The campus is closed and staff will work remotely at least until the governor announces the reopening of the New York City Region. See the Coronavirus / COVID-19 Updates page.

FEC Plan Q&A

See below a compilation of the questions and issues that have been raised about the FEC’s Recommended Plan to Return to Full-Tuition Scholarships. Our thanks to all who have shared their feedback.

One of the graphs shows that the majority of the plan – 53% – relies on significantly increased fundraising. How do you plan to hit that aggressive target?

The Recommended Plan is ambitious, but we believe it is achievable. To get us started, our goal is to double annual current-use (restricted and unrestricted) giving by FY21 from $4.5 million to $9 million. Momentum is already building, and the Irma Giustino Weiss (A’45) Challenge Grant is a perfect case in point. This micro-campaign launched in the fall and, through its matching component, has achieved $8 million for Cooper. Importantly, we are also increasing our base of supporters. More than 1,100 people participated in the challenge; 206 of those were new donors; 582 were returning donors who had not given the previous year; and 418 of the donations were increased gifts. Irma’s Challenge generated donations of all sizes, including major and mid-sized gifts. Overall, fundraising (excluding bequests) for calendar year 2017 was 56% higher than it was in 2016.

We also made good progress with institutional funders in calendar year 2017. The number of institutional funders increased from 17 to 24 with 9 new grants totaling $329,000 in new funding. In addition, 5 of our current donors increased their annual contributions totaling $165,000 in additional revenue. Our community is really stepping up to the plate. Fiscal year-to-date, we are over $950,000 ahead of where we were this time last year with respect to cash contributions received. We will continue to build on this success by maintaining and growing the relationships we have and by cultivating new relationships and gifts for scholarships as well as for fundable projects and programs within our academic programming and for our Great Hall initiatives.

How did you arrive at these fundraising targets?

In developing the projections, the Administration and FEC evaluated fundraising benchmarks for peer institutions; under-tapped fundraising sources at Cooper Union such as private foundations, corporations, and mid-level to major gifts; expanding Cooper Union’s donor base through new outreach strategies, such as Great Hall programming; and new fundraising strategies that focus on a cycle of relationship building and stewardship.

Is a capital campaign being considered to help reach these aggressive fundraising goals?

While our fundraising outreach will most certainly be enhanced, it will not be structured as a campaign, which requires a larger, existing donor pool and dedicated marketing campaign infrastructure. We would also not want a capital campaign too early because it could cannibalize critical, annual, current-use fundraising.

The Expense Initiatives include additional personnel cuts. Our staff is already lean. Does this mean another round of layoffs is coming?

Financially and operationally healthy organizations regularly evaluate whether they can operate more effectively and generate sustainable cost savings. That is the case at Cooper as well. As we continue to look at how work is best managed here, there is the potential for additional personnel changes. As part of our organization’s evolution and return to a financially sustainable position, we are also looking for new ways to work. The idea of expecting a smaller number of people to do the same amount of work is not the solution. We have to be strategic and intentional about eliminating some of what we do and/or making our work more efficient so that we can accomplish it at a lower cost.

I don’t understand the Composite Financial Index (CFI). What is its relevance to the Plan?

The Composite Financial Index (CFI) is a widely-used metric within higher education to measure long-term financial health and determine the financial impact of strategic decisions. It measures an institution’s annual financial performance, its ability to withstand a crisis or other unexpected loss, and the extent to which debt is weighing it down.

For those interested in a more technical answer, it is calculated by blending four different ratios, two of which are balance sheet-based and two of which are income statement-based. The balance sheet ratios make up 70 percent of the CFI and the income statement ratios make up 30 percent. The larger focus on the balance sheet suggests that expendable (i.e., liquid) financial resources are the primary key to sustainability of a higher education institution. Currently, Cooper’s CFI is -2.01. The Financial Monitor has indicated that a score of +4.0 or better is likely what will be required for Cooper Union to return to a sustainable full- tuition scholarship model.

Why are we unable to leverage the Chrysler and Astor Place assets in a more meaningful, immediate way?

We already have. We already took the lease revenue out of 51 Astor, for example (by financing the ground lease). Additionally, the Financial Monitor has said they will not allow us to solve our financial problem by leveraging future revenues which, in essence, is kicking the can down the road. The FEC and the Administration agree with the Financial Monitor on this issue. Restructuring or renegotiating our debt is one of the “additional initiatives” that will be pursued if it can be done in a financially favorable way for Cooper Union.

Isn’t there risk in the fact that 2/3rds of Cooper’s revenue is tied to the Chrysler Building?

Diversifying Cooper’s revenue stream is certainly part of the FEC Plan. That’s why we’re looking at four different Revenue Initiatives – from reducing average graduate program scholarships from 66% to 25%; increasing dorm rate to current market rate of $15,000 per year beginning in FY20; growing building and facility rentals by 3% beginning in FY19; and increasing current-use fundraising by an average of $1.2 million (or 25%) in each of the next five years and by an average of 11% annually for the next five years thereafter. We have received community feedback on some of these initiatives and are currently reviewing the feedback to determine whether any adjustments to the plan will be recommended.

Shouldn’t the  Chrysler Building have more of a positive impact on the calculations of our current financial condition?

The Chrysler Building is taken into account in certain ratios in the CFI but excluded from others since those assets, which are tied up, wouldn’t enable Cooper Union to weather a storm the way an endowment or cash reserve would.

Adding $152 million to our endowment and reserve sounds very high. Why is that the number?

It’s actually still low relative to other relevant benchmarks. We believe it is the minimum target. Financially healthy institutions have financial reserves that enable them to withstand unexpected expenses, losses, damages to physical plant, or cash flow shortages. Reserves constitute a “Rainy Day Fund” that can support continued operations – e.g. educating and housing students, paying faculty and staff, staying current with debt payments, keeping the lights on, etc. – for a period of time while addressing the unexpected events. Colleges and universities that are financially resilient maintain operating and capital reserves (cash surplus) in an amount equal to or greater than their long-term liabilities and at least four to six months of operating expenses. (Many schools can cover at least a year of expenditures.)

Presently, Cooper’s operating and capital reserve is negative. Although Cooper has a positive cash balance, it was generated by using debt (the Bridge Loan) to fund operating deficits. Since we must repay those funds, they are not a cash surplus, and, therefore, we have no Rainy Day Fund to cover unexpected expenses. We need one. Even with an additional $152 million in reserves, we would still be below peer benchmarks but it, along with other actions we are taking, would get us to a measure of financial health that we and the Financial Monitor are comfortable with (CFI of +4.0) to support a return to full-tuition scholarships.

On the Balance Sheet in Appendix A, Cash, Other Assets, and Other Liabilities remain flat over the course of the Plan. Why is that?

Cash and Investments are typically looked at together. We expect this combined balance to grow over time, with most of the resources held in investments that can grow at a higher rate. As the Plan generates additional resources that can be used as reserves, they will be put into the investment pool to earn money for the college. We will keep some funds in cash for short-term expenses, but since this won’t vary much over time, the projections show the cash balance holding steady and growth going into investments. Other Assets and Other Liabilities are typically a collection of small items that fluctuate up and down. Since there is little way to predict these, we simply assumed they would be roughly constant over the course of the plan period.

For those interested in a more technical answer, the long-term projections were done on a cash (rather than GAAP) basis. Certain material non-cash transactions were captured in projecting out the balance sheet (e.g. depreciation on fixed assets and amortization of debt issuance costs and deferred lease income). Any timing on cash payments or receipts (working capital adjustments to other current assets and liabilities) were deemed insignificant, with the effect already captured through the change in net assets and investments for projection purposes.

What happens to this plan given the recent federal tax law change that was passed? Won’t Cooper be impacted by the endowment tax?

It’s too early to know precisely what the impact will be. Specific provisions detailing how investment income will be defined and calculated, how to identify the funds it applies to, and how to allocate related expenses to the endowments have not yet been developed by the federal government. We have taken this and other potential risks into consideration in formulating this Recommended Plan, so that we can be nimble in adjusting the components in order to build long-term financial health for Cooper, while also investing in academics and our physical plant, throughout our path back to full-tuition scholarships.

Do you believe you will have the Board’s full support to adopt the FEC recommendations?

The Board is deliberating on the final FEC plan recommendations, as well as feedback from the Cooper community and the Financial Monitor’s assessment. The Board will then vote to adopt some, most or all of the Recommended Plan at its meeting mid-March. It wouldn’t be appropriate to comment on a Board vote until after it is completed and the Board makes its decisions public. However, we have been updating the Board throughout the FEC planning process, and they have provided their feedback at critical points.

How engaged is the Board in fundraising to meet these new financial goals?

Trustees have all made a $25,000 “give-or-get” annual commitment to Cooper’s fundraising goals. Trustees also play a critical role in connecting Cooper Union to new potential funding sources. For example, one Trustee introduced the team to a new institutional funder, which resulted in a major grant earlier this year.

I don’t understand what all of these financial needs are. Why do we pay for health insurance after somebody retires? Isn’t Medicare for that? Why are we putting so much money away to repay the Bridge Loan? Aren’t we just going to refinance that? What’s all the money for deferred maintenance going to be used for?

Cooper’s financial challenges are complex and significant and a result of decades of structural deficits, unfunded needs, and the decisions that were made during those periods – in addition to the rising costs of higher education, in general.

  • Post-retirement health insurance is part of Cooper’s contractually negotiated medical benefits, and in addition to budgeting sufficient resources to cover these costs, we will explore ways to contain the growing cost for the future.
  • Self-amortizing the Bridge Loan debt (or reserving cash each year to fund the loan payment) beginning in FY19 will give us the financial freedom in 2034 (when the $39 million payment is due) to choose whether to refinance or pay off the debt, depending on which option is in Cooper Union’s best financial interest. Cooper cannot, under any circumstance, find itself unable to pay that debt when due if refinancing is not viable.
  • The February 2017 Financial Monitor Report highlighted the significant mismatch between net plant assets ($161.4 million) vs. debt ($175 million) and between asset depreciation vs. capital expenditures – all of which supported the conclusion that Cooper Union is under-investing in capital (our physical buildings). There are other measures and a study done by an outside engineering firm which confirm that we are under-investing in our physical buildings. We need to invest $2.5 million per year in capital expenditures (vs. the $1.5 million currently being spent annually) to address this imbalance. This is not about making our buildings showplaces. This is about basic maintenance and investment to make sure that our buildings can continue to serve their core academic purposes at a reasonable cost.

Are we able to pay down the loans early if there is a large increase in fundraising?

The loans have significant pre-payment penalties which likely make it cost-prohibitive to pay them down early.

Why is there so much time spent on the financial aspects of the Plan? What about the other strategic issues?

A financially healthy organization that is sustainable for the long-term must be achieved in order to support and sustain all other long-term strategies, including and especially full-tuition scholarships. The Board and Administration, informed by faculty and staff through things like the Community Planning Collaborative and Diversity Task Force, are doing additional strategic planning work to develop Cooper’s path forward. A return to full-tuition scholarships is an important component of that strategic plan, and it requires a specific and responsible financial plan to achieve it.

Why are we so focused on free tuition and not on stellar academics?

We are focused on both, and we think they are mutually reinforcing. The FEC Recommended Plan accounts for both of those areas – returning to full-tuition scholarships and investing in academics – while also ensuring that we are maintaining our physical plant and building long-term financial health. The Recommended Plan includes increased annual investment in current and new academic programs, building to $3 million per year by FY25, if we meet the fundraising targets set forth in the Recommended Plan.

It seems like scholarships are going up so slowly. Isn’t that our most important priority?

The FEC Recommended Plan to Return to Full-Tuition Scholarships significantly accelerates the return to full-tuition scholarships from 22 years to 10 and begins that process in two years (provided we meet certain financial goals). Importantly, in addition to funding full-tuition scholarships, the Recommended Plan also accounts for investment in academics and Cooper’s physical plant and for building long-term financial health. We need to make sure we are building towards full-tuition scholarships carefully so that we are confident that these gains are sustainable.

How will the increase in scholarship levels be implemented beginning in two years?

Once an overall financial plan is approved, we will determine the manner in which scholarship levels will rise for undergraduate students.

It looks like this Plan gets us to free tuition, but not necessarily to all of the ideal financial benchmarks. Isn’t now the time to strive for that?

The FEC has outlined a 10-year plan for returning to full tuition-scholarships but is clear in stating that there is not an end point in terms of implementing revenue and expense initiatives. The work will continue beyond the 10-year period to continue to build financial health, including achieving the appropriate financial benchmarks. We believe that this Recommended Plan would achieve a level of financial health that will support sustainable full-tuition scholarships, even as we build toward even more robust financial health.

What are you going to do to control health care costs?

This is a question that virtually every organization in the country is examining. Cooper’s health care plan has not been evaluated for a long time, and we believe there are alternative health care designs that still provide high-quality choices for employees but at lower costs. Cooper Union will be working with consultants with significant experience in higher education benefits who can inform us of comparable structures and provide benchmarks of other plans at similar institutions as we look for both cost-savings and coverage improvements. The Administration and Board understand the importance of a competitive benefits program to attract and retain the best faculty and staff.

Can you explain how you arrived at the projected $48 million needed to cover health care costs? It seems excessive compared to the $900,000 spent last year.

Based on actuarial estimates, we will likely be required to pay $48 million for post-retirement medical benefits for those currently in the plan, and this is likely to grow as retirements and life expectancies increase.

What happens to our fundraising targets when the economy makes its inevitable downturn?

A major recession or general economic downturn would negatively impact multiple aspects of the Plan — fundraising, tax equivalency payments, enrollment (and therefore tuition), ancillary earned revenue such as space rentals, etc. We will try to mitigate this risk with the proposed guardrails. Certainly we cannot control if/when an economic downturn occurs. We can only take the risk into account and prepare for it by planning for a downturn and building healthy reserves. For example, we have built an average annual contingency of $500,000 into the Plan.

Won’t increasing the dorms to market rate mean you’ll either price people out of the market who can’t afford to live in the Village or present a disincentive for first-year students who can choose to live elsewhere if there is no cost savings to choose the dorms? It feels like this initiative puts the return to free on the backs of students.

Financial support for non-tuition costs of attending Cooper Union (e.g. fees, books, housing, and other living expenses) will continue to be offered for those with significant financial need. We also believe that the first-year student experience, which is enhanced by first-year students living together in the dorm, will continue to be a factor in incoming student decisions about their housing. As with every aspect of the Plan, we will monitor these areas very carefully and course-correct as necessary.

It seems like on the revenue side, the Plan is reducing graduate student scholarships to build undergraduate scholarships. What’s the rationale there and is that a fair solution?

An undergraduate education is critical for a student’s future practice and economic opportunities. That’s why our focus is on undergraduates first. We look forward to accomplishing the goal of returning to full-tuition scholarships for all undergraduates, so that we can then turn our attention to the financial requirements of the graduate program. We are comfortable that this approach adheres to the fundamentals of our legacy.

Reducing graduate program scholarships is dangerous as the program isn’t strong enough as it is. Are you prepared for this to have a negative impact on graduate student enrollment, which, of course, also means declining revenue?

As was described in the FEC Plan, the recommendations have associated risks, and we are aware that a risk of reduced graduate student scholarships could be a decline in enrollment. As with every aspect of the Plan, we will monitor these areas very carefully and course-correct as necessary.

I still think 10 years is way too long to return to free and further threatens/diminishes Cooper’s academic reputation. The Plan is too conservative, even  risk-averse, at a moment when there is great urgency to return to free.

The Plan is designed to develop financial responsibility and sustainability, in addition to achieving free tuition. It seeks to balance the goals of reducing net tuition starting in just two years while building long-term financial sustainability. In the end, full-tuition scholarships matter only if Cooper has the financial health to maintain its academic excellence and campus operations for the long term.

The FEC studied our current financial condition very carefully. Given the combination of depleted operating and capital reserves, deferred maintenance, a bridge loan payment due in 2034, and post-retirement medical benefits, we are in need of generating approximately $250 million in new resources for Cooper Union in order to return to full-tuition scholarships and long-term financial health. The 10-year timeline is aggressive, in many ways, but we believe achievable if we all work together. In addition, an ongoing evaluation of the issues surrounding academic reputation and quality, beyond the standard industry measures we currently have, will continue to be a high priority.

I think the Plan is too ambitious. Focusing on free is the wrong priority; we really need to focus on becoming financially sound and ensuring the absolute highest quality, most innovative academic programs.

The Plan is designed to develop financial responsibility and sustainability. It seeks to balance the goals of reducing net tuition starting in just two years, of building long-term financial sustainability, and of continuing to fuel the highest quality academic rigor and innovation.

The 10-year timeline is aggressive but we believe achievable. For example, on the fundraising front, we are already building momentum and increasing our base of supporters. More than 1,100 people participated in the Irma Giustino Weiss Challenge, which generated $8 million for Cooper; 206 of those were new donors; 582 were returning donors who had not given the previous year; and 418 of the donations were increased gifts. Irma’s Challenge generated donations of all sizes, including major and mid-sized gifts. Overall, fundraising (excluding bequests) for calendar year 2017 was 56% higher than it was in 2016. We also made good progress with institutional funders in calendar year 2017. The number of institutional funders increased from 17 to 24 with 9 new grants totaling $329,000 in new funding. In addition, 5 of our current donors increased their annual contributions totaling $165,000 in additional revenue. Our community is really stepping up to the plate. Fiscal year-to-date, we are over $950,000 ahead of where we were this time last year with respect to cash contributions received. We will continue to build on this success by maintaining and growing the relationships we have and by cultivating new relationships and gifts for scholarships as well as for fundable projects and programs within our academic programming and for our Great Hall initiatives.

At what point will bullpen items be taken into consideration?

Some bullpen items will be actively pursued now (e.g., working to reduce Cooper Union’s footprint in 30 Cooper Square by 50% by the end of FY19 ); however, other bullpen items (e.g., retail in the Foundation Building) require more community discussion and would be deployed depending on other results, such as fundraising.

Will the Free Education Committee remain in place after the Board votes on the Plan in March?

The Board will make that decision but has already been discussing the idea of keeping the FEC intact to oversee the Plan.

Do the reported years of 2009 through 2017 (e.g. 2017) regarding the number of international students mean that it was for the end of the academic year (e.g. 2016/2017) or the start of the academic year (e.g. 2017/2018)?

The numbers of international students were for the start of the academic year.

Did the data concerning the number of international students that was provided to the FEC include the actual number of international students for each school for each reported year from 2009 thru 2017, or did it only include the reported percentages for each school, as shown in the FEC report?

The numbers provided included the actual number of international students.

Will there also be plans to publicly post answers to all questions and requests submitted in the Community Feedback Forms? If yes, where will those questions, requests, and answers be posted?

We are responding directly to the individuals who posed each question. When we do that, we ask if we can include the person's question in a list of publicly posted questions. If they grant permission, we will include their question in the list. Any information that can be shared with the community will be posted on our website, on the FEC page.

Page 9 indicates there were 797 undergraduate students, as of October 2017. The CU Admissions Facts web page indicates there are 853 undergraduate students, which is in line with budgeted plans, for 2017/2018. Please explain why there is a difference.

853 includes the grandfathered students that came in pre-tuition.

It is more important to invest in the academic programs and to build a financially healthy and sustainable institution rather than return to free tuition in 10 years or sooner! 76% already get a full scholarship. Engineering faculty is underpaid for years (as compared with other schools in the area and the high cost of living in NYC). The labs and facilities need upgrading and much better maintenance. If we want to attract top students we also need top faculty and staff. Why are we having such a hard time to attract a qualified Dean for the Engineering school?

Some students (less than 10%) receive the minimum 50% scholarship. Others (37%) receive (based on financial need) a 100% scholarship. The remaining students receive something in between. This averages to 76% of students’ tuition costs being funded through scholarships. The FEC Recommended Plan accounts for both a return to full-tuition scholarships and investment in academics – while also ensuring that we are maintaining our physical plant and building long-term financial health. The Recommended Plan includes increased annual investment in current and new academic programs, building to $3 million per year by FY25, if we meet the fundraising targets set forth in the Recommended Plan. The search for a dean is ongoing. We continue to see candidates who are interested in the role and are working hard to find someone with the right combination of skills for our particular situation at an appropriate level of compensation.

The principal question that I am writing to address is how realistic are the goals for fundraising? It would help to see a table of the annual fundraising for the past ten years and the projected fundraising under the FEC for the next ten years

Clearly, fundraising is one of the most significant areas of emphasis. Our goal is to double annual current-use (restricted and unrestricted) giving by FY21 from $4.5 million to $9 million. As noted above, momentum is already building.

A table of projected fundraising targets for the next 10 years-plus can be found on page 38 of the FEC Plan. Fundraising for the past 10 years is as follows:

Fiscal Year Current-Use Total * Total Contributions *
FY08 $ 4,684,680 $14,103,406
FY09 $ 4,619,643 $17,112,875
FY10 $ 4,998,324 $14,590,501
FY11 $ 5,004,272 $11,465,667
FY12 $ 7,193,180 $10,004,509
FY13 $ 6,773,213 $10,005,318
FY14 $10,983,029 $13,437,192
FY15 $10,008,088 $12,299,924
FY16 $ 7,062,992 $11,080,188
FY17 $ 9,250,098 $11,331,989

*Please note: These totals include bequests. The projections going forward do not include bequests as Cooper cannot budget for those.

I attended the session on 2/7 and I found it very informative. My thanks to everyone who participated. I did have another question/comment. The initiative "Rent First Floor of the Foundation Building", as I understand it, raises the good point that the potential move or re-configuration of the Cooper Union Library might be costly and/or have unintended consequences. Nonetheless, part of the first floor of the Foundation Building is already occupied by the "Colonnade", not the Library. Would it be feasible to attempt to rent the Colonnade without any re-configuration of the Library? Or, instead of renting the space occupied by the Colonnade, have other uses been considered for this space, such as using it for offices (perhaps in conjunction with "30 Cooper Square" initiative)? Thank you.

Thanks so much for attending the session and for your engagement in this process. Yes, we are exploring how various configurations, with and without the library could be considered for revenue-generating rentals and/or cost-saving repurposing of space.

I fully support the important effort to return to Full-Tuition Scholarships, and I agree with all the recommendations of the FEC. I just wonder if you have considered—when the financial situation has improved—the possibility of reducing the salary gap between full-time and adjunct professors, and/or of increasing the percentage of full-time professors. Please note that I am a full-time faculty member. Still, I think that the adjunct professors play a fundamental role in our institution (in fact, in some cases they teach the majority of the courses), but they work in very hard conditions, in terms of salary, working hours, and above all (lack of) social security. I know that this is a common issue in the American educational system. Yet I think that our institution, which rightly and proudly pursues the ideal of a free high-level education, could also show the path to a more just academic system.

Thank you for your question and your concern. We agree with you that adjunct professors serve a critical role in the academic program and are valued members of our community. Many bring important experiences through their work outside of academia that deepen and enrich our program. We hope that we can serve as a leader on several fronts in academia and will certainly take this consideration into account as we increase our resources over time and address the critical financial needs outlined in a plan to return to full-tuition scholarships, build financial health, and ensure an academically vibrant program.

  • Founded by inventor, industrialist and philanthropist Peter Cooper in 1859, The Cooper Union for the Advancement of Science and Art offers education in art, architecture and engineering, as well as courses in the humanities and social sciences.

  • “My feelings, my desires, my hopes, embrace humanity throughout the world,” Peter Cooper proclaimed in a speech in 1853. He looked forward to a time when, “knowledge shall cover the earth as waters cover the great deep.”

  • From its beginnings, Cooper Union was a unique institution, dedicated to founder Peter Cooper's proposition that education is the key not only to personal prosperity but to civic virtue and harmony.

  • Peter Cooper wanted his graduates to acquire the technical mastery and entrepreneurial skills, enrich their intellects and spark their creativity, and develop a sense of social justice that would translate into action.