JTS Facing Serious Financial Problems

Faculty members at the Jewish Theological Seminary, the Conservative movement’s flagship institution, are reeling over the sudden announcement that the school faces serious financial problems, ones they believe could harm the future academic reputation of the institution.

At a Nov. 3 faculty meeting convened by Chancellor Ismar Schorsch, the teaching staff learned that JTS has implemented a hiring freeze and is selling a parcel of land it purchased four years ago intending to build graduate housing.

The explanation was that there is a debt of “about $50 million” requiring speedy repayment, according to one faculty member in attendance.

“We all sat in the meeting with our jaws dropped because we didn’t know it was coming,” said the faculty member, who spoke on the condition of anonymity. “My God, when we heard that number we were astonished.”

Several JTS teachers spoke with The Jewish Week on the condition that they not be named because of concerns they could jeopardize their jobs.

At a follow-up meeting Nov. 15, JTS board members board tried to calm the worried staff.

“They are under pressure to resolve this debt immediately and so they are contemplating what we faculty consider drastic measures,” said someone who was present at both meetings.

In addition to the hiring freeze and sale of the parcel at 100th Street and Amsterdam Avenue — JTS bought the land for $4 million and hopes to sell for double that amount — the seminary is also considering the sale of two apartment buildings on 122nd Street adjacent to its campus.

The seminary has owned the buildings for decades but has been unable to completely turn them into student housing because of court battles with tenants who won the right to stay.

Faculty members said they were concerned that they may not receive their standard annual cost-of-living salary increase, and non-tenured faculty feared potentially losing their jobs.

Twenty non-faculty staff members were laid off in June, according to sources.

A JTS spokeswoman, Elise Dowell, could not confirm the number of positions eliminated but said that “as a financially responsible institution we continually assess our costs and eliminate redundancies. Personnel expenses are one of the largest costs an academic institution bears, so to be prudent, it’s one of the things we have to continually look at.”

JTS officials denied there is a single debt, but said funds were borrowed from internal sources to cover operating expenses over the past few years as interest income from investments plummeted with the stock market and created a gap. Promised donations were also never made.

“As many organizations have experienced, because of market conditions and deferred gifts, our portfolio has decreased as compared to our plan,” Dowell said.

“Professional examination of our strategic alternatives is under way and has been for about a year, and its objective is to assure that we have the strongest possible financial footing in order for us to enable to fulfill our mission as the pre-eminent center of scholarship and academics in the Jewish community,” Dowell said.

She also said that fund raising at JTS is strong. Fund raising has risen in each of the last several years, Dowell said, growing from just under $14 million in fiscal year 2001 to $17 million in fiscal year 2004, which ended in June.

The seminary has an endowment of approximately $80 million, Dowell said, and if expected bequests were counted, the figure would double to $160 million.

A five-year capital campaign that began in 1999 and ended this year raised $265 million, she said.

Independent confirmation of the numbers is nearly impossible because JTS since 2000 has classified itself with the Internal Revenue Service as a religious rather than educational nonprofit.

Organizations with 501C3 nonprofit tax status from the IRS are required to file forms called 990s disclosing their income, expenses and the compensation of the five highest-paid staff members and five highest-paid independent contractors. But religious institutions like churches, synagogues and mosques are exempt from that requirement.

As a comparison, the Reform movement’s Hebrew Union College-Jewish Institute of Religion is also classified as a religious institution exempt from 990 filing requirements. But the Conservative movement-affiliated University of Judaism in Los Angeles, along with Yeshiva University here, have classified themselves as educational institutions and do file the 990s.

Like these other institutions, JTS essentially is a university offering undergraduate and graduate programs in academic fields such as Jewish education, as well as ordination of rabbis and cantors.

The questions about financial stability at JTS come at a time when fund-raising and asset-management practices at universities and other institutions are coming under scrutiny by Congress and in the media.

JTS officials said the property sale and cutbacks represent nothing more than the routine, if difficult, financial planning that any organization goes through.

“There’s a perennial challenge of matching the revenue resources to all the great things people want to do, and the seminary is no different than lots of other institutions in that regard,” said Dowell. “A strategic planning exercise for the seminary six or seven years ago found that the thing that needs to be preserved the most is the strength and quality of its faculty and programs. That study also ranked physical real estate as a much lower priority.”

“If the seminary had the resources of Harvard or Columbia, we’d be building buildings all over the city. It would be nice if we could use the limited resources we have to build graduate student housing, but it’s a finite world.”

Some on the faculty at JTS said they were worried that even a temporary hiring freeze would have a long-term impact on its reputation as one of the premier institutions for Jewish studies. JTS already is being challenged by the growth of competing graduate programs at major universities, and other rabbinical and cantorial seminaries.

Two faculty positions whose search committees had already identified candidates are finishing their process, JTS sources said, but there are other vacancies and no new search committees are being formed.

Instead of pursuing professors seeking tenure-track positions, JTS increasingly is relying on hiring adjunct professors on one- or two-year contracts.

“If we have a hiring freeze on for the next couple of years, that kills the academic future of the institution,” said a faculty member who asked not to be named.

“If there’s an up-and-coming star they’re going to go to Columbia or NYU, and if you don’t have faculty you lose graduate students,” said the faculty member. “One of the reasons people choose JTS is because our fine academic reputation is our strength. If we lose our academic edge because of these kinds of things, then we’ll lose our graduate students and eventually our rabbinical students.”

The faculty member used baseball as a metaphor.

“You can keep the team together,” this person said, “but if you can’t get the best pitcher and catcher, you won’t make it into the World Series.”