Life in America is not easy because of the bad economy. Nina, a financial journalist, wrote an article in the August issue of Vanity Fair. According to a special topic written by Nina Monk, the economic situation of eight Ivy League schools including Yale, Princeton, Columbia and Cornell is grim. Private universities in the United States rely on donations, and now these universities have received nearly 25% less donations than in previous years.
As for Harvard University, the richest school in the world, it is experiencing the most serious and dangerous economic crisis in its 373-year history. In the heyday, no one dared to doubt Harvard's financial resources. The basic salary of each full-time professor reaches $6.5438+0.92 million, which is far ahead of American universities, and the annual scholarship for students reaches $338 million. These figures add to Harvard's aura. In the last fiscal year (as of June 30, 2008), Harvard still received a donation of $36.9 billion. However, in the first quarter of the new fiscal year, donations dropped by 22% (from July to June last year, Harvard received $8 billion less than expected). Resulting in a huge deficit. Nina. Monk lamented that the golden age of the Ivy League was over.
Harvard University has been spending a lot of money to build campus facilities. It did not hesitate to entrust Robert to build a new medical building costing $260 million. There is no problem for Robert A.M. Stern (an old American architectural firm) to design a giant Harvard Law School annex. However, there is a morbid smell on Wall Street now. Strolling through the Harvard campus on the Charles River in Boston, John, the first donor. The statue of john harvard shines brilliantly, but the dustbin that was almost trampled seems to reveal an ominous omen. As for Harvard's most ambitious project, the scientific complex, which is expected to be completed in 20 1 1 year and costs more than1200 million US dollars, has been forced to stop working. As the enrollment and construction of graduate schools are frozen, conflicts between students, teachers and management are brewing.
Monk said that in the process of writing this report, Harvard officials refused to cooperate with her and she became the "most unpopular person". However, information providers from all directions emerge one after another. It seems that everyone is full of complaints and has something to say to those in power. Many people believe that Larry, the current chief economic adviser of the Obama administration and former president of Harvard University. LawrenceSummers is the culprit.
Forget the free coffee.
The college of Arts and Sciences, the core college of Harvard University in Massachusetts, now faces a budget deficit of $220 million, equivalent to one-fifth of the total annual budget of the College of Arts and Sciences. When Monk visited the college auditorium, the student union organization was being held *, because the undergraduates with the least right to speak would undoubtedly become the victims of the first round of layoffs. The whole campus is in chaos. The staff were angry and the students felt cheated. Smith, a professor of engineering and applied science, lamented: "At Harvard, cost control must start from the undergraduate budget, not the salary of senior managers. "
In addition, some infrastructure will be degraded. In winter, the thermostat of air conditioner will drop from 22℃ to 20℃; Students and teachers must forget about free coffee from now on; The number of free shuttle buses between colleges will be reduced by half; The steaming breakfast of undergraduates will also disappear, and the cold ham, cheese, grains and fruits will replace the bacon, poached eggs and waffles in memory. In the words of Harvard Crimson, the newspaper of Harvard University, "This is the richest department in Harvard. If even they can't serve coffee, the situation can be imagined. "
Free coffee is a trivial matter. What students are really worried about is the difference in teaching resources. An insider of Harvard, who asked not to be named, said that it is obvious that Harvard will lay off staff on a large scale, the courses will be streamlined, the large class will replace the small class, there will be fewer professors, teaching assistants, guards and logistics personnel, and the management structure will be better. The library that will open the next day, the research fund will be carefully allocated, vending machines will replace cafes, junior high school sports teams will be downgraded to clubs, and the campus will be devastated, with no salary increase and bonus.
Harvard is not a business.
In Harvard's dictionary, "cost control" is a new word, and they prefer to call it "adjustment" or "reassessment". A former Harvard executive said: "Someone must be responsible for the judgment at that time." In the past 30 years, they have become accustomed to being rich. In the 20 years from 65438 to 0980-2000, Harvard opened a new campus of 3.2 million square feet, and in 2000-2008, this number doubled again, and the total campus area was almost equivalent to the Pentagon. Numerous buildings have been built on these new school sites, with a total cost of more than $4.3 billion.
On the other hand, from the donation of $4.8 billion from 1990 to the donation of $36.9 billion in 2008, those Harvard managers thought that the double-digit growth rate would last forever. Therefore, Harvard has never cut costs. According to Forbes, Harvard's non-performing assets ratio is extremely high, and there are no funds entrusted, such as private equity funds, real estate investment or hedge funds, reaching110 billion US dollars. In real life, such a financial management method has long been heated by investors, but a professor at Harvard Business School said: "Let Harvard control the budget will bring disastrous consequences." Because Harvard is not an enterprise and should never be managed as an enterprise, no one should review Harvard's predicament. "
Therefore, Harvard is not facing a simple liquidity problem. They can't control costs by firing middle managers, splitting departments or selling real estate like ordinary enterprises. A hedge fund manager said: "No school has the ability to cut costs quickly." . "They totally screwed up." Although Harvard's capital operators plan to increase the financial flexibility of the school by increasing cash on hand, for example, they try to sell their private equity of $654.38+$50 million at an ultra-low price to make up for the lack of donations (no one cares). Last year, 65438+February sold off another $2.5 billion in creditor's rights, but these were not enough to make up for the huge fixed cost expenditure gap of the school. According to the standard &; According to the data provided by Standard & Poor's, Harvard's total debt has accumulated to 6 billion US dollars, and by 2038, Harvard's annual repayment interest will reach 5170,000 US dollars.
Although, Jane, the newly appointed chief investment officer of Harvard Asset Management Company. Mendillo is still defending Harvard's economic situation, but everyone knows that if there is no way out, who will sell his property in June 5438+February last year?
The essence of the problem is people, not money.
In order to find out the culprit of Harvard's almost desperate economic situation, the frequent changes of its management in recent years seem to leave clues to people. In the past eight years, the president of Harvard has changed four times, while the vice president has changed almost every year. Edward, vice president transferred from Goldman Sachs last year. Edward forster stepped down as 1 in August this year.
In 2005, Jack was the head of Harvard Asset Management Company 15 years. JackMeyer left, leaving the company almost like "a Ferrari without an engine". Fed up with internal struggles, Meyer left Harvard to start a new business, and took with him 30 portfolio managers and traders, including chief risk management officer, chief operating officer and chief technology officer. It is said that the eight-figure salary income of several managers in the asset management company angered Summers, then the principal, and Summers took it out on Jack. Repeated questioning of Meyer's investment strategy led to opposition within the company, which eventually forced Meyer to leave.
Later, Summers' resignation caused a storm in this city. He had to retire because of a slip of the tongue that "women are not as good as men academically" and a series of criticized iron-fisted policies. Under pressure, the school board elected Drew as the first female president of Harvard. Drew foster.
Many people think that as an economist, Summers can also be called "dereliction of duty" in his field of expertise. Around 2000, in order to cope with the risk of exchange rate growth of foreign exchange loans owned by Harvard, Summers sold bonds to make up for the interest rate swap of $654.38 billion. The result backfired, and then the exchange rate fell sharply. Strangely, Harvard did not cancel this swap when the interest rate plummeted, and eventually lost $654.38 billion. Although Summers is to blame, this incident is enough to reflect the internal management confusion of Harvard. As the members of the board of directors of Harvard Asset Management Company summed up to Monk: "The essence of this story is people, not money.