Not surprised at all. This may not be the end of it if this crisis deepens. GW faces an existential crisis University-wide. As one of the most expensive schools in the Country without the portfolio/cache of a top 20 school, the crisis has made many question whether the value proposition for GW is there. I credit LeBlanc for getting ahead of the curve by dropping enrollment and cutting costs. It's going to be painful for many years I fear.

Just read President LeBlanc's letter on the subject.  Very sad yet understandable news.  No NCAA basketball tournaments last year meant no share of A10 conference tournament revenue for all schools.  This is the money which helps fund sports such as the ones that will soon be converted to club sports.  Coupled with the very realistic notion of going another academic year without any revenue from athletics, I am certain that this decision was quite necessary no matter how difficult it will be on many people.

TLDR: They get to keep their scholarships


We are committed to caring for those affected through this transition. All existing athletics scholarship aid will continue to be awarded to the affected student-athletes through their graduation at GW. We hope that our students continue their education at GW. However, should any student-athletes from the affected teams choose to transfer to another institution, we will support them in every way possible. We will also provide mental health and other counseling resources throughout the year.

I'm not surprised, as I have seen friends of mine who work at GW subject to layoffs recently.  Very sad for the university.

Related to these and other GW cuts, I have a philosophical question, one that may take me a little to get to, but please indulge me.  

Individuals have savings accounts.  Businesses and nonprofits have reserve funds.  Governments generally have a buffer fund of some type to cover unexpected expenses. 

Colleges come in two varieties:  public and private.  Public colleges are subject to the whims of their legislatures for funding in whole or part.  Private institutions that don't get that public funding rely on themselves in the same way a business would need to do so.

GW has an endowment of $1.8 billion (circa 2018), and I imagine that it earns somewhere between 4 to 8% per year.  

COVID-19 is not a permanent state of affairs; at some point it will be a non-impactful virus most likely due to a yet-to-be-proven vaccine.  

So my question is this:  if GW has such a healthy endowment that earns income every year, why is it that the university cannot sustain a 2 to 3 year loss of growth of their endowment to maintain their staffing levels, quality of student life, and maintenance of other infrastructure?

Is the issue that GW cannot sustain its expenses with limited revenue, or is it rather that the administration chooses to not use the endowment's earnings (not the principal, but investment revenue).  In other words, is this happening because of a desire to not use what would otherwise be the university's failsafe reserve funds?  

Please note, I'm not second-guessing the decision, as I'm not expert in this kind of situation.  Rather I am curious if anyone who has greater knowledge of the GW administration can offer thoughts about this, and whether that administration just can't let themselves not grow its endowment at the expense of monumentally major cuts across the university.  

Mayhem, thanks.  It's not that I question the decision on the sports.  I used to work for GW Athletics and I was a student when the wrestling program was cut.  I've been through this and I understand.  But the financial discussion go beyond the cutting of the sports.  GW's had its share of financial debacles over recent years.  I'm just troubled that they're making such extreme cuts when they have the ability (in this or any economy) to survive this.

Perhaps I am naive after all, but that's my feeling on this.

B.

Sucks for the Student athletes on these teams, GW's committment to Athletics needs some serious re-evaluation.  Should be higher, not lower and looks like lower is the direction the school may be taking

 

The cuts are a gut punch for me as well.   The dollars I have spent over the years for GW sports contributions have all been for rowing and more recently sailing.  My focus was the product of these sports, true student athletes most of whom would never be a "professional " other than in non-athletic fields.  As a current Master's Rower with the large and old San Diego Rowing Club I am still amazed at the number of rowers who are MDs, biotech researchers, attorneys, engineers, naval architects etc.  I often row in a quad with 3 doctors.  And I am amazed at the number of them who went to the Ivy League schools (every school represented) as well as Stanford, Cal, USC, UCLA, Washington etc.  (even the school down the street).  Yes, there are many factors for this concentration in one organization and location, however I alway hoped that GW would be represented more strongly at this level as well.  Again, the product of the school and these types  of student-athletes has alway been paramount,  thus my concern that this is not a good move.  Having said that I have no solution from this distance,  nor any experience to contribute and therefore feel even more like shit.  Would I like consistent NCAA appearances in basketball---of course---but not sure in the long run we are taking that direction, NOR attracting student athletes who will contribute even stronger to our rep.  Time for a double-shot of Red Breast irish. 

Dr Mike wrote:

The budget crisis that all universities are facing is real and has long term consequences. GW is no exemption and in many ways has a much deeper problem than some other universities. To truly understand the GW fiscal crisis you will need to evaluate all of its revenue sources (tuition, fees, endowment return, auxiliary revenue, real estate revenue, fund raising, etc.) and measure up to all of its expenses (one example of long term expense is health and retirement benefits for faculty and staff). The expenses far exceed the revenue and this is before COVID. The university is carrying more than $1 billion inn debt (most of this tied to construction). As a non-profit institution, GW is required to complete a federal 990 form that provides a good analysis of the institutions revenue, expenses, compensation, major contracts, etc. You can Google search 990 Form George Washington University. It is free to open an account. 
Do not lose sight that it is the intention of the current administration to transition the university to a more focused STEM institution. Part of this refocus is to reduce the student population that will result in a loss of revenue around $37 million. Consistent with this reduction is a review of all academic programs and services. I suspect GW will eventually eliminate or consolidate all low enrolled academic programs. Associated with this will be a reduction in tenured and tenure track faculty, full time faculty and a reduction in staff. Approximately 75% of the GW budget is tied to personnel. 

Although reductions are painful and ugly and create angst among all constituents it is necessary. GW has become very bloated over the decades. It has resisted making decisions especially on personnel and programs that have not provided any significant benefit to the institution. Again, a review of the institutions 990 Form shows they have been living on the margin counting on their real estate division and other auxiliary revenue operations. Equally, you must factor in the hospital revenue and expense even though GW only owns 20% of the hospital. But, on the other hand it has committed to building and being the primary operator for a new hospital in DC. This is one example of long term financial previously referenced.

On to the sport question. It is a bit disingenuous to claim the sports axed do not favor alumni contribution, corporate sponsorships  or season tickets, meaning they operate as a financial loss. Well, every sport at GW operates on a financial loss. There is not a sport that generates enough revenue to cover their expenses. It has nothing to do with the NCAA allocation. 

Truth is GW did not go far enough to reducing its sports sponsorship. It should have reduced until reaching the minimum sport sponsorship to compete at the NCAA Division I level--16 sports. Then there can be a serious reallocation of funds to fully support the 16 sports and compete for championships.

GW has always wanted to be considered among the top tier universities. One way to be in this upper echelon is through nationally recognized faculty, research and academics. Another way is through athletics. On the athletic side, you will notice GW sponsored many sports commonly associated with the Ivy League colleges. This was intentionally that allowed GW to compete against Harvard (rowing), Princeton (squash), etc. so that some bragging could occur that GW beat the Ivy League.  But, this only provides temporary cache.

Yes, people are upset that their sport will no longer be sponsored at GW. I understand this. 

But, the financial crisis at GW is real. I suspect the projected $200 million deficit is understated. Probably closer to $300 million. 
  
You will need to fasten your seat belt, sure to be a bumpy ride with many more reductions to follow.

Dr. Mike, thank you for your thoughtful commentary and for the pointer to GW's financial disclosure.  This was quite an eye-opener, at least of me. I had no idea that GW had such financial difficulties.  Is this unique in the A-10, and/or for schools that compete with GW for the enrollment of a similar demographic of student?  I must say, that, after reading your comments and reviewing GW's form 990, I have so many more questions, but most of them have nothing to do with basketball, and are much more related to how the administration could invest and spend money like the disclosure suggests.  This is very discouraging to even an optimist like me!

Thank you again, Dr. Mike for the excellent information.

It comes down to giving. Georgetown and GW generate similar revenues but Georgetown generates about 20% from contributions while we generate a paltry 5%. That's just not going to cut it. Alums have to give more. 

22andF I have to admit I haven't done all the research you have or looked at any specifics as it relates to compensation. So keep that in mind when you interpret my questions.

Does it give you a detailed listing of what positions these salaries are for?
I would imagine if it includes the medical school the significant number of high paid employees might make sense. Think surgeons etc.

I would assume a dean of all the different academic schools would need to be compensated in that range given the high cost of living of the DC area and their qualifications.

Many faculty are possibly compensated in that range because they bring in research $'s.

Could the previous administrations push to bring in more research faculty mean that in those years there were significant signing bonuses and this doesn't reflect and ongoing compensation plan.

As I said before I'm not in any way an expert on higher education compensation but especially if the medical school is included , I don't find those #'s shocking.