Yale’s President Speaks Out
Posted on January 23rd, 2009 in Uncategorized | 6 Comments »
I went to see Rick Levin, the president of Yale, speak at the Yale Club of New York last night.
Thanks to my handy iPhone, I took some detailed notes. Following are bullet points from Levin’s talk.
* He was greeted with a standing ovation that felt genuinely warm; there’s a lot of appreciation for Levin in the Yale community.
* He spoke about Barack Obama as a testament to the success of American higher education and its financial aid policies.
* He said that “education for the 21st century requires an international experience,” and said that 1200 Yale students study abroad annually.
* He said that Yale plans to reduce its greenhouse gas emissions by ten percent below 1990 levels by 2020.
* He added that while Yale plans to slow development of its new science campus in West Haven, “we are moving ahead.”
* He said that Yale “has done more than any other educational institution in the world to support the arts—there is no other university in America with world-class schools in art, architecture, music and drama.”
* Applications for the next freshman class are up another 15 or 16 percent, with 26000 applications for 1300 spaces.
* He said that Yale’s endowment is down from about $23 billion to about $17 billion, but is “relieved to say that things are no worse than when I wrote the letter” to alumni detailing the state of the endowment, which was a month or so ago.
“If the endowment doesn’t get any worse, we’ll see endowment spending go down about five percent over the next year and then be flat.” But, Levin explained, “it would be imprudent to take [too] much out of the budget to solve the shortfall in a single year.”
* In terms of faculty, “we’re going to continue to hire but we won’t hire quite so many people.”
* So Yale should be able to manage its way through the financial crisis, but there’s an important context: “We were ramping up.” The university had planned to spend $4 billion over the next years on new colleges, the School of Organization and Management, a new medical school building, etc.
At the moment, “our spending is limited mainly by [the state of the] credit markets. …We don’t want to lose our AAA rating just when the credit markets are freezing up.”
Still, over the next couple of years Yale will spend $400-$500 million on new construction.
Levin then took questions:
* On Yale’s support for graduate study: Yale does “a lot…[but] it’s still not the happiest place in the world, we could do a lot more for [grad students].”
Levin added that “I would lke to see graduate education drastically reformed,” making the time to get a Ph.D. “much shorter” and instituting a review process after the first year to weed out “the people who really aren’t going to cut it.”
* On whether Yale needs not two new residential colleges, but four: “I think we do. …We have done work to identify sites where we could build more colleges.” But doing so would impose huge financial challenges. “I fear it will be the next president who does that.”
* On his vision for the new science campus in West Haven: First, it was “the deal of the century.” Plans include five potential institutes: cancer, cell biology, systems biology, microbial biology and genomics generally.
Levin added that he is also considering developing an area for the arts and for museum collections that are now “scattered in various warehouses.” He spoke—are you listening, Marjorie Garber?—of developing “a huge creative playspace for artists and drama students.”
* On the percentage of foreign students at Yale and whether he’s satisfied with the number, currently about ten percent: “Pretty much, yes. …Virtually every American Yale college student becomes a good friend of a foreign student.” Moreover, “I don’t think foreign students would be that interested in coming to Yale if only six percent of Yale students were American. They want to come to Yale because it’s an American school.”
(I can think of one Harvard professor who would appreciate that language.)
Levin later added that Yale “is the only Ivy League school to require students to take a foreign language”—you can test out of one foreign language coming into Yale, he said, but then you have to take another.
* On violent crime in New Haven: First, “it’s way below the level of incidents in the mid-90s,” but there has been “a slight uptick” recently in incidents such as muggings. A big problem: There are so many unfilled slots in the New Haven Police Department, due to budget cuts, that the “New Haven police are allowing Yale cops to patrol neighborhoods. I think our police force is actually beter and more effective than the city’s police force.”
Levin is an interesting man. He’s not the most charismatic or forceful speaker, but he’s likeable and charming in an understated way, and he conveys sincerity; he seems secure enough in his job, in the status of Yale, and in himself to be honest. He’s also unpretentious in a Yale fashion: At the end of his talk, he just stood and shook hands with a few people, and then, without any flacks or advisors, he donned a trenchcoat and hustled down the steps of the Yale Club looking like he had to catch a train at Grand Central. Maybe Drew Faust is different, but you certainly couldn’t imagine Larry Summers without a mandatory and omnipresent entourage.
I don’t think there’s any doubt that Levin should be considered one of Yale’s greatest presidents.
6 Responses
1/23/2009 11:44 pm
Penultimate paragraph, last sentence: yes, she is, and no, I couldn’t.
Levin’s tone in all of this indeed seems very good.
1/24/2009 5:30 pm
President Levin is a very smart person. In certain areas, however, he is either not very smart or is fooling himself and his constituency.
He made (according to Richard B) the remarks below. What could he have been thinking? Has President Levin not realized that permanent structural changes are going to be necessary for all universities, including Yale? Where is the vaunted Yale formula for endowment payout?
Is it now an ad hoc formula rather than the one that Yale said made the most sense? If the endowment doesn’t get any worse, will Yale’s budget continue to be flat!? That is doubtful unless the univesity is willing to continue to do imprudent things. Suppose for example, that Yale was going to pay out the equivalent of 6/30/08 endowment. Call it a billion. Endowment stays flat and Yale pays out 950 million. Now we’re up to a 5.6% payout. The “down five pecent” either means large cuts or it doesn’t include inflation. What if the endowment stays the same for just one more year? Ah, then some professors who have argued for higher payouts will, ironically, get their wish.
Let’s hope that Harvard takes a different approach and makes the necessary long term structural changes and also changes its method of budgeting.
This is what Richard B reported:“He said that Yale’s endowment is down from about $23 billion to about $17 billion, but is “relieved to say that things are no worse than when I wrote the letter” to alumni detailing the state of the endowment, which was a month or so ago.
“If the endowment doesn’t get any worse, we’ll see endowment spending go down about five percent over the next year and then be flat.” But, Levin explained, “it would be imprudent to take [too] much out of the budget to solve the shortfall in a single year.”
1/24/2009 7:09 pm
Thanks, as always, Sam. Slight change of subject: did you think Jeremy Grantham’s letter, posted by Paul Kedrosky (again, thanks for that tip), was as good as he PK did? I thought it was right on target:
http://www.gmo.com/websitecontent/JGLetter_4Q08.pdf
1/24/2009 11:30 pm
I would like permission for another change of topic (or at least for suggestion of a topic I’d like to see you discuss). Obama’s inaugural address was unexpectedly leaden. No drama Obama for sure. Also no ringing cadences, no memorable phrases, nothing to get us to stand up and cheer (aside from the blessed even itself, of course). Did he intend to lower expectations for his term? or was it inadvertent?
1/25/2009 5:09 am
Richard T,
I always find Jeremy’s letter good, even if I don’t always agree with everything he says. His latest missive was one of his best. He is a very smart person who has had an incredibly good investment record over a long period of time. Even better, he has done it by sticking to tried and true fundamental analysis: buy assets when cheap; sell when dear; and keep lots of cash when nothing looks attractive (and don’t worry about what other people think about having lots of cash when markets are going wild on the upside). What great discipline… and his record shows it. HMC is fortunate to have had him as one of its external money managers.
Glad you’re enjoying the Kedrosky site. Last month, I neglected to mention one other that I use every day. This is a compendium of other sites (many of which are excellent). It is easy to use and with a simple click, will easily take you to the article you might wish to use. http://abnormalreturns.com/
1/25/2009 10:18 am
Thanks, Sam, and it’s duly bookmarked. I thought he was particularly good, though somewhat pessimistic, on Volcker, whose influence looks to be stronger than Grantham feared:
http://www.nytimes.com/2009/01/25/us/politics/25regulate.html?_r=1&ref=todayspaper
So, Geithner and Summers fix it up in the short and medium term, while Sunstein and Volcker, not part of the Greenspan/Rubin/Summers/Geithner deregulation exuberance, reverse the free-market as wise thing and fix it for the long term?
If so, then, Anon 11:30, who cares what Obama said on Tuesday?