The announcement of the termination of the Memorandum of Understanding (MOU) between Albert Einstein College of Medicine and Montefiore Medical Center on December 10th was a disconcerting turn of events. The MOU, signed this past July, proposed a framework for Einstein and Montefiore to move forward in negotiations toward the creation of an agreement that would be satisfactory to both parties. Under the terms of the MOU, Einstein would remain the accrediting entity of the medical school and cede $100 million in research debt to Montefiore. Montefiore in turn would gain research capabilities, enabling the institution to become an academic medical center, similar to those at NYU and Columbia.
A successful agreement would have been greatly beneficial in YU’s continuing efforts toward sustainability. Following the news break, there were many questions about what exactly the dissolution of the MOU would mean for the financial state of the university.
At Cardozo Law School on Friday, December 12th, Provost Selma Botman addressed the faculty council of the YU Manhattan campuses, made up of representatives from the undergraduate and graduate programs, to provide clarity and respond to concerns about this late-breaking development. In her opening statement, Botman agreed that this turn of events is a setback, but reassured the council that this is by no means the end.
Botman stated, “The memorandum may have been terminated, but discussions continue” She continued, “Everyone wants an agreement; it’s just that two complicated units are trying to come together and it’s messy.” Botman identified CFO Jacob Harman, and vice president of legal affairs Andrew J. Lauer, Esq. as negotiators in this ongoing discussion.
While negotiations will continue, the question remains as to how YU will make up for what can be seen as a major loss of revenue. Of great concern to the council was whether this development will affect the other schools and programs in the university from a financial standpoint.
Paula Geyh, speaker of the council, raised the question regarding short term effects the termination of the MOU could have, given that, “the undergraduate programs are turning themselves inside out to cover these debts.”
Botman replied that Einstein will be tightening its belt. As Einstein is primarily a research institute with a medical school on the side, the big financial drain for Einstein is the loss of revenue due from research, which is costly and not entirely covered by grants. To help combat this problem, Botman disclosed that Einstein is in the midst of enacting a new tenure policy that will “lower the salary of those researchers who are not grant-active [vs. being given full salary].”
Further, Botman noted that Einstein has booked, “significant amounts of savings over the last year,” on the academic side, a practice that she assured will continue. Additionally, Einstein does have liquid capital that it is using to operate; therefore, concluded Botman, “I do not [believe that there will be] a negative impact on the other Manhattan campuses.”
To conclude the session, Nora Nachumi, associate professor of English at Stern College and parliamentarian of the council, asked how Botman read the Moody’s report, which confirmed the termination of the MOU. Moody’s is a financial reporting service which provides ratings, analysis, and research for investment and similar purposes. According to the December 9th report, the dissolution of the MOU “highlights that the university’s operating challenges will be extended.”
“It is not a good reading, but it is not a downgrade,” emphasized Botman. “The report is simply repeating our financial condition.”
“Complex institutions routinely face complicated negotiations and the termination of the MOU is suggestive of this reality,” said Botman. “[While] two weeks ago the situation appeared despondent – today, I am hopeful.”