By STEPHAN KOZUB
Fordham being an expensive school is not a groundbreaking observation. With tuition at $49,645, and approximately 90 percent of undergraduates relying on some form of university-funded financial aid, most students here either do not or cannot pay the full price to attend.
But how do those tuition dollars and the volume of financial aid being given to students affect the university’s finances?
On July 11, Robert Daleo, chair of the Board of Trustees, released new information on the May 12 faculty salary and benefits deal. In the statement, he provides the financial aid statistic, and states that because 92 percent of Fordham’s revenue comes from tuition and student fees and 63 percent of Fordham’s expenditures are in salary and benefits, the university’s ability to provide financial aid and compensate faculty and staff are “inextricably linked.”
Fordham’s dependency on tuition was highlighted in the Middle States Commission on Higher Education’s 2016 report to the university, which stated that Fordham had to resolve issues with financial resources. Over the past year, this situation has become a focal point in discussions regarding the university’s financial situation, a statistic used to make arguments on both sides of the salary and benefits negotiations.
While he acknowledges this situation exists, Andrew Clark, Ph.D., vice president of the Faculty Senate, argues that this situation only exists because Fordham is “too tuition dependent.”
“We understand this is the case, but to use this argument points to issues of leadership because since Fordham President Rev. Joseph M. McShane S.J. became University President in 2004, this hasn’t significantly changed,” Clark said.
Fordham’s Endowment sits well below growth projections the Board of Trustees set in 2005.
That’s not to say that McShane hasn’t raised money. In his statement, Daleo states that Fordham has raised more than $645 million during McShane’s tenure, more than it did in the previous 161 years of its history. This number includes $540 million in the Excelsior Campaign, and $105 million in the $175 million Faith and Hope Campaign, which was “devoted solely to raising money to support financial aid for our students.” He continues that Fordham has invested more than $600 million in infrastructure improvements and has tripled the number of endowed professorships from 23 to 71. In an email statement to The Observer, he also added that the 2017 fiscal year was the best giving year in the university’s history, with more than $75.9 million raised.
Despite this fundraising and development, however, the university’s endowment remains “modest,” as Bob Howe, assistant vice president for communications and special advisor to the president, told the National Catholic Reporter. It also sits well below the university’s endowment projections set back in 2005 in the Board’s Towards 2016 ten-year plan. At the time, the university set the goals of having a $1 billion endowment by 2011 and $2 billion by 2016.
In 2003, the university’s endowment sat at $226.2 million. By the end of the 2007 fiscal year, when the university issued an update on the status of the Towards 2016 goals, the university’s endowment and other investments had grown to $513 million.
The endowment now sits somewhere around $728 million.
From 2003 to 2017, Fordham’s Endowment grew by 221 percent, a larger percent increase than that experienced by all of Fordham’s Peer Institutions.
But even though that number sits well below where the Board of Trustees hoped the endowment would be by this point in time, it is the median endowment among the institutions Fordham University considers to be its peers. Syracuse University, George Washington University, and Boston University have endowments ranging from $1.157 billion to $1.655 billion, while Fordham’s three other peer institutions–Loyola University Chicago, Villanova University, and Northeastern University–have endowments between $551 million and $700 million.
In comparison to other New York universities, Columbia University’s endowment sits around $9 billion, while New York University’s endowment is about $3 billion.
In an interview with the National Catholic Reporter, Howe said the goal of $1 billion by 2011 may have been “overly ambitious,” but cited the 2008-09 recession as a reason for the endowments lack of predicted growth.
Clark sees the recent salary and benefits deal as a way the university is trying to compensate for the endowment’s lack of projected growth.
“If Fordham Wants to Achieve what it wants to do, it needs to become less tuition dependent.”
“Cutting faculty benefits and wages is what I believe is a slow death and is not a long term strategy,” Clark says. “If Fordham wants to achieve what it wants to do, it needs to become less tuition dependent.”
Daleo, however, refutes Clark’s claims that the salary and benefits deal was a strategy on the Board’s part to make up for not meeting the goals it set in 2005 for increasing the endowment. He states that the endowment’s return on investments “has significantly outpaced the stock market” in an email statement to The Observer. From July 1, 2003 to July 1, 2017, Fordham’s endowment increased from $226.2 million to $728 million, an increase of 221 percent, according to Daleo. As a comparison, he said that the Dow increased by only 136 percent in the same time frame.
Stacked up against Fordham’s peer institutions, this number is a good percentage. It’s actually the best percentage increase; every peer institution’s endowment increased from only 69 percent to 197 percent for the same time period.
That comparison, however, does not fully reveal the amount each university has raised. From 2003 to 2017, Fordham’s endowment went up by $501.8 million. That’s still a larger increase than four of Fordham’s six peer institutions.
“The Board is committed to Fordham’s long-term intellectual and financial health, and to the advancement and well-being of its students, alumni, faculty, and staff.”
But the two others–Boston University and George Washington University–experienced endowment gains significantly greater. While their percentage increases went up by only 167 percent and 147 percent during the same time period as Fordham’s 221 percent, their endowments went up by $1.035 billion and $935.9 million, respectively, sums which are each greater than Fordham’s current endowment.
“Our insurer informed us that the cost of obtaining insurance for Fordham’s faculty and staff was projected to increase by 60 percent over the next three years,” Daleo said in an email statement to The Observer in defense of the salary and benefits deal, an argument he also made in his July 11 statement to the Fordham Community. “We pushed back but they had solid data, and a spate of recent rate approvals by insurance regulators backed them up. The only way to forestall that huge jump in cost was to agree to modify the plan, which allowed us to lock in a price for three years.”
Daleo added that “institutions and businesses across the country are also facing this.” He cited projections reported on by the Poughkeepsie Journal, PBS Newshour, the Washington Post and Modern Healthcare as evidence of this situation.
“We thought it prudent to ensure good coverage at a predictable price, while health care reform and the insurance market get sorted out over the next few years,” he said.
The university’s dependency on tuition, however, will likely remain at the forefront of discussions of the university’s finances for some time. Daleo is aiming to grow the university’s endowment by continuing fundraising momentum from the 2017 fiscal year and by developing alternate revenue streams, according to an email statement he sent to The Observer.
“The Board is committed to Fordham’s long-term intellectual and financial health, and to the advancement and well-being of its students, alumni, faculty, and staff.” Daleo said in his July 11 statement.