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Today in American Meritocracy

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EMPAC_NW_Face

This is a mess:

Rensselaer Polytechnic Institute is facing debts and liabilities of nearly $1 billion, and has seen a sharp decline in its overall net assets over the past 13 years, according to an analysis of the school’s tax returns by the the student newspaper, The Polytechnic.

In 2000, the university, located in Troy, had assets totaling $929.7 million, the paper reported. But by the end of the 2012-2013 fiscal year, the total had dropped by 55 percent, to just $414.8 million drop. In addition, the university ended nine of the last 13 years with an operational deficit, including $18.1 million at the end of 2013, the paper reported.

The Polytechnic report assigned much of the blame to R.P.I.’s decision to build the Experimental Media and Performing Arts Center (EMPAC), for which it issued $160 million in bonds to help cover construction costs. Those costs ended up being much higher than originally projected, the newspaper reported.

“[EMPAC] was originally announced on July 5, 2001, with a planned construction cost of $50 million and an expected opening date in Fall 2003. However, by the time ground was broken on the project in September of 2003, the revised construction cost became $141 million, and EMPAC was expected to be ready for opening in 2006,” the paper reported. “Neither of these plans were achieved, with EMPAC finally holding its grand opening in October 2008, with a reported cost that exceeded $200 million.”

The announcement of the school’s plan to help finance EMPAC via bonds also caused Moody’s Investors Service to downgrade R.P.I.’s credit rating from A1 to A2; its rating today is an A3, with a “negative outlook.”

Clearly, this is what happens when you skimp on higher administration costs!

Brond defended R.P.I.’s performance under the guidance of its president, Shirley Ann Jackson, who was hired in 1999. Jackson has led the school in its implementation of her Rensselaer Plan, which has been the guideline for $1.25 billion in investment over the past 15 years, according to Jackson’s profile on the university’s website.

Jackson was paid $7.1 million in 2012, more than any other college president in the nation, and continues to be paid at that level.

Perhaps they should consider hiring Charlie Weis to coach the hockey team; not his primary sport, sure, but he’d be a comparative bargain.

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  • Warren Terra

    Dr. Jackson has a stellar resume and should really be an inspirational figure. She also should take an immediate and massive pay cut. Even if there weren’t huge fiscal troubles, $7 million plus perks would be ludicrous.

    • medrawt

      That’s not her salary. A little googling suggests her true salary is somewhere just under one million, and the $7M represents a bonus payout which, per one source that came up, represented years of deferred payouts handed out in one lump sum. The characterization seemed wrong to me because I recalled not that long ago seeing a story about the three highest-paid college presidents, and she wasn’t in the group, which suggests that she can’t have continued to be paid “at that level” when the presidents in question (of Chicago, Northeastern, and Marist) all grabbed about half that or less. (And even those weren’t straight salaries either.)

      Not to say there isn’t an issue with her compensation package; but the plain language reading, that she’s getting around $7m per year, doesn’t seem to be the case.

      • Aimai

        Yes, I’ve never seen her name in the highest paid group. I’m doubting this. But overbuilding? Getting into debt? that’s pretty terrible.

        • Shakezula

          Yes, it seems they’re pulling that designation from the Chronicle of Higher Education’s annual report on salaries at private unis.

          In the linked article (which is the first place I’ve ever seen Rensselaer referred to as obscure) the writerbot states that her base pay is actually lower than the president of NYU’s.

          • Unemployed_Northeastern

            CHE also had a feature-length piece last December or so on the RPI prez and her reportedly authoritarian leadership style. Strangely, the piece was not originally behind CHE’s paywall, but it is now.

            • LosGatosCA

              Charge what the market will bear. Obviously interest has perked up now that she’s notorious.

      • Derelict

        Jackson’s salary aside, she’s pretty much destroyed the school’s engineering and technology side. I know some now-former professors from the aerospace department who were driven out over the last dozen years. Their research facilities were closed and/or scrapped (including the only hypersonic wind tunnel on the East Coast). The message was loud and clear–the “technic” part of Polytechnic was going away in favor of more humanities-based studies.

        It takes real talent to create the destruction Jackson has wrought upon RPI. But I guess the trustees look at all this and figure, Ah, education is soooo over-rated.”

        • When she was hired, my reaction was “Finally, another heavy hitter in the George Low model, following years of non-entities. Just what we need” I was, as people say, wrong.

        • I don’t think that’s quite accurate as a generalization eg my former boss was recuited to form a computer science constellation with the aim beefing up the research activity and graduate program.

          • I know as a fact that the school of architecture – the first “poly”component introduced in the 1850s – had a zero budget increase for at least six years and I believe eight. She’s starving the portions of the school (engineering, architecture, applied science) that were its strengths to feed her new programs.

            • That sounds right.

              It’s not just “feed humanities” it’s “pick new winners and try to make then so with a ton of money whatever that does elsewhere”.

              • Top-down picking the winners. What could go wrong?

                • You were always picked last, weren’t you?

                • I was always picked early for street hockey. If you many the OP, civil engineering is boring to today’s modern administrator.

                • wca

                  civil engineering is boring to today’s modern administrator

                  Education is boring to today’s modern administrator.

      • Barry_D

        “…and the $7M represents a bonus payout which, per one source that came up, represented years of deferred payouts handed out in one lump sum. …”

        So, for example, she was paid $1 million in performances bonuses per year for….destroying the place?

        • medrawt

          I have no idea. When Chicago’s president was shown to have topped the list with earnings of over $3M, the explanation around it had to do with contractual bonuses for hitting certain fundraising benchmarks.

    • I’d be curious to see the 990 for 2013. The FYE for RPI is 6/30, and they are not required to file for almost a year (the 6/30/2013 fiscal 2012 filing was in May 2014)

  • I got a tour of EMPAC when I visited RPI and it is an amazing building.

    I don’t know that it was a good idea. But it is amazing.

    • rea

      How on earth can there be a 400% cost overrun?

      • Warren Terra

        Really? You haven’t paid a lot of attention to the stories of these fancy prestige buildings, I guess, most notoriously with Gehry’s designs (e.g.).

        I’m not sure this even counts as a 4x cost overrun – it’s 4x the initial estimate, but only 2x the estimate they had when they actually broke ground.

        • The difference between the initial estimate and final estimate was caused by insanely expensive foundations. They picked the worst possible spot in Troy – halfway up the river bluff – to put a very heavy building with a huge void space inside.

          • rea

            They picked the worst possible spot in Troy – halfway up the river bluff – to put a very heavy building with a huge void space inside.

            I’m neither an architect nor an engineer, of course, but one might imagine that would be foreseeable.

          • That’s my understanding.

            Th sound isolation is incredible but it required all sorts of fancy bits above the foundations.

            • Aimai

              Too bad they didn’t know any good engineers.

              • Who does?

              • Manju

                Ouch! LMAO.

          • Lee Rudolph

            If they were going to build in Troy with a huge void base inside, surely they should have gone for a topless tower?

            • Hogan

              Giant horse. You can’t go wrong with a giant horse.

              • Paging Dr. Loomis.

            • Or a horse shape.

              ETA: damn it, Hogan!!

          • Joe Bob the III

            The thing that jumped out at me was that it took 5 years to get from groundbreaking to grand opening. Even for a building of this size and sophistication, that is a very, very long time. Simple cost escalation alone added at least $30 million to the price tag.

        • Joe Bob the III

          Gehry is not really apropos to this case. I did a little reading on EMPAC and the building is not just an architectural flight of fancy. It is, without question, a world-class building in terms of function. The engineering is absolutely top notch.

      • Sly

        Boss Tweed: “What our great city needs is a new courthouse. Now I propose it should be a modest, economical structure.”

    • Unemployed_Northeastern

      I imagine Thomas Jefferson Law School’s nearly $150 million edifice is amazing. They still defaulted on the construction bonds.

  • Pseudonym

    Clearly to fix this fiscal deficit they need to open a law school.

  • Manju

    Sounds like they want to blame their defined benefit retirement plans:

    In separate statements provided to Capital, Brond characterized the newspaper’s comparison of R.P.I.’s finances to those of Lehigh University, the Rochester Institute of Technology and Worcester Polytechnic Institute as unfair due to those schools’ lack of defined benefit retirement plans.

    “During this time frame, both unrestricted and total net assets of Rensselaer have been adversely affected by the necessity to continue to fund a legacy defined benefit retirement plan, established in 1944, and to honor Rensselaer’s commitment to our retirees and the remaining participants in the plan, which was closed to new employees in 1993,” Brond said. “Exclusive of the impact of the defined benefit retirement plan, both unrestricted and total net assets would have been higher by $266 million respectively through fiscal year 2013.”

    • Manju

      I wonder how he accounted for the effects of the defined benefit plan. Did he just add up the total amount paid out for those years and arrive at $266M?

      Or did he subtract from that total some estimated amount that would have been paid under a defined contribution?

      Either way, the university would still see a drop in its net assets…while others have gained.

      • Pseudonym

        Obviously all of the risk of retirement investments should be borne by individuals with no working income rather than billion-dollar organizations.

        • Manju

          Anything less would be another Kristallnacht.

          • Aimai

            You have to love the way these people turn the very phrase “honor [our commitments]” into some kind of dire curse.

          • rea

            Kristallnacht

            Judging by the picture, there is certainly a lot of glass to break . . .

  • heckblazer

    Is making the building a giant USB drive some sort of ‘synergy’ thing?

    • Pseudonym

      Do you have any idea how difficult it is to power an entire building off five volts and a maximum of 900 milliamps?

    • Warren Terra

      It is in case they want to attach it to another building.

    • Hogan

      I looked at that thing on the front and thought, “I used to have that toaster.”

      • jim, some guy in iowa

        world’s largest vending machine- that can’t be tipped over after it eats your $

      • Halloween Jack

        The shape certainly is quite evocative.

        • heckblazer

          Once I wondered “Who the hell names a car ‘Edsel’?” Then I found out it was named after the son of Henry Ford and instead began wondering “Who the hell names a kid ‘Edsel’?”

    • wca

      They were trying to sell it to Circuit City to use as their new corporate headquarters.

      The best laid schemes of mice and men …

    • Nichole

      A chrome selector button from a 1959 Ford.

      Only four more to build around it and we’ll have AM Radio all the time!

  • Theophrastus Bombastus von Hoehenheim den Sidste

    EMPAC is awesome. Totally irrelevant to the core RPI educational mission, but awesome none the less.

    Everyone hates Shirley Jackson, except for the trustees it would appear, with the burning heat of a thousand suns. As I understand the story, she laid down the law that RPI would stop being a solid engineering school with an active community outreach in order to become MIT on the Hudson. This caused me no small amount of personal inconvenience: the company where I worked at the time was accustomed to sending engineers over for enrichment education, but suddenly those programs were no more. So while I am not exactly skipping we glee, neither am I crying in my beer.

    • I went to Rensselaer specifically because it was a solid engineering school. If I wanted to go to MIT I would have applied there.

      A personal note: my alumni donations stopped when the decision to build EMPAC was made public. If the Tute had money to burn, they obviously didn’t need my few grand per year.

      • If I’m ever lost at sea or in the wilderness, don’t call search-and-rescue.

        Call the University of Illinois Alumni Association.

        Those people have managed to track me down no matter where I’ve been and they are relentless.

        • HA!

        • rea

          The Wharton School at the University of Pennsylvania somehow managed to find me, and bombard me with solicitations directed to my late father (similar name to mine), who would be 96 if he had not died 35 years ago. I have no connection whatever to the school.

        • Hogan

          Listen, and understand. That alumni association is out there. It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead.

          • Derelict

            . . . until you are dead . . . and even then . . .

            • rea

              As I said, they are chasing me under the impression I’m my 35-years dead father.

              • Hogan

                Fine. “Until they realize you are dead.”

                • Halloween Jack

                  Then they start on your heirs.

    • Just_Dropping_By

      Everyone hates Shirley Jackson

      Well, “The Lottery” is overtaught, but “hate” is a really strong term.

      • Theophrastus Bombastus von Hoehenheim den Sidste

        Lottery in June, more administrators soon.

    • MAJeff

      Everyone hates Shirley Jackson, except for the trustees it would appear,

      In general, trustees are the most useless human beings existing.

  • Pseudonym

    I’m thinking that to fix this they should hold some sort of lottery, the winner of which is ceremonially sacrificed.

    • Whew! Saved. (Thinking along those lines but nothing as good.)

    • FMguru

      I re-read that story recently, and I noticed a couple of things about the Lottery itself. It’s rather cleverly designed to encourage desired behavior in a primitive agricultural community.

      Each household has an equal chance of being picked, and then each person in a picked household has an equal chance of being selected as that year’s “winner”. So that strongly encourages newlywed couples to start cranking out kids as early and often as possible. And, as kids move away and start their own families, the household empties out, and the system works to eliminate non-contributing elders. It also encourages people to adopt and care for orphans and foundlings.

      • Linnaeus

        the system works to eliminate non-contributing elders.

        Except for Old Man Warner, it would seem.

      • Domino

        I feel slightly clueless asking this, but which story?

        • Hogan

          The Lottery, by Shirley Jackson.

          • Hogan

            The other Shirley Jackson.

  • howard

    the bond prospectus must have been something else….

    • Aimai

      They said they would spin straw into gold.

  • dporpentine

    What are the stories of “X institution builds giant building, disemboweling itself financially in the process” that turn out good? MoMA maybe? But MoMA’s evil and every time it succeeds the souls of a hundred good people are cast into hell. (Or so I’ve heard.)

    What is it about architecture that makes people lose their minds?

    • The Seahawks?

    • joel hanes

      In Silicon Valley, this well-known phenomenon is called the “Edifice Complex”, formerly the “Dyson Effect”.

      Something about building a huge flashy new world headquarters seems to double the short-term risk of corporate death.

      • FMguru

        The conventional wisdom I’ve heard is that giant new buildings/campuses cost a company 6-12 months of lost work, as managers focus on floorplans and team seating and picking out the equipment for the gym and the color scheme for the cafeteria and all that. It takes everyone’s eye off the ball, which in a fast-moving industry can be fatal.

      • The late (and very, very great) C. Northcote Parkinson described the phenomenon in the 1950s in his essay Plans and Plants, or The Administration Block:

        The institutions already mentioned — lively and productive as they may be — flourish in such shabby and makeshift surroundings that we might turn with relief to an institution clothed from the outset with convenience and dignity. The outer door, in bronze and glass, is placed centrally in a symmetrical facade. Polished shoes glide quietly over shining rubber to the glittering and silent elevator. The overpoweringly cultured receptionist will murmur with carmine lips into an ice-blue receiver. She will wave you into a chromium armchair, consoling you with a dazzling smile for any slight but inevitable delay. Looking up from a glossy magazine, you will observe how the wide corridors radiate toward departments A, B, and C. From behind closed doors will come the subdued noise of an ordered activity. A minute later and you are ankle deep in the director’s carpet, plodding sturdily toward his distant, tidy desk. Hypnotized by the chief’s unwavering stare, cowed by the Matisse hung upon his wall, you will feel that you have found real efficiency at last.

        In point of fact you will have discovered nothing of the kind. It is now known that a perfection of planned layout is achieved only by institutions on the point of collapse. This apparently paradoxical conclusion is based upon a wealth of archaeological and historical research, with the more esoteric details of which we need not concern ourselves. In general principle, however, the method pursued has been to select and date the buildings which appear 60 to have been perfectly designed for their purpose. A study and comparison of these has tended to prove that perfection of planning is a symptom of decay. During a period of exciting discovery or progress there is no time to plan the perfect headquarters. The time for that comes later, when all the important work has been done. Perfection, we know, is finality; and finality is death.

        When I remember this piece, I worry about Apple’s new campus.

        • rea

          The classic example, which I believe Parkinson mentions, is the League of Nations, which moved into its brilliantly-designed, shiny new headquarters in February 1936, a few months after Germany and Japan withdrew from the organization . . .

          • LosGatosCA

            I think the real lesson there is that people who don’t support ambitious building plans are typically genocidal maniacs.

        • LosGatosCA

          If I worried about Apple (I don’t) I would worry about their new building.

          Successful people seem to need a monument to ‘cement’ their success in a highly visible, tangible way.

          For some it’s their houses, for others, like Jobs, it’s the company HQ. HP’s founders seemed content with building up Stanford and not naming anything for themselves and then out of nowhere they built a 400,000 sq ft warehouse for people on Page Mill.

    • NewishLawyer

      Because you can give someone a nice plaque or naming rights when they pony up money and it seems to be delegated in lots of different ways. I have seen offices in academic buildings named after people (seriously). I have seen plaques that say “Funding for this staircase was provided by….”

      The person who figures out how to get rich people to pay for salaries and/or the electric bill deserves the Noble Prize in Peace and/or Economics.

      • Baby Needs-A-Nym

        The person who figures out how to get rich people to pay for salaries … deserves the Noble Prize in Peace and/or Economics.

        Isn’t this exactly what endowed chairs were meant to be? When was the last time one of those got created, anyway?

        • Hogan

          After the Donald T. Regan Professorship in the Humanities, the whole idea collapsed from its own absurdity.

          No, not really. They still make new ones.

      • Hayden Arse

        My favorite example of this phenomenon is the “Falik Men’s Room” at Harvard Law School.

        • wjts

          My favorite, though named after a former professor rather than a donor, is the Dr. John S. Doctor Conference Room at Duquesne University.

          • Ahuitzotl

            Mac Rebennak must be pleased

      • FMguru

        The one time I visited USC, I was struck by how every single object on the campus – down to the benches and the drinking fountains – had a little plaque with some contributor’s name on it. I guess that’s just life as a private university that has to fund itself every year.

  • I pointed out elsewhere…probably on Facebook…that this endless cycle of spending money garnered from athletics, then raising tuition on students, would end up cannibalizing private universities.

    Harvard can do it. Perhaps Stanford. And the other Ivies. But NYU is now asking staff to contribute to a scholarship fund to help students afford its $71,000 tuition, despite having rolled out a varsity baseball team…without a stadium! RPI, a really great tech school for decades, is bumping up against its limits. And I’m sure an entire litany of instances can be cited where colleges have ben pennywise (pay adjuncts nothing) and pound foolish.

    They compete with schools they can’t possibly outclass, then wonder why they fail miserably.

    • Unemployed_Northeastern

      Fun fact: neither Harvard nor MIT even make the top twelve among sticker-price undergraduate college tuition in Massachusetts.

  • Shakezula

    No worries. Get rid of all those professors cluttering up the place and call in some of the kids from Teech 4 Americuh.

  • Atrios

    That thing we’re best at and known for? let’s stop doing that.

    genius

    • That’s pretty good. You should write a blog or something.

    • mds

      genius

      “Allow me to introduce myself: Wile E. Coyote, Super Consultant.”

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