This image was removed due to legal reasons.

The best piece of in-depth investigative reporting you’re likely to read this week comes not from any journalist, but rather from the office of Eric Schneiderman, New York’s attorney general. His 55-page report into what went wrong at Cooper Union should be required, and sobering, reading for anybody who cares about higher education in America.


The story here is narrowly about Cooper Union, and the way in which two presidents – George Campbell first, then Jamshed Bharucha – managed to bring a great institution to its knees, destroying its most precious and unique principle. More broadly, the report is an indictment of otiose trustees, egotistical technocrats, and a culture where university administrators gone wild can effectively railroad all stakeholders, including students, faculty, alumni, and even the attorney general’s office.

There’s a hint of good news, too, primarily in the fact that the New York authorities were willing and able to conduct a year-long investigation into Cooper Union. They write:



The Attorney General intervenes here to safeguard Peter Cooper’s irreplaceable gift to the people of New York… The Attorney General has authority to intervene in this case because it concerns the management of one of the state’s not-for-profit corporations.


State Attorneys General, it seems, can conduct this kind of investigation into any nonprofit college; the peculiarities of the Cooper Union situation, with its various cy près petitions, can for these purposes be ignored. If you’re at a college where administrators have gone mad, and the trustees are doing nothing, and the alumni and faculty can do nothing, then maybe – just maybe – your state AG might be able to help.

Although, frankly, in this case the AG’s intervention comes a decade too late. Better late than never, to be sure. Cooper Union will be better-run tomorrow, thanks to this report, than it was yesterday. But it’s still a tragedy that it was ever allowed to reach this point in the first place.

The AG’s report is clear: the lion’s share of the blame for Cooper Union’s current dire predicament can be laid squarely at the feet of former president George Campbell, along with the board which enabled his megalomania and created a recipe for disaster.

Campbell, and his board, inherited a fundamentally healthy institution with what the Attorney General calls “general fiscal stability”. To be sure, there were deficits, but there was no existential crisis, and the balance sheet was strong, thanks to two incredibly generous gifts dating back to 1902. The first was a large endowment from Andrew Carnegie; the second was an acre of land at the corner of Lexington Avenue and 42nd Street, which now sits underneath the Chrysler Building. (This asset – the land underneath the Chrysler Building – will end up playing a starring role in the saga of Cooper’s egregious financial mismanagement.)


The income from Cooper’s two big assets was more than enough to support a small, high-quality educational institution while staying faithful to the most important and defining characteristic of the college: that of free tuition. Peter Cooper emphasized repeatedly from 1853 onwards that his institution should be “open and free to all,” and so it was, at least for 150 years. Not only did it charge no tuition, but it also gave a bully pulpit to the likes of Frederick Douglass and Susan B. Anthony.

Given finite resources, free tuition is not something that can ever scale: Cooper Union was always going to have to be relatively modest both in terms of size and in terms of budget. But it could, and did, punch well above its weight in terms of educational quality and influence. (Abraham Lincoln, for instance, said that he owed his election to Cooper Union.)


Campbell, however, never aspired to modesty. Rather than preserving a storied institution for perpetuity, Campbell decided that he should come in and shake things up. He had big visions, and expensive ambitions, and no real way to pay for any of them, but he was in charge, and he proceeded to embark upon a series of ultimately ruinous changes.

Campbell became president in 2001, and immediately decided that what Cooper Union needed was a Master Plan. Under the plan, the college would raise $120 million, mostly for new architecture. (Not a new program in architecture, mind you; rather, new buildings, which Campbell decreed were necessary despite the fact that none of the faculty agreed with him.) Once $84 million of the total had been raised, the old art school would be demolished, and a shiny new building would go up in its place. Then the engineering school would move into the shiny new building, the old engineering school would also meet the wrecking ball, and a big black skyscraper would go up on the site of the old engineering school, the lease payments from which would bring “long-term financial stability” to Cooper Union.


None of this made much sense, nor did any of it come with broad support from faculty, students, or alumni. Certainly no one objected to the idea of raising $120 million, but for a school with only 1,000 students or so, almost everybody could come up with alternative (and, frankly, better) uses for that kind of money. Invested at a real rate of 4% (a number which was quite realistic at the time), an extra $120 million for the endowment would produce a permanent income stream of almost $5 million a year. That’s more than three times the $1.2 million student aid budget in 2001, or a full 35% of the $13.7 million spent that year on “instruction”.

In any event, neither Campbell nor anybody else ever had to worry about how to spend the $120 million, because neither Campbell nor anybody else ever came close to raising that much. In fact, by late 2005, the construction campaign had managed to raise less than $40 million, and was going nowhere fast.


That should have been the end of that. Instead, it turned out to be the beginning of the end.

Unable to raise the $84 million that he needed to build his shiny new building, George Campbell decided to build the building anyway – even if doing so meant creating an imminent existential threat for Cooper Union as a whole.


The gods of finance certainly gave Campbell multiple opportunities to abandon his hubristic folly. First, he tried to get an advance on future lease payments from the Chrysler Building – but that wouldn’t raise enough cash. So he moved to Plan B, which was a “sandwich lease” on future years, based on the idea that the existing lease was at a below-market rate. That, too, proved insufficiently lucrative. So finally Campbell moved to Plan C, which was simply to borrow the money he needed.

But Plan C couldn’t work either – for very good reason, which is that when you borrow money, you need to pay that money back, with interest. Potential lenders to Cooper Union took one look at the college’s cashflows, and saw that it was already in deficit; new interest payments would only add to that deficit. Once the new building was finished, it would not be used to generate any kind of new cash: it was to be an academic building, not a commercial building. So there was really no visible way for Cooper to ever pay the money back.


And yet still Campbell didn’t give up. One lender – and only one lender – was willing to front Cooper Union the money that Campbell was requesting, but that loan came with four unacceptable conditions.

The lender was MetLife, and the first unacceptable condition was that its $175 million loan was to be secured by a mortgage on the Chrysler Building land. That land was granted to Cooper Union, in perpetuity, by Peter Cooper's heirs – it was never designed to be collateral for short-term liquidity of dubious necessity.


The second unacceptable condition was that the liquidity was not going to be short-term at all: the loan would take the form of a 30-year mortgage, with a prepayment penalty so enormous (it was $81 million in 2012) that the loan could never be restructured or otherwise paid off early. Even if Campbell managed to magically find the rest of his $120 million, he couldn’t use it to pay down the loan, thanks to that prepayment penalty. The loan would last the full 30 years, even though Cooper Union had no real plan for where it would find 30 years’ worth of interest payments. By the time that the $175 million loan was paid off in full, Cooper would have paid back $10.3 million a year for 12 years, followed by $15.8 million a year for another 18 years, for a total of $387.4 million. That’s well over $200 million in total interest payments alone. Cooper Union had no realistic way of even paying back $175 million, let alone $387 million, so MetLife’s terms were clearly a non-starter.

The third unacceptable condition was that Cooper Union would be forced to give up an enormous amount of upside on its Chrysler Building land. In 1998, Cooper Union negotiated a rather clever 99-year lease for the land, under which it had a lot of leeway to raise rents substantially after 2018. Indeed, there was even a possibility that Cooper Union might be able to end up owning the Chrysler Building itself.


But MetLife was not interested in maximizing Cooper Union’s upside; rather, it was interested only in minimizing its own downside. So MetLife, in return for the $175 million loan, required Cooper Union to sign a series of leases on the Chrysler land, dating all the way out to 2048. Those leases were very favorable to the tenant, Tishman/Speyer, and they essentially prevented Cooper Union from ever being able to take advantage of rising midtown property values.

Finally, there was one last unacceptable thing that Cooper Union would need to do in order to get its $175 million: It would have to get the New York attorney general to agree to the deal with something known as a cy près petition. A cy près petition happens when a charity needs to restructure the terms of its trust, or endowment. In this particular case, in order to get the required cy près relief, Cooper Union would find itself being forced to lie to the attorney general about the necessity of taking out the loan in the first place. Since no university president or board of trustees ever wants to lie to an attorney general, the whole idea of borrowing the $175 million was obviously never going to happen.


Faced with a loan whose terms were unacceptable on multiple levels, the Cooper Union board did exactly what you would expect them to do. They agreed to everything, and paid Campbell a hefty bonus for his troubles.

The attorney general lays out four different heroic assumptions that the board was forced to make in order to go ahead with this plan while contriving not to see that it would become an entirely predictable disaster. Cooper would need to continue to raise ever-increasing sums in new donations (despite the fact that borrowing in the first place was an admission that it wasn’t able to raise the necessary funds in donations); it would need to cut expenses by an unprecedented amount; it would need impressive internal returns on its endowment; and it would need to be able to lease out buildings in Cooper Square tax-free.


As the attorney general says, “the evidence does not reflect that the Board ever established any safeguards, early-warning systems, or contingency plans” for what they would do if any of these assumptions failed to come to pass. On the other hand, what the board did do was sign a contract with Campbell entitling him to a $175,000 bonus if the New Academic Building was built. Unsurprisingly, Campbell then turned around and recommended to the board that they do exactly that. (There was another $175,000 for leasing out the property which would replace the old engineering school, and of course that was part of Campbell’s plan as well.)

Amazingly, not once did a single board member even mention the idea that if Campbell’s plan failed, then Cooper Union might be forced to start charging tuition. Instead, they simply signed off on Campbell’s self-serving plan, after having heard from him that if they didn’t, “further delay in commencing construction would be unacceptably costly.”


The irony here, of course, is as black as night: nothing would have been more “unacceptably costly” than exactly what happened. And so it’s worth naming not only Campbell, but all of the trustees who happily let him set the course for Cooper Union’s eventual implosion:



Ronald W. Drucker, Chairman of the Board

Marc Appleton

Robert Aquilina

Carmi Bee

Lawrence Benenson

Robert Bernhard, Chairman Emeritus

Michael Borkowsky

François deMenil

Mark Epstein, Future Chairman

Edward Feiner

Jeffrey Gural

Charles Gwathmey

Douglas A.P. Hamilton

Stanley N. Lapidus

Richard S. Lincer, Future Chairman

John C. Michaelson

Lawrence Ng

Bruce Pasternack

Sandra Priest Rose

William H. Sandholm

Richard Schwartz

Georgiana J. Slade

Martin Trust

Roger C. Tucker III

Jason H. Wright


These trustees were perfectly happy basking in the prestige of sitting on the board of a storied institution, but they didn’t do their job. They should have said no to Campbell’s crazy plan; instead, according to the AG report, they signed off on it without even asking any questions. They didn’t ask how the loan would be repaid; they didn’t ask why it had such an enormous prepayment penalty; they didn’t ask why the Chrysler lease was being renegotiated in such a way as to lose any upside; and so on and so forth. Cooper Union would have been better governed by a stinking pile of rotting horseflesh. Horses, dead or alive, don’t happily sign away the very thing they are being charged with protecting.

Neither do horses file detailed documents with the attorney general (at the time, it was Eliot Spitzer) saying things which are flatly false. Cooper Union, in its cy près petition, said that:



Modernization of facilities is essential to maintain The Cooper Union’s standing as one of the nation’s premiere undergraduate colleges, to follow the mandate of the charter to be equal to the best technological schools and address concerns about accreditation.


The whole crazy real-estate shell game, in other words, was justified on the grounds that the engineering department might lose its accreditation were its facilities not “modernized” (which means, completely torn down and rebuilt in another location).

In reality, the Engineering faculty were dead-set against the plan, they did not want the new building at all, and Middle States, which accredited the department, had said nothing at all about any danger to its accreditation.


Indeed, the statements in the cy près petition were so clearly false, especially to anybody on the engineering faculty, that the entire thing was kept top secret. If the petition had leaked while the attorney general was considering it, then everybody, most importantly Eliot Spitzer, would have found out how mendacious Cooper Union was being, and there’s a very good chance that the school would not have been allowed to go forward with its plans.

But Spitzer’s office didn’t question the secrecy. They read a petition saying that Cooper Union’s “mission will be compromised” without “financing that is desperately needed to secure the future of the institution.” And, taking these assurances at face value, Spitzer signed off on the plan.


The financing (a fancy word for “going into massive debt”) was not “desperately needed”; it was the worst thing that Cooper Union could have done. The institution might never be able to recover from this one dreadful decision to overborrow.

Campbell’s plan failed for four reasons, at least three of which were entirely predictable. First, the unprecedented cost cuts, unsurprisingly, failed to materialize. Second, the tax breaks built in to the plan also failed to materialize. Third, the donations never got raised, partly because few people want to pay for a building which has already been built. And fourth, the value of Cooper Union’s endowment – at least the part of it which was invested, rather than the part of it sitting under the Chrysler Building – went down rather than up.


Faced with all of these failures, Campbell and the Cooper Union board swung into action with a heroic Plan B for saving the college, right? Haha, just kidding–of course they didn’t.

Instead, they said the plan had been a success, presumably on the grounds that entering a state of mendacious denial was the right thing to do. Campbell and Epstein started crowing to the press about how the endowment had gone up in value, how they hadn’t taken any big risks, and how they had balanced the budget–when the truth of the matter was, in the attorney general’s words, that “without radical changes, insolvency had become inevitable.”


In fact, Campbell had taken very big risks, and no radical changes ever happened–or, at least, they didn’t happen until it was far too late. After all, there’s no need to make radical changes if everything is rosy, and Campbell was still telling all and sundry that everything was rosy.

It’s not as if the board was incapable of making swift decisions. For instance, according to Schneiderman’s report, they started looking for a new president in 2010, and got as far as drawing up a list of finalists–but then, in the course of a single weekend in early 2011, a trustee phoned up Jamshed Bharucha (who was not one of the finalists) on the Saturday; the two had lunch in New Hampshire; Bharucha flew to New York; a few more trustees met him; and by Sunday evening the board had somehow managed to offer him the job.


Bharucha was incompetent and heavy-handed from day one. For four months after taking office he said nothing about the school’s fiscal crisis. When he finally did, he was far from transparent about both his diagnosis and his proposed “reinvention plan.” (Which all of the faculties were forced to sign on to, without even knowing what exactly it entailed.)

Then, in April 2013, after almost two years of dithering, Bharucha and the board announced that they had decided to start charging tuition.


It’s almost impossible to overstate how much damage this decision did to Cooper Union and its community. Free tuition was always – for 150 years – the defining feature of Cooper Union, the thing which made the institution. Sangamithra Iyer, in an excellent n+1 essay, called the school’s free tuition “a symbol of a certain American dream.” Cooper Union was never the richest school; its facilities could be shabby, its faculty underpaid. And yet it was always an undisputed center of excellence, with the very best students, celebrated teachers, and a universally heartfelt social mission which brought everybody together in service of the same cause.

Well, maybe not everybody. At some point, the board started to become dominated by engineers who had made money on Wall Street and who had very different ideas about what Cooper Union should be than the rest of the institution. The board was happy to pay Campbell and Bharucha handsomely, despite the fact that Cooper Union is very small, and its members seemingly lapped up rhetoric about “growth” and “investment,” despite the fact that a school with free tuition can’t grow, and investments, by definition, are designed to elicit future cashflows.


There is a reasonably strong case that the board wasn’t even allowed to start charging tuition, under Cooper Union’s Charter and Deed of Trust. But there is no evidence that the board ever worried overmuch about such technicalities. Rather, it chose instead to barrel blithely onwards. Far from apologizing for egregious mismanagement, the board continued to talk about “turning adversity into opportunity.” The new plan was to use tuition money to ensure that Cooper was always “equal to the best” colleges in America, which was code for adopting their business model of using tuition fees to pay for constant expansion and cost inflation. In other words, they were giving up everything that made Cooper Union special and unique, to become just like any other small liberal-arts college.

The decision to start charging tuition was met with predictably deep opposition among Cooper Union’s faculty and students. This seemed to come as a complete surprise to Bharucha and his board. A large group of students occupied Bharucha’s office for 65 days, leaving only when they were promised that they would be able to join a Working Group charged with finding alternatives to charging tuition. What they weren’t told was that Bharucha was determined to undermine the Working Group from the start: he gave it just seven weeks to come up with a plan, did not allow it direct access to Cooper Union’s books, and then, when a plan was drawn up and presented to the board, Bharucha added his own dissenting “minority report”–a report he never shared with the Working Group itself. Predictably, Bharucha’s board rejected the Working Group’s proposals, and continued with its plan to charge tuition.


In an echo of Campbell’s reckless optimism in 2006, the 2014 plan was also based on a host of what the attorney general calls “unrealistically optimistic assumptions”, including the idea that new contributions to the endowment would pour in at unprecedented levels, despite the fact that large numbers of students, faculty, and alumni were up in arms at the end of free tuition, and were less likely than ever to support Bharucha’s administration.

On top of that, Bharucha’s plan included continual growth in enrollment, despite the fact that there was simply no physical space for ever more students, and no plan for where those students might end up being taught. Those new students were mostly expected to be paying full tuition, despite the fact that Cooper Union has a needs-blind admission process which results in large numbers of students receiving full scholarships.


Giving education away for free is easy, especially if you’ve been doing it for 150-plus years: you just accept students and then start teaching them. But charging tuition is expensive because it requires a huge bureaucracy, all of which Cooper needed to build from scratch. And so, in order to be able to charge tuition, Cooper Union had to borrow even more money, partly just to build up that bureaucracy. In August 2014, it borrowed another $50 million. The debts were piling up, while the revenues were still nowhere to be seen.

This is the point at which the Attorney General started his investigation into Cooper Union. He was faced with official board statements that effectively blamed everybody but the board for the school’s plight. Soon, Schneiderman started finding outright falsehoods in the board’s statements. (The word “inaccurate” appears six different times in his 56-page report, “incorrect” appears two more times and “false” appears once.)


And yet, even in the face of an official investigation, Bharucha continued with his autocratic and self-defeating ways. He would deny teachers tenure even when they came with the unanimous recommendations of the existing faculty, for instance, and his attempt to start up a new computer science program was a complete fiasco. (It’s a long story, involving yet more lies by Cooper Union to the New York State Education Department, but suffice to say that it ended with dozens of distraught parents crying in the admissions office, after they were told that the program their children had been accepted into didn’t actually exist.)

In the wake of the computer science debacle, the Attorney General had seen enough. In June 2015, Jamshed Bharucha resigned as president, a move which had the AG’s fingerprints all over it.


With today’s announcement of a “comprehensive reform package” for Cooper Union, the Attorney General is essentially placing his official seal of approval on the post-Bharucha era at the school. He approves of the actions of the current interim president, William Mea, and of the procedure by which the next president will be selected. (You can be sure that it won’t be driven by a quiet lunch in New Hampshire.)

The Attorney General’s official Summary of Investigative Findings is brutal: if you can’t be bothered to read the whole 55-page report, you should just read paragraphs 171-180. (I’ve put them into a Google Doc here, so you don’t even need to download the Word document.) And yet they end on an upbeat note. No one is under an illusion that the mistakes of the past decade can easily be cured. But at least now the board is going to be set up in such a way that it is charged with trying to do so.


In today’s consent decree, Cooper Union has agreed to radically change the way that the board is constructed. A key aim of the board will be “to return Cooper Union to a sustainable, full tuition scholarship model,” and a Free Education Committee has been set up to achieve exactly that end. The board will also have many more students and faculty on it, including a broadly-elected alumnus as either chair or vice-chair. What’s more, anybody who was on the ill-fated board of 2006 will not be allowed to get reappointed to the board, and none of them will serve beyond December 2016. (That would include the current chairman, Richard Lincer.) There will also be a financial monitor, who will essentially serve as an independent reality check on what the board is saying.

Realistically, Cooper Union won’t be able to revert to being free any time in the foreseeable future. It’s going to be hard enough to tackle the deficit even with tuition revenues. (One of the big ironies of this whole saga is that while starting to charge tuition was hugely damaging to Cooper Union’s legacy and reputation, it hasn’t actually helped the finances very much.) But at least, now, if going free ever is possible, Cooper Union has a legal obligation to do exactly that. Which is great news.


This is not quite the turning over of a brand-new leaf that it could be. Specifically, the board has not accepted the Attorney General’s report as being factual; in a rather peevish response, they have agreed to all of the specified remedies, while maintaining that the AG’s findings are “incorrect and incomplete in numerous respects.” And Jamshed Bharucha is still hitting back at all charges that his presidency was a failure.

But thanks to the AG, the future for Cooper Union is as bright now as it could realistically be. And one trustee in particular, Kevin Slavin, has quietly started a Facebook group, called Off Script, which allows for unprecedentedly open communication between the broader Cooper Union community and the board of trustees. With luck, that group will continue to grow and thrive, and will help reassure everybody that the new board is truly aligned with the students, the faculty, the alumni, and the founding wishes of Peter Cooper.


Cooper Union’s finances are dreadful, and the fact that it charges tuition is a dereliction of everything Peter Cooper stood for. George Campbell, Jamshed Bharucha, and Mark Epstein should be shamed for what they did. It will take something approaching a miracle, or at least a couple of hundred million dollars, to get Cooper Union back to where it was. But at least now we can have some faith that it’s moving in the right direction.