More here.

Late Update: For those of you who don't quite understand the problem with this (beyond the fact that the 'Nard Dog has no ties to the Law School), Andy Bernard is like the uncle in your family that nobody quite likes. You can laugh at him in the presence of good friends, and smirk at him in the presence of polite company. But you don't bring him up unless asked.

One of the more provocative ideas surrounding admissions options was floated by Kent Fuchs at the Cornell Alumni Leadership Conference in January, where he suggested that freshman should be only accepted to the University at large, and not affiliate with an undergraduate college until their sophomore year.

This would centralize the admissions process, make the Cornell educational experience more flexible, and not force students to prematurely choose their academic path. There are a lot of students applying to Cornell who cannot clearly communicate why they would like to study nutrition over biology or ILR over AEM. But it would also arguably dilute the quality of the experience in some of the more cohesive colleges on campus, namely Architecture, Hotel, and Engineering.

Another option would be to make the Cornell application process itself more dynamic and engaging, even if this means making it harder to apply to Cornell. (In my view, that would be a feature, not a bug.) Right now, the University is asking one lame supplemental question per college as past of the Common Application.

Nowhere in the application process is the University trying to excite students about the intellectual riches that await them in Ithaca, nor is it trying to uniquely brand itself or its student body. By contrast, Northwestern asks its students about the research they have conducted and Tufts asks students to ponder 'Are we alone?', while also giving them the opportunity to submit their own YouTube video.

So how about a distinctly Cornellian essay prompt about 'Freedom and Responsibility' or public outreach and engagement?

One of my big complaints about the admissions office under Davis was that it was too numbers focused -- not in terms of SAT scores and GPA (that's another story) -- but in terms of applications received, acceptance rate, and other rather trivial metrics. See, for example, the article in the Chronicle about Davis's depature:

Since 2000, the university has streamlined the application process, increased student diversity, become more selective in admitting students and accepted more international students than ever; it has implemented an online application review process, enhanced its work with community-based organizations to specifically target low-income students and improved financial aid.

At the same time, Cornell continues to attract more students. More than 36,000 students applied for 3,150 places in the Class of 2014, a new high.

"I am proud of the enormous success we've had in increasing admissions applications to Cornell -- applications have increased over 65 percent since my arrival," said Davis."

Now's the opportunity to make the Cornell admissions process a distinctly Cornellian one. Even if it means our acceptance rate would go up, we need to ensure that we are attracting the right types of students for Cornell.

No matter what happens in the NCAA tournament, I can't emphasize enough what a pleasure it has been to follow this team over the last four years. Their stories -- from an out of nowhere Jon Jaques to a local boy done good in Jeff Foote -- are enough to make any Cornellian proud. Their talent and character, both on and off the court, will far ring the story of the glory of Cornell.

Two memories of mine stand out in particular:

The first was at a basketball game in Allston four years ago, when I convinced a couple of friends that our basketball team was worth seeing. We ended up seeing a nerve-wracking, buzzer-haunting, one point loss, but not before we could tell that Cornell has something special in Louis Dale and Ryan Wittman. (And, not coincidentally, before I got into a heckling match with a bunch of eight-year old Crimson fans. The only fans fair Harvard seemed to be able to attract that night.)

The second was attending the home game against Columbia this past January, when I somehow found myself standing next to Jeff Foote after the game. Sweat was still dripping off of his forehead and I was a bit intimidated by the fact that he seemed twice as massive as I was, but Jeff just has an awesome grin on his face.

Congratulations to the Big Red Basketball team for all of your accomplishments, past, present, and future.

Sun: Some of the task force reports mentioned a decrease in the number of higher level courses because of fewer faculty members. Is this going to be a trend?

K.F.: We’re hoping not to shrink the faculty any more than we already have. My higher priority is to keep the faculty size at its current level, and even to regrow it. You’re right, if we have to balance the budget by reducing faculty, then that does mean fewer courses, particularly electives. Our hope is that we can avoid that. We don’t yet know if we can do that, but we hope to not have to shrink the faculty any more. That’s why we’re trying to attain $90 million of administrative savings.

Sun: Many of the task force reports discuss possible mergers among colleges. Have there been further developments on the feasibility of these plans?

K.F.: For some, yes, and for some, no. For example, the College of Engineering was proposing a possibility of a combined science. It’s unlikely we’re going to do that. We are, however, discussing whether AEM should become a school and whether there should be a school of environment, both [of which were] proposed by CALS.

Sun: It seems odd that AEM is in CALS.

K.F.: The AEM major is a highly ranked major for undergraduate business, but we also have management programs in the Hotel School, the Johnson School and some business in ILR; Engineering has a masters in management, so we’re trying to decide how we can be best organized around management.

Sun: Are you planning to create a school of public policy, and if so, will it be built out of one of our current schools?

K.F.: That’s going to be a big decision and we don’t know yet.

Sun: Is the College of Arts and Sciences — especially the government or economics departments — playing a role in the school of public policy?

K.F.: It will. We’re not yet ready to bring in all of the colleges because I’ve asked a couple of deans to think about it. The Arts College, because of its breadth, has some type of impact, whether it’s social sciences or economics.

Sun: How will such major changes in the University structure impact the budget model?

K.F.: That’s why I’m such a big supporter of changing the budget model. If we pool undergraduate tuition, we can make it easier to pull down barriers between colleges, at least from a student’s perspective. For colleges, we have to ensure that we don’t create negative incentives that will make them compete with each other.

In another interesting tidbit, apparently the Policy Analysis and Management program in Human Ecology has decided to rename itself 'Public Policy', perhaps trying to distance itself from the pre-business crowd.

“After 3 1/2 interesting and enjoyable years at Cornell and in Ithaca, my family and I have decided to return home to the United Kingdom,” Walsh said in the release. “Cornell is a wonderful place. I have had the honor to work with a great group of talented and dedicated people, and I’ve learned a lot during my time here that I will apply to new endeavors in the U.K. I also feel proud to be leaving a stronger and more professional Investment Office than the one I found when I arrived.”

In the statement, Walsh also reported that the University’s endowment performance is up about 10 percent so far this year, after suffering a more than 25 percent decrease in fiscal year 2009. In the midst of the bleak financial situation that engulfed the nation in 2009, the statement noted that the University’s “endowment successfully avoided many of the liquidity problems that affected those of its peers last year.”

“Working with the Investment Committee, James helped the University weather the downturn and begin to regain much needed equilibrium in its investment performance,” President Skorton said in the statement. “I wish him all the best in his future endeavors.”

Skorton might as well have added, "And don't let the door kick you on the way out."

While the press release is padded in good will, the performance is obvious: while Cornell lost 26.4 percent of its investments in the last fiscal year, other peer schools, like Columbia and Pennsylvania, lost less than 20 percent.

Remember, when Walsh was first hired, he was aglow in the opportunities of hedge funds and commodities. That didn't turn out so well for us. Walsh also was offered a first year salary of $400,000, not counting any incentive bonuses. We wonder if there were any clawback provisions to his contract for subsequent poor performance.

Curiously, when MetaEzra first learned of a departure that turned out to be that of Doris Davis, our thoughts initially turned to Walsh.

But now we can report that we also know of one other high-level departure coming down the pike as well...

So the Sun is running an op-ed piece today that implicitly argues that Cornell should be playing a large role in the discussion when it comes to regulating the process.:

Oversight for natural gas drilling in New York is in the hands of Governor David Paterson and the DEC’s proposed regulations — local governments hold no power over the gas companies that drill in their area. Thus, should hydraulic fracturing be allowed under the proposed regulatory measures, gas companies would legally be able to dump millions of gallons of wastewater into local plants, which may lack the capacity to treat all the solvents in the fluid and would not have to publicly disclose what chemicals they have used.

In addition to considering the immense trucking needed to haul the water to and from the well site and protecting New York’s gorgeous natural landscape, consider that under such loose regulations residents would be dependent on the good character of gas companies, geared to seek profit rather than societal well-being.

It's a critical issue that Cornell needs to weigh-in on, because only a land-grant institution like Cornell can gain the confidence of all interested parties, including government, industry, and the public at large. Currently, Cornell Cooperative Extension has an extensive website dealing with all of the issues involved.

What I haven't seen, however, is an estimate of how much the Marcellus Shale reserves could be worth to Cornell. Obviously the value of the gas deposits is subject to market swings, but given the University's structural deficit, it's definitely necessary to place the value of Marcellus within the context of the University's budget challenges.

In Tompkins County alone, Cornell owns 11,000 acres of land. (I actually haven't been able to track down the total number of acres that Cornell owns in New York State, but the University owns 400,000+ acres across the country. If you have a more detailed breakdown of the University's land holdings, please let me know.)

Now, according to estimates by the University's department of Earth and Atmospheric Sciences, each acre of Marcellus Shale is worth approximately $30,000 over the course of the next 10-15 years. That's assuming roughly 6,000,000 cubic feet of gas per acre and a payment of $5 per thousand cubic feet. And prices have jumped around between $3 and $8 in the past couple of years.

So in Tompkins County alone, Cornell could yield $330 MM over the next ten to fifteen years from Marcellus Shale drilling. That's $30 MM a year for the next ten years, or around a quarter of the University's structural $135MM deficit, or just about the cost of the University's increased financial aid packages in recent years.

The question, of course, is whether or not that is worth the cost of potential drinking water contamination and all of the associated health risks. Interestingly, the same Cornell report indicates that wind power actually would produce 25% more energy per acre than drilling. The difference of course, is that wind power is clean and endless.

I know I am sounding like a crotchety old alum, but part of the Lynah experience is being in the barn before the hockey game starts. If we're not going to win on the ice, at least we can win in the stands.

That said, I was pleased that most of you seemed to know the lyrics to My Old Cornell. The Yale fans that I was sitting with were impressed.

Late Update: Discussion has continued on eLynah and on Elie's blog.

So it's interesting to note that Dartmouth has decided that its students can begin to shoulder a heavier loan burden:

Dartmouth College announced Monday that it is restoring loans to the aid packages of students from families whose incomes exceed $75,000 -- ending a no-loans policy that was announced with much fanfare two years ago. Dartmouth will continue to exclude loans from the aid packages of those with smaller family incomes and will continue to be "need blind" in admissions, meaning that financial need will not be taken into consideration in admissions decisions.

The announcement by Dartmouth was part of a package of spending cuts designed to deal with a $100 million "structural deficit" the college faces. Students currently on financial aid or those admitted this year (who would have applied believing they were exempt from loans in aid packages) will be grandfathered into the no-loans approach.

Dartmouth's announcement comes a week after Williams College moved away from its no-loans policy, although Williams will also continue to offer its lowest-income students packages that do not include loans.

We'll start counting how many other schools end up having to cut their aid pools. Cornell's own aid pool for undergraduates has grown by $40MM in the last five years. For his part, Skorton has continued to pledge that student aid will not be touched.

We may start to see schools with substantial merit aid programs, like WashU, begin to cut these funds. It can certainly help to close budget gaps without any painful staff or faculty layoffs.

Interestingly, Cornell now has a more generous no-loan policy than Dartmouth:

The following year, 2009-10, the program will take full effect by eliminating need-based loans for students from families with incomes up to $75,000, and capping annual loans at $3,000 for students from families with income between $75,000 and $120,000.

Dartmouth currently wins around 65 percent of the common admits with Cornell. This may change if Cornell can afford to keep its current aid policy.

One final thought: By shifting more of the student tuition burden back onto loans, Dartmouth is just helping to feed the lurking student loan bubble -- and with a continued bleak employment outlook for most graduates, we're still waiting for that one to pop.

Perhaps the biggest change the task force calls for is to pool all undergraduate tuition -- Cornell's largest revenue stream, which provides about 35 percent of the Ithaca campus's revenue -- which would then be redistributed by the provost, based on several considerations and data such as university priorities, college of enrollment and college of instruction, Streeter said.

This will be useful because it will mean that the University will be able to divert some of the funds going into the Hotel School into the Schwartz Center. Right now, the only way that the Hotel School is supporting the Scwartz Center is either by a) paying the tuition credits for any Hotel Student enrolled in a Schwartz Center class, or b) any Hotel School professors or staff who pay to see Schwartz Center productions.

The catch is that the contract colleges currently have language written into the University's charter explicitly targeting their tuition to their own expenses. For instance, here is the language for the Ag School:

The tuition fees charged to students shall be regulated by Cornell university after prior consultation with the state university trustees and all other fees and charges in said college of agriculture and life sciences shall be fixed by Cornell university, and the moneys received from these sources and from the sales of products shall be credited to a separate fund and shall be used for the current expenses of the said college of agriculture and life sciences.

It will be interesting to see if re-opening the University charter will draw any political attention in Albany.

Late Update: The Sun follows up today with an article detailing one of the Q&A sessions held about the budget model:

The discussion began with a bang. As soon as Fuchs, Streeter and Cathy Dove, the co-chair of the task force report, opened the floor to questions, Prof.Robert Smith, labor economics and associate dean of academic affairs, shot up.

He said that the proposal would create a “Soviet central planning agency…with homogenization across the University” in a “zero-sum game.”

Smith’s fear is that the proposal would turn over too much power to the Provost, giving him unprecedented control over how much money each college receives in return from the Provost’s office.

In a later interview, Smith expressed concern about how the proposal would change the incentives of some of the colleges. “If [we] have to adapt to a formula that’s imposed on us, I’m worried that it will change [our] behavior,” Smith said.

Some of the meeting’s attendees snickered audibly at the Soviet remark, but it quickly became clear that Smith was by no means alone in his reservations about the task force’s suggestions.

He was soon supported by fellow ILR faculty-member Prof. John Bishop, human resources. He said that his “great worry” is that the proposal will “greatly increase power at the center,” adding that Cornell’s diverse, “decentralized” colleges are “what has made the institution great.”

Of course, it's entirely possibly that the amount of duplicity and decentralization across the colleges has also kept the institution from becoming even greater.

Final Update: Paul Streeter writes in with the following:

Please be assured that if it is decided to pursue implementing the budget model as has been proposed we will be working with state officials to make sure we implement in a manner that is consistent and supportive of our stewardship responsibilities for use of state funds.

We don't know when Davis will depart, nor whether it is of her own volition. We'll have to watch for an official university statement in the future.

It's important to note what Davis's admissions office has accomplished in the past decade. Between 1999 and 2010, applications have risen by over 75% -- from just shy of 20,000 to over 36,000 applicants. This has come in tandem with a decline in the acceptance rate from 33 to 19 percent.

At the same time, the university has become more diverse under Davis's watch. The number of minority students in the entering class has increased from 916 to 1150, while the percentage of students from New York State has dropped from 42 to 33 percent.

According to this article from BusinessWeek, Cornell posted the biggest percentage fundraising gains of the twenty schools that raised the most money last year. While total donations to U.S. colleges fell 12%, Cornell recorded a 9.1% increase in donations ($446.8 million total). Other top schools mentioned in the article experienced large drops in annual giving: Harvard (-7.5%), Stanford (-19%), Yale (-26%), UCLA (-23%), Duke (-22%).

One could raise the objection that Cornell’s numbers are inflated by the $170 million gift to Cornell from Sanford Weill, which was included in the overall calculations, but I don’t think this should be any reason to add an asterisk to our stats. I don’t have access to the data, but it’s obvious that lots of other schools received large donations from individual donors. Ours just happened to be the biggest this time around.

Meanwhile, the Sun is on the Arts college's case for placing a full third of the College's $6MM deficit on the backs of the Department of Theatre, Film, and Dance:

But it must be noted that the cuts outlined for the Department of Theatre, Film and Dance — somewhere between $1-2 million of the department’s $4.6 million budget, depending on the outcome of that “conversation” — would take up a significant chunk of the total $6 million in cuts required of the College of Arts and Sciences.

That seems like a heavy-handed conversation starter.

In the administration’s eyes and budget sheets, the Department of Theatre, Film and Dance might be a peripheral unit to the University’s core. With a downsized performing arts department, Cornell will likely continue to exist largely as it had before. The students in the department will suffer a sharp loss in the quality of their experience, but they are few in number, and can find another direction (or so the thinking goes). But the department, while not necessarily central to the University's rankings or mission, has undoubtedly had a crucial positive effect on many individuals’ Cornell experience.

It is true that the department has relatively few full-time undergraduate majors — combined, the visual and performing arts awarded 90 bachelor's degrees last year, just three percent of Cornell’s total. And while these students will bear the brunt of the blow, they will not be the only one’s affected. The performing arts, more so than other departments, touch so many lives aside from the students who declare it their major.

I truly hope Dean LePage understands that one of the reasons why students choose to attend Cornell is because it has both strong core academic disciplines as well as strong supplemental programs (think art, theatre, music, athletics). The two need to go together.

What's frustrating is that this University has five colleges that ostensibly offer programs in undergraduate business education (AEM, PAM in Human Ecology, ILR, Hotel, and ORIE in Engineering) and yet the one non-duplicative program in the performing arts is the one that bears the major blunt of the budget cutbacks. To paraphrase something I said earlier this week, the Hotel School needs to start helping to pay for those who entertain it.

And finally, the Motley Fool suggests that more colleges should consider making loans directly out of their own endowment.

There are a number of reasons moving to a direct-lending model makes sense both for colleges and students. And in fact, many colleges -- especially those with large endowment funds -- would be well advised to make loans not only through federally funded programs but also directly from their own assets.

In addition, though, having colleges invest part of their endowments toward making direct loans to students would serve two other valuable purposes. More loan availability would make it easier for all students to attend college, something that serves the mission of the schools and their endowment funds. Moreover, some of the largest colleges and universities have suffered huge losses lately, having invested much of their endowment funds in high-risk strategies like private equity and hedge funds. Taking some of their assets to make loans to students instead would help restore the lost confidence that many donors have in their school endowments.

It's worth a serious thought. Although taking out loans from the University itself might make alums think they only need to pay back their loans and not make any further charitable donations.

Doesn't take a Harvard student to figure out that math.

-- A draft version of the strategic plan is now available and the Provost is welcoming public comment on the draft. Later this spring, there will be a second "comment window" for a revised draft.

-- The $200 MM+ long-term structural deficit appears to be largely under control due to a) cuts already taken, b) the $90 MM in administrative savings that the consultants have found.

-- A new budget model for the Ithaca campus, greatly simplified and streamlined, is very close to being approved. Fuchs put up slides of both the old budget model and the new model to get a laugh out of the audience, but the slides were actually very telling -- under the old model undergraduate tuition revenue went straight to the college that "owned it", but the new model has Day Hall distributing the funds back to the colleges based on both "quantitative and qualitative factors" . Additionally, Day Hall will be "taxing" all revenue streams to the various units, presumably at various rates depending on the source of income, and re-allocating the "taxed" dollars to institutional priorities.

In a nutshell, what this means is that the Hotel School will have to start subsidizing the folks that culture (Arts) and feed (Ag) it.

-- Fuchs talked at length about this article and chart. And I'll have more about it later.

-- Interestingly, Fuchs mentioned that the University was "somewhat seriously" considering the idea that students wouldn't have to associate by college until their sophomore year. I'm certain the Hotel School and Engineering School really love that idea.

-- As far as state appropriations, Fuchs could only really say that a) New York State is seriously constrained and b) beyond that is anybody's guess. How Cornell's relationship with New York State changes throughout this process is crucial to the shape and scope of our 'reimagined Cornell', and I think it remains to be seen.

-- Finally, I was able to ask Fuchs where he saw undergraduate business education in ten years. (Loyal readers know this is a favorite issue of mine.) He wasn't able to give a firm answer, because the final decision obviously hasn't been yet, but he did indicate that he expects the undergraduate business part of AEM (as opposed to the agricultural and resource economics part of AEM) to develop a "stronger" relationship with the Johnson school.

We live in interesting times.

NACUBO reports that the University lost 26.4 percent of its endowment in fiscal year 2009 -- the endowment stood at $5.385 B in June 2008. Unfortunately, this puts the University in some good company, as the New York Times reports:

Unusually, the universities with endowments over $1 billion had the greatest decline, an average of 20.5 percent. Harvard, Yale and Stanford, the wealthiest universities, all lost more than 26 percent of their endowment values.

I've asked before whether or not the University takes too many risks with its endowment.

The 26.4 percent number, however, is a bit of an understatement because it includes any funds that the University added to its endowment in FY2009. What we really need to know is how the endowment that existed as of June 30th, 2008 performed. which, in the interest of openness and transparency, the University kindly provides for us.

First, though, a little bit on how the University's endowment works. Any unit associated with the school can purchase 'shares' in the endowment, provided that the initial purchase is greater than $100,000. (This amount used to be $10,000 but the University recently increased it due to administrative costs.) The shares than function exactly like a mutual fund -- the underlying values of the shares change while the shares also produce dividends that can be used for the unit's operating expenses (e.g. financial aid or professor salaries) or re-invested back into the endowment by purchasing more shares.

Here's a chart:

So what we can see is that between FY2008 and FY2009, a share in the University's endowment fund actually fell from $65.37 to $45.12, a decline of 31 percent. (To be fair, it also produced a $3 dollar dividend.) This is a little bit bigger drop than the 26 percent from what was previously reported.

What is even more striking is how flat the overall value of endowment shares has been in the last 11 years. In June 1998, a share was worth $47.65, while in September 2009, a share was worth $46.65.

At the same time, though, the fund produced over $30 in dividends per share, for a 'true' return of over 60 percent -- better than the 40 percent that the S&P 500 returned over the same. This shows the endowment has definitely been very beneficial for the university.

That's 13.6% of Dartmouth College's total budget.

By comparison, Cornell's Ithaca campus currently has a structural deficit of $68MM out of a $1.9 B budget. That's around 3.6% of the University's budget.

Seems like there will be a lot more staff lay-offs and cost-cutting in Hanover than Ithaca.

The interesting question is how Dartmouth got into this mess, and it seems to be a confluence of two related factors: 1) gross financial mismanagement, and 2) an over-reliance on endowment funds.

MetaEzra's counterparts at Dartblog are on the case:

It’s not complicated: the previous administration had long had the College on an unsustainable spending jag. The growth of expenses outpaced revenues for many years and the only way to make up the difference was to draw an ever greater amount of money from the endowment. As President Kim pointed out, over the past few years the College’s draw on the endowment went from below 5% to over 7% (the highest in the Ivy League) — and this figure grew even as the endowment itself was growing robustly: a 77% rise between 2003-2007.

To put things another way, between 1998 and 2001, the College more than doubled its draw off of the endowment (from $48.7 million to $106.3 million). Then between 2001 and 2009, the amount of drawn money more than doubled again (from $106.4 million to $229.6 million). That’s an increase over 11 years of 371%, while the College’s spending grew by 122% over the same time period (from $329.8 million to $735.5 million). Conclusion: the College’s other revenues could not keep pace with spending.

So Dartmouth was paying out 7% of its endowment per year to sustain its operating revenues.

By comparison, Cornell was never paying out close to 7% of its endowment value per year. At the peak of the bubble, it was paying out 5.1%; today it is paying out at a 5.5% rate.

Where Dartmouth has done better is in its overall endowment performance -- Dartmouth's endowment has fallen around 25 percent from its 2007 peak levels, whereas Cornell's fell a bit less than 30 percent.

But that's of little help when fully one-third of Dartmouth's operating budget was based off of endowment revenues, compared to Cornell's more modest 11 percent.