In November of 2009, then-president of Cooper Union Dr. George Campbell Jr. delivered a speech accepting the Green Building Design Award, which had just been awarded to the institution’s recently completed home at 41 Cooper Square. The building was a symbolic shift for the school, its stainless steel facade something one would expect to find at a large research university with a global brand, not at a small arts, engineering, and architecture university where students attended gratis.
With a droopy bowtie, tiny spectacles, and a teacherly grin, Dr. Campbell exudes a quaint, avuncular honesty. In his speech, Campbell briefly mentioned Cooper’s free education, touted the building’s environmental sustainability, and quickly alluded to some unspecified risks behind the project. “It’s enormously gratifying to be recognized and to be rewarded for taking those risks—and succeeding,” he said. Campbell left the school two years later, with $175,000 dollars in bonus pay received for building 41 Cooper, according to the attorney general report.
Never a wealthy institution, Cooper Union, which owns the land under the Chrysler Building, had provided full scholarships to admitted students since 1859, primarily thanks to this steady stream of real estate income. Its long-brooding financial problems are reported to have reached existential proportions primarily under the administrations of its last two presidents: Campbell, who championed the building of 41 Cooper Square, and Jamshed Bharucha, who oversaw the implementation of tuition at the school until he was forced to resign last June.
As far back as 2001, the administration argued that the engineering school needed a new building because faculty wanted it (they actually voted against it) and because the old engineering building would require millions of dollar of renovations to remain accredited (not true, according to the attorney general’s report). After a capital campaign failed to generate sufficient funds for construction, Cooper Union secured a $175 million loan from MetLife and drew up a loan plan in order pay for the construction of 41 Cooper Square.
Under the 2006 plan, $35 million of the loan was invested in the school’s endowment, expected to produce returns in excess of 7% to cover the loan’s 5.875% interest rate. The plan also called for a reduction in expenses beyond any the school had ever achieved—a 10% flat cut by 2011. Next, Campbell and the board counted on the continuation of some $6 million in property tax benefits that were historically afforded to the school by New York City. Lastly, the plan relied on an unprecedented level of philanthropic support, with donations to a special building fund expected to total $40 million by 2011.
As the attorney general’s report notes, “The failure of any one of these four assumptions would undermine the school’s ability to remain solvent through the 30-year loan term.” Campbell and the board had, in the words of the report, “bet the school.” A statement released by the university, following the report, rejects its conclusions: “The Cooper Union and the Board of Trustees [...] neither accept nor agree with the factual findings” of the attorney general, which “fails adequately to credit the Board’s commitment and initiative in addressing the issues raised” in the report.
Yet, as Dr. Campbell declared mission accomplished in 2009, the report claims the loan plan for financing 41 Cooper was derailing. In 2008, Cooper’s endowment was hit hard by the financial crash, not just failing to exceed the loan’s interest rate but suffering major net losses. In 2007, New York City challenged the university’s key property tax benefits and rather than risk losing them all, the school settled for a 50% cut—a loss of $3 million annually.
Additionally, by 2009, contributions to the building fund were falling well below target, and would continue to decline in subsequent years. It seemed alumni, undoubtedly also affected by the 2008 crash, were less compelled to finance the building’s construction after it had already been completed. The 10% across-the-board reduction in costs never materialized, either. By 2011, expenses had actually increased by 5%.
Unbeknownst to the public or to Cooper’s student body, as Campbell and other members of the Board of Trustees claimed success, the loan taken out to finance an ostensibly sustainable building was threatening not only Cooper Union’s free tuition, but possibly the very existence of the school.