Oct 7 - Trustees meet on financial crisis

Fact Checker here.

Today's two lead stories -- on cutting costs and on last year's results in investing our endowment and other assets -- are the best journalism this newspaper has seen this year. All stakeholders -- students, parents, faculty, employees and alumni -- need many more probative reports like those printed today, and far less pap.

Fact Checker was particularly interested in the new Trustee Chair's meeting with reporters after the plenary session of the board. The Chronicle did not say so, but this is a repudiation of the former chair, Bob Steel, who ended these traditional news briefings except when they served his purposes. I repeat: Repudiation.

We should all be startled too by Chair Dan Blue's stark assessment: that we are in "dire financial strait."

Contrast that to other statements we have heard over the past year, starting with Mr. Brodhead's assurance that our finances were "secure" and "stable" not to mention Steel's "good news" last December.

Oh yes, let's not leave out our chief financial wizard, Tallman Trask, whose report on the 2007-2008 year, issued precisely a year ago, pronounced Duke "financially secure." This man of great vision went on to praise our "diversification of investment portfolio" and "prudent stewardship of our resources" that put us "in position to allocate substantial resources in pursuit of the goals outlined in Making A Difference, the University’s $1.3 billion strategic plan," which is to say the new Central Campus, which has now been deferred indefinitely. The meltdown started nine months before Trask presented this to the community, and was in high gear at the time of his denial.


The careful reader will recall that Fact Checker
had predicted a much bigger loss in our endowment; until official reports are issued next week, I cannot comment further. I should add, however, two points:

A) the values that were put on our various endowment holdings are in many cases estimates. We will need to explore if other methods would have yielded other results. Or in technical language, how we "marked" our assets.

B) the numbers were are seeing are all over the lot. For example The Duke Endowment, which invests its own funds through Duke University and its Duke Management Company, reported its assets slid from $3.3 billion to $2.2 billion in its last fiscal year. That's 33 percent if you ask me. However, the endowment has stated it lost 24.4 percent on its investments; it presumably spent about five percent of its hoard. I have an inquiry out.

All of us should be shocked by the magnitude of the loss in private support: from $351 million two years ago to $136 million last year. Brodhead's sputtering explanation is not enough.

Let us recall the February 3 story from the PR department, stating that through seven months of the fiscal year, such support was off 20 percent. Chronicle, you should be asking about this!!

With regard to expenses, Fact Checker does not see how the 295 departed employees who took early retirement -- all low level, about 20 percent needing to be replaced, all now collecting Duke money via pensions -- will save $20 million. $20 million this year, according to the Allen Building gurus, when many of the 295 were still on the job during the first quarter.

Ditto the estimates we are seeing about retirement incentive #2, which probably will only embrace ten to 20 employees. I shall be glad to review any worksheet that the newspaper publishes (hint).

Now... moving on... buried in one story: we have no idea when the stars will line up and allow us to begin a fund-raising drive. Had the world spun in our favor, we'd probably be in the last months of the year-long "quiet" phase, about to announce publicly a drive for $4 billion or more, just like our peers.

Tie this, please, to the age of Richard Brodhead. Born in 1947, he is about 62 or 63 years old. If you begin to add up how many years the campaign will take, you have to begin to ask whether he should stay aboard, because if he starts it he will have to finish it, and by the end he will presumably be well into his 70's. Tie this too to a recent Chronicle column (one of the best also) which explored with the president his possible return to teaching as a cap on his career. He would need to reserve "good" years for this, if it is indeed his goal. We need to hear from the president on all this.

Fact Checker is preparing a report on the new Keohane Quad dorm. Quite frankly, today's Chronicle quotes make Dean Steve (Nowicki) sound as if no one at Duke had ever built a dorm before. We will put one up, sorta an experiment, we have to learn from it, and so forth. All these other buildings, from Edens and current Keohane on West and the newest dorms on East did not teach us? No other university has a successful dorm we can copy?

But that's the start of my analysis on Keohane quad and I do not want to get ahead of myself. I will write soon, and that's reason enough for you to read Fact Finder again.

Oh, thanks for your comments on my Founders' Day essay, including my perspective on the Duke family.


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