Dive Brief:
- The New School is set to reduce its workforce 7% by spring's end through voluntary buyouts as it tries to adjust to declining enrollment and budget pressures.
- The private university in New York City introduced the buyouts in December as it faced a structural deficit of over $30 million for the third straight year, according to university President Joel Towers.
- The New School recently opened buyouts to some of its union employees. But even with those measures, Towers warned more workforce cuts were likely this spring, starting with vacant positions where possible.
Dive Insight:
Towers described heavy financial pressure on The New School that he said is forcing officials to make quick decisions about budget cuts.
“Our budget fragility has become more acute and is now impacting our capacity to manage the day to day expenses and revenues of the university as they vary significantly across the year,” he said. “The hard truth is that we must resolve the remaining structural imbalances in our budget now with discipline, clarity, and care.”
The New School also plans to consolidate down to two academic units. One of those will combine its liberal arts college and social research-focused graduate school into a single unit, while the other will combine its design, performing arts and media schools.
Towers said that any future workforce reductions would be “directly aligned with the work underway to support our new two-college structure, our program offerings, and the restructuring of our operations.”
In addition to the workforce downsizing, he said that The New School is evaluating the size of its real estate footprint as well.
Under mandate from its board, the university must balance its fiscal 2028 budget, and its recent fiscal actions get The New School “substantially closer” to that goal by the next fiscal year, according to Towers.
Last week, S&P Global Ratings downgraded the institution’s bond rating, to BBB from BBB+, based on what analysts described as a “weakened operating picture” and deep deficits. At the same time, they wrote that The New School’s restructuring efforts “should yield some near-term savings ahead of larger, longer-term savings.” The new rating indicates that the university is still reasonably likely to meet its financial obligations but more vulnerable to economic headwinds.
University leaders in November projected a $48 million deficit for fiscal 2026, even after freezing hiring and canceling courses with low enrollment.
In his message Tuesday, Towers pointed to those pressures to explain the pace of the cuts.
“One of the common appeals we have heard is to ‘go slower’ — to pause or delay decisions and take more time for deliberation,” he said. “I understand this desire, but The New School’s present financial challenges no longer allow for gradual changes. After three consecutive years of significant structural deficits and the concomitant impact on our liquidity, we must act now.”
Behind the financial declines is a shrinking enrollment base. Just between 2021 and 2024, fall enrollment fell 13.6% to 9,068 students, according to federal data. Tower’s November message alluded to further enrollment declines this past fall, while the university’s student newspaper reported that degree-seeking students had fallen to their lowest level in a decade.
S&P analysts last week wrote that The New School’s enrollment could slip even more during the next two years, but they also noted that the institution is relatively large, diverse and has a “solid brand within the arts, design, music, performance, social sciences, and policy spaces.”
