’t do it if the assets were not provided.”

But however successful, the campus’ small scale means that it cannot contribute significantly to ongoing revenue. As one professor noted, “It's just not scaled right…NYU Abu Dhabi is a small liberal arts college. If they want to have it, fine, but it's a tiny fraction of what this major research university with professional schools does." It is also unlikely that the royal family, which was eager to establish a university as a tool for building a modern economy, would be willing to subsidize tuition and expenses over the longer run to support NYU’s flagship campus in New York City. Indeed, NYU’s Tisch School of Arts’ branch campus in Singapore closed down recently, because the government would not commit to subsidizing its operations over the longer run. 

This suggests that the faculty’s underlying worry is that NYU’s business model is broken and that no substitute has emerged. I think this worry is realistic. The question is how can they, or should they respond?

In this context, it is interesting to look at the document that the faculty released, some months prior to their decision to take a vote, in which they described their “ideal president.” They suggested that such a president, and by inference unlike John Sexton, would make the following commitments. Below is an extract from their document. 

“New York University, as one of the nation’s leading universities, needs a president who is deeply committed to:

The Ethos and Practice of shared governance who therefore supports

a.     The right and obligation of faculty to define and shape all new academic and curricular initiatives, including those at global locations.

b.     The right and obligation of faculty to be represented on the Board of Trustees.

c.     The right and obligation of faculty to participate fully in choosing new presidents and provosts.

d.    The right and obligation of faculty to serve, as elected representatives, not as ad- hoc appointees on top-level committees.

At first glance, these requirements describe a president who believes in shared governance, that is a process of ongoing and organized consultation between the faculty and the administration. But point “d,” if implemented, would represent a radical departure from customary practice. It suggests that the president would not and could not appoint faculty members to committees, or even request their participation. Instead, faculty members would elect their representatives to committees, whose primary obligation would then be to their constituencies. This is radical proposal because if implemented, it risks politicizing decision-making significantly. Faculty members would, after all have different interests and could hardly be expected to speak with one voice. Instead, different faculty coalitions, tenured versus untenured, medical school faculty versus arts and science faculty, would vie for influence. Moreover, if implemented, all high stakes administrative decisions would be subject to faculty votes. This would certainly upend the customary arrangement in which authority is vested first and foremost in the board of trustees, not in elected bodies.  I don’t mean to evaluate this proposal here, but just to note that it is quite radical in its conception.

One question is whether or not the faculty authors of this document even expected that this proposal would be taken seriously, or whether, instead, they hoped simply to be provocative. Some evidence for the latter idea is another clause in the same document in which the authors describe a president committed to reducing the salaries of senior administrators by, “at least 25%.” Again, I am not evaluating this idea.  Rather, I suggest that the board and the administration would regard this idea as implausible and possibly reckless and that the faculty authors knew this. This suggests that they included it in their document, not to establish a framework for negotiation, but rather as a provocation.

Indeed, as several journalists have already reported, the Board of Trustees strongly supports President Sexton and will in all likelihood disregard a vote of no confidence by the Arts and Science faculty. As one reporter notes, “Meanwhile, Sexton retains the full support from the Board of Trustees, a group comprised mostly of NYU alumni whose main responsibilities include fundraising for NYU, determining university policy and electing the university president.” The reporter goes on to note that that the board chair, Martin Lipton, released a formal statement to the Washington Square News, a local newspaper, saying, “We see a strong, thriving, advancing university under [Sexton’s] leadership.”  This suggests strongly that the board will ignore the faculty, in effect calling its bluff.  This is likely to reduce rather than increase faculty influence and power.

This point of view is consistent with another curious moment in the unfolding of this story.  In a (video) interview with the President, a New York Times reporter suggests that the faculty was voting to unseat him. Her phrase is; "looking back on a vote designed to unseat you..." Sexton interrupts at this point and in a quizzical tone, while almost whispering, asks the reporter “why do you keep saying that?”

Some observers interpreted his response, as meek or cautious, even though it was an interruption. But if my hypothesis has merit it is more likely that he cannot and will not take the vote seriously, even though in the interview he talks humbly, noting that he makes mistakes, “I am not perfect, I am not perfect in my services to NYU,” and that a university is always a seat of contention. In this way of thinking, his whisper is a cautious, almost suppressed acknowledgement that the faculty, while undoubtedly upset, is not a serious contender for power.

Let’s go with my hypothesis that the faculty document and vote is a provocation rather than a serious bid for influence, and ask why and how faculty members now find themselves in this situation.  I want to suggest that the prospect of a broken business model has stimulated anxiety sufficient to block thinking and thus realistic action. Instead, faculty members are acting expressively through symbolic gestures.

If I am right about the NYU business model, their anxiety is realistic. After all, the faculty has benefited immensely from the business model to date. They have very good salaries, in a prestigious institution, living in wonderful section, of one of the world’s greatest global cities. How can they entertain the institution’s potential demise without at the same time entertaining their own decline? 

Moreover, should the institution fail to finance its growth, they would most likely face increasing divisiveness in their own ranks as different schools and classes of faculty, e.g. tenure track versus adjunct, fought over a shrinking pie. This suggests that one reason that the faculty authors suggested that faculty members be elected rather than appointed to committees, however unrealistic, is that it expressed a fantasy that the faculty could in fact speak with one voice against the administration’s plans. 

Indeed, in another section of the document the faculty authors suggest that an ideal president would commit to, “The steady conversion of NTT (non-tenure-track) into TT (tenure-track) faculty positions at every NYU location.” While if implemented, this could be fatal financially, it nonetheless expresses the wish for an undivided faculty body, that could speak with one unified voice.

The faculty many not be the only party susceptible to symbolic thinking. Sexton has described his plans for building a global network university (a “GNU”) by comparing his vision to the “the Italian Renaissance, when painters circulated throughout Milan, Venice, Florence and Rome.” As he suggests, “If you change the nouns today and instead of Milan and Venice and Florence and Rome, you have Shanghai and Abu Dhabi, London and New York, there’s a similar circulatory system that characterizes the world. Faculty have always participated in that circulatory system. The question then becomes, is it possible to re-imagine the infrastructure of a university in a way that facilitates that circulation?”

It is certainly reasonable to ask if this vision of circulation is realistic and if the metaphor of the Renaissance is not a tad grandiose. One counter-argument is that the circulation of scholars and students will evolve naturally, outside the boundaries of any single institution that can control it, and that this circulation will at first integrate the extant world cities New York, London, Paris, Tokyo and Hong Kong. Business theorists will recognize here the challenge of “disintermediation.” Can and should a single institution be a “one-stop-shop” so to speak, or will the most value be created when people and institutions act in a decentralized fashion through markets, individual choice and many sided negotiations to build and use an “infrastructure of circulation.” This is, after all, how most economic development takes place. 

Moreover, though Shanghai is a global city in terms of scale and commerce, as long as it is under the thumb of the Chinese Communist party its ability to contribute to human culture and its evolution will be stymied. In addition, Abu Dhabi, with a population of only 613,00 people, still has feudal roots. NYU chose them as branch campus sites because their respective governments paid for building the campus and its associated infrastructure, not because these cities were at the forefront of creating a global culture. In this light, the reference to the Renaissance feels like wishful thinking.

My argument suggests that when institutional leaders face a potentially broken business model they are vulnerable to discharging their anxiety through symbolic thinking and expressive actions, rather than through realistic thinking and concrete plans. This process, I suggest, can impair leaders’ abilities to navigate the future and build a consensus for a new strategy. Perhaps both John Sexton and faculty leaders are susceptible to wishful thinking just at a time when they have to be resolutely realistic. This also suggests that the faculty’s anger at the university’s real estate expansion plans in their own neighborhood has become a symbol of their own potential demise rather than simply the agent of their day-to-day disruption.  If this seems like an exaggeration perhaps it is worth nothing that today we feel that even some of the greatest institutions are vulnerable to unpredicted trends and unexpected events.    

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