Killed by Klarman Hall
By Melvin Li
Even if you’ve never been inside Klarman Hall you’ve at least heard about the massive construction project that shut down East Avenue for over a year—January 8, 2014 to April 19, 2015 to be exact—and got the Temple of Zeus moved yet again (it used to be in a storage basement until it moved in the 90s).
Someone vehemently opposed to the notion of expensive college construction might shake his or her head at how, once again, bureaucracy and inefficiency have triumphed in the waste of our tuition money on useless construction projects, many of which are for students who probably won’t make too much after graduation. Building things is expensive, especially if you do it right. The April 2015 expansion of Gannett Health Service’s facilities will cost an estimated $55 million once completed in the fall of 2017—the project originally would’ve cost $133 million had the financial crisis not forced the university to table it in 2009. Back on the Arts Quad, Klarman Hall tips the scale at $61 million which, in an era of ever-rising college costs, may at first seem like an outrageously wasteful splurge in exchange for marble countertops, fake Greek statues, and the 28-month destruction of what was once a perfectly good hillside. Such pricey, egotistical, reckless, and superfluous construction projects are surely to blame for busting budgets and raising the costs of attendance at countless American universities—all because some rich alumni really want to see their names on buildings, right? As Cornell’s already eye-widening tuition increases another 3.75 percent in 2016-2017, it is easy for students to look at Klarman Hall and wonder at a possible link between the school’s construction projects and its price tag. However, we must be careful to note that construction is far from the only possible culprit in the case of rising higher education costs, and at Cornell this connection is not so clear-cut.
The concept of universities bankrupting themselves over extensive construction at the expense of students, known as the “Edifice Complex,” predates websites like Urban Dictionary. A pun on Freud’s Oedipus complex, the term “Edifice Complex” appeared as early as 1990 in News & Record in reference to a new $40 million public education building in downtown Raleigh at a time when North Carolina faced a $1 billion shortfall. Deyan Sudjic’s 2005 book The Edifice Complex: How the Rich and Powerful Shape the World describes architecture as not simply an art but as tool for the wealthy to cement their legacies in glass, steel, and stone—basically what college alumni around the world do.
Unfortunately for many Klarman naysayers, the truth about Cornell’s large price tag is not as simple as a few extra buildings. First, Klarman’s construction was completely funded by private philanthropy and has nothing to do with the cost of attending Cornell (unlike a certain student health fee). Likewise, about a third of the new health center’s costs will be covered by philanthropy, with the remainder coming from a partnership between Cornell’s schools and the central administration according to the Cornell Chronicle. Class of 1979 economics major Seth Klarman, billionaire and founder of the Boston-based hedge fund Baupost Group, started the Klarman Family Foundation which contributed the leading donation to the project. Designed by Koetter Kim & Associates with work beginning in May 2013, Klarman Hall was intended to solve workspace issues in the College of Arts and Sciences. Goldwin Smith Hall, which has housed the College since 1906, has long suffered from classroom and office shortages, creating problems for the 4000 A&S students and 200 humanities faculty today. Klarman Hall will serve as a new home for Cornell’s Romance Studies and especially Comparative Literature faculty, who were earlier spread confusingly throughout several buildings. The fancy-looking Greek statues adorning Klarman Hall’s atrium were actually taken from Cornell’s own collection of 19th century plastic casts compiled in the 1890s with funds from trustee Henry Sage. If nothing else, Klarman Hall is a reminder to Cornell students that the humanities have not been forgotten by the university in light of other projects such as Gates Hall and the soon-be-to-completed Cornell Tech campus on Roosevelt Island.
While Cornell may have gotten lucky with Klarman Hall’s debt-free financing, construction and borrowing have long gone hand-in-hand at this and many other universities. The most recent trend of rapid campus expansion has its roots in the 1990s when growth in federal research money, rising tuition, and investment returns triggered a boom in university construction across the United States. At Cornell, 1.8 million square-feet of new dormitories, laboratories, and classrooms were added to the Ithaca campus alone at a cost of over $900 million since 2001, according to a Bloomberg report by Michael McDonald. This construction boom ground to an abrupt halt on November 3, 2008 when then-President David Skorton instituted a 90-day construction pause after Cornell’s endowment experienced a loss as a result of the global financial crisis in 2009. The pause, in Skorton’s words, intended to help “re-calibrate the university’s capital budget,” was the harshest restriction on campus construction in Cornell’s recent history. Skorton later announced two major criteria intended to reduce new construction projects to only those deemed most necessary. Skorton’s ban on campus construction has long been lifted but his strict criteria for approving and funding new projects remain—perhaps rightfully—in place. Skorton, a self-declared financial novice, banned the university from taking on new debt to fund new construction projects in the aftermath of the pause. Skorton emphasized philanthropy and fundraising as alternatives to debt, and upon assuming office in 2006 launched the “Far Above” fundraising campaign—the first of its kind in over a decade, according to MacDonald.
Construction and campus expansion certainly play a role in rising costs and there are many documented cases of university students having to shoulder the burden of their schools’ construction debt. For example, UNC Greensboro levied $2,390 in total annual student fees in 2013, according to Jesse Saffron at the John William Pope Center. UNCG allocated $707 of that fee to pay off construction-related debt, and $435 to build a controversial new $91 million 225,000-square-foot recreation facility. Because of state budget cuts, North Carolina Agricultural and Technical State University is currently building a new 150,000 square-foot student union funded entirely by four years of student construction fees of up to $400. A recent five-year expansion of Talley Student Union at NC State University cost $120 million. Students funded the project mostly by an annual capped student fee of $290 that was phased in over four years and will remain for 25 years. For comparison, Cornell’s own student activity fee stood at just $241 annually for undergraduates and $85 annually for graduate students as of March 2016—a sign that perhaps Cornell is much better at keeping its construction costs off the backs of students.
One particularly extreme example of excessive construction’s detrimental effects on a university occurred at Rensselaer Polytech Institute in Troy, New York. After analyzing its school’s tax returns, RPI’s student newspaper, The Polytech, concluded that the school had taken on over $1 billion in new liabilities and reduced its net assets by 55 percent over the last 13 years, going from $929.7 million in the 1999-2000 fiscal year to just $414.8 million in the 2012-2013 fiscal year. The Polytech attributed its findings to President Shirley Ann Jackson’s Rensselaer Plan, which combines major campus construction and the hiring of hundreds of staff to further RPI’s prominence in the higher education community. Beginning in 2007-2008, the school issued almost $500 million in tax-exempt bonds to fund construction projects such as the Experimental Media and Performing Arts Center (EMPAC), the Center for Biotechnology and Interdisciplinary Studies, and the East Campus Athletic Village. The Polytech ascribes much blame to the construction of EMPAC in particular, which was first announced in July 2001 with a planned cost of $50 million and an opening date in the Fall of 2003. By the time construction began in 2003, the expected cost had risen to $141 million, and when EMPAC opened in October 2008, they had spent an estimated $200 million on the project. Moody’s Investor Service downgraded RPI’s bond rating from A1 to A2 following the 2006 decision to issue over $160 million in bonds to fund EMPAC. RPI’s credit rating today stands at A3 with a negative outlook. Despite her risky financial decision making, President Jackson received over $7.1 million in total compensation in 2012, making her the highest-paid president of a private college in the nation that year. Arthur Gajarsa, chairman of the Rensselaer board of trustees, told The New York Times that most of this compensation came from a $5.9 million retention set aside over the last decade to dissuade Jackson from leaving the school. “She’s worth what we paid,” Gajarsa said, “because she has done the job magnificently, and taken the university to a different level.”
Unfortunately, as easy as it is to complain about it, construction costs alone can’t explain why Cornell is so expensive. In fact, if one only judges by the amount of, price of, and perhaps ridiculousness of construction at colleges, then attending Cornell should be a lot cheaper than attending some of the aforementioned schools. It does not take a Dyson student to explain why this is not the case at all. For one thing, what you are building matters perhaps just as much as how much of it you are building. As enrollment in higher education continues to stagnate, especially in the Northeast and Midwest, many universities find themselves spending more on the five-star hotel dorms, top-notch student union bars, brand new athletic faculties, and indoor rock climbing walls necessary to keep hordes of freshmen coming year after year. Say what you want about Cornell but you won’t find any luxury high rises and lazy rivers around our campus, although to be fair, Libe Slope would make a great water slide park if it wasn’t frozen six months out of a year.
As students at one of the most expensive universities in the nation, we should not focus too much on our lack of debt-financed construction and instead turn our attention to other price-raising factors. It is great that our student activity fee is around 20 times smaller than that of UNCG but keep in mind that the total out-of-state cost of attending UNCG in the 2015-2016 academic year was $29,758. The total cost of attendance for Cornell out-of-state contract students came out to be $62,744 that same year. Expensive construction projects certainly play a role in raising attendance costs for students at some schools but they do not explain why schools like Cornell are so incredibly pricey. And here is where factors such as school ranking, financial policies, and other possible causes come into play. Operational and administrative inefficiencies have long been concerns of those wary of Cornell’s financial situation. Skorton in fact announced a pause on non-professorial hiring to last until March 31, 2009 and a “rigorous 45-day university-wide review of operational effectiveness” on the same day he laid down his ban on construction. Last spring’s controversial student health fee was not, in fact, to finance the construction of Cornell’s new health center. Instead, the $350 fee was intended to pay off $4 million of loans taken to cover the cost of Gannett’s increased staff and expanded services.
On June 30, 2009—the very day Skorton’s moratorium on construction ended—the Cornell Chronicle reported that the university faced an operating deficit of up to $215 million by 2013 without a detailed plan of action and downsizing. Then-Provost Kent Fuchs launched “Reimagining Cornell,” described by Jeff Schweers of The Gainesville Sun as “a strategic plan to streamline administrative costs, eliminate redundant operations and consolidate programs as well as create a single budget model for all the college deans to adopt.” By January 2010, a total of 308 staff had been laid off, with a number of language programs being cut and certain majors being combined into new programs. The university’s deficit stood at $55 million by March 2015, with much of it possibly resulting from a faculty renewal program and increased hiring begun in 2010, according to former Vice President for Student and Academic Affairs Susan Murphy. The Edifice Complex is a very real phenomenon at many universities across the nation but thankfully is a much less pressing issue at Cornell. The administration, however, still has a responsibility to mend practices that continue to bring it financial trouble. By tackling needless construction, administrative inefficiency, and other issues together we can continue striving towards a more financially sound alma mater with the best interests of all in mind.