Fellow Dukies. Good day.
I have four questions:
✔First, how is this dorm going to be paid for?
✔Second, does this mean we are increasing the number of undergraduates by 150?
✔Third, who decided that this dorm would be priority #1 when Duke was able to resume construction?
✔Third, what happened to the pledge that students would be involved in planning. The Campus Council, as well as The Chronicle, should demand specifics. Dean Nowicki made that pledge October 8. Tallman Trask said just seven weeks later that interior planning was complete and now we are starting to dig.
Fact Checker is not happy this morning.
✔HOW THIS DORM WILL BE PAID FOR.
There was a time when Duke got a donation or otherwise had money in hand before building. My loyal readers, we are going to borrow to put this up. And that should set off an alarm bell.
Borrow, borrow, borrow. Five years ago, Duke's education division -- in other words, excluding the Duke Health System -- owed $779.4 million. Fellow Dukies, we entered this academic year owing $1,981.5 million. Yes that's right, this debt has almost tripled under Mr. Brodhead.
Duke Health has done just a little better in controlling the urge to borrow. In five year's its debt went from $469.8 million to $555.5 million.
Combined with a 30 percent decline in the university's net assets in the last academic year -- principally investment losses in the endowment, pension funds -- Duke was lucky to escape without a decline in its credit ratings. When Tallman Trask wrote this up in his annual financial report, he said Duke and Duke Health "continue to achieve current credit ratings of Aa1 and Aa2 with both Moody's and AA+ and AA with Standard and Poor's."
Continued from the prior year that is. What Trask did not say was that this represents an erosion of the credit rating that Duke once enjoyed -- and a credit rating below that earned by institutions we like to compare ourselves to. Harvard for example has an AAA rating.
Lower credit rating = higher interest rates. Fellow Dukies, the fastest growing part of our annual budget is interest payments. Up an astounding 20 percent from the 2007-8 to 2008-9 academic years, the latest statistics.
Watch for Duke to operate this new dorm as a separate entity, the room rental fees being channeled to interest costs. And watch too for Duke to try to charge premium rates to rent a room in the new portion of Keohane Quad, K4 as they call it.
One other point about our overall debt. A portion of this debt -- the actual portion is an Allen Building secret -- is at floating rates. For the most part, in the past five years we've benefited from low interest rates. Down the road, when the economy perks and rates start to rise, Duke will be bonged!
You should understand too, that Duke is only paying interest -- it does not it does not pay back any of the principal as we go along. Compare that with a home mortgage where each year, you pay down the debt.
Let's just look at one of the borrowings -- Duke issued bonds known as 2006 Series B. We got $128,435,000 and we are paying interest rates between 4.3 percent and 5 percent until the year 2042.
In the year 2042, Duke needs $128,435,000 lump sum to pay back the loan -- and guess what -- we have no idea in hell and no plan at all on where to get that money.
We are screwing future generations. Let them figure it out. Maybe they can refinance, that is, take out a new loan, at the mercy of whatever interest rates there are in 2042.
You tell me if this is the Duke you want to leave to your children and grandchildren. This will be our legacy if we continue on the current course.
✔WITH 150 NEW BEDS, ARE WE INCREASING UNDERGRADUATE ENROLLMENT?
Administrators have dodged a Fact Finder inquiry. It's one thing to say we are putting up K4 and using the new beds to thin out the population in existing dorms. For example to create more commons rooms and other facilities all over campus. But if we are going to wind up with 150 more students, don't say Fact Checker did not sound the alarm.
We want more students to get more tuition! We can earn a profit from more. The added students will be selected from the pool of those who can pay full freight -- our commitment to need blind admissions notwithstanding. This is the precise thinking that one of the most horrible president's in our history, Douglas Knight, used. And you know what the outcome was: a campus wide crimp because our endowment per student declined.
This is one of the key measures of the long term health of the University -- how much money backs up each student and subsidizes his or her education. With the meltdown of our endowment, endowment per student went from $480,633 18 months ago to $341,386 at the start of this academic year. Princeton has almost $1 million more per student.
Fact Checker has factored in inflation: the purchasing power of the endowment per student is $20,000 less per year than it was a decade ago.
We cannot add another 150 undergraduates, on top of the large number of new masters students that we will be seeing because these programs are cheap to create and they are profitable to run. Don't say Fact Checker did not warn you about the endowment per student!
Oh. Last question: will there be faculty living in K4? No one says. Or did the experiment of Few Quadrangle flop?
✔ The addition to Keohane Quadrangle, K4, though on West Campus, was actually part of the Central Campus master plan. When the financial meltdown caused Duke to scrap those grandiose plans, we put aside a decade of collaboration between administrators, faculty, students and others, collaboration to make sure that we got it right.
Please tell me, now that the urge to construct is stirring our administrators, who decided that K4 was our number one priority. Who was involved in that process? Where was the collaboration?
✔Beyond the designation of Priority #1, there was the design process. I try to follow Duke affairs closely, as loyal readers may surmise, and I was quite surprised to learn we were as far along as we were.
I was relieved however, to learn via the Chronicle that Dean Nowicki had met with Campus Council on October 8 to invite student participation. Nowicki even said he was going to go out personally to other groups. So Dean Steve, this morning please tell us precisely what you have done to solicit input since October 8. Precisely how you incorporated that input.
This is important, Dean Steve. You sat there in the Class of 2013 Convocation, when Brodhead told our new freshmen not only to begin their studies, but to begin planning the future of Duke. That was a ringing endorsement of the idea of collaboration. How did you carry it out?
Mr. Campus Council president, Stephen Temple, let me remind you of what you said on October 8. “Campus Council will be acting as the student voice throughout the process.”
You are quoted again in this morning's Chronicle, and one could venture to say your comments mean a collaborative process indeed did occur. But I rather doubt it. Tell us what you did, and on what dates? What ideas of yours will be coming to fruition?
And Alex Reese, vice president, Campus Council, let me remind you what you said on October 8:
“I hope to see Campus Council and a wide variety of students involved in discussions about which living style are most amenable.”
Seven weeks after that student, Tallman Trask said interior planning on the dorm was almost complete. You owe it to your fellow students to stand now and say whether you indeed played a significant role -- at the table, with your ideas incorporated -- or whether this entire notion of cooperation and collaboration is a sham, another example of the Brodhead Administration rolling over students.
✔Fact Checker will be listening. As always.