The Inside Story of the University of the Arts’s Stunning Collapse

The collapse of UArts / Photo-illustration by Leticia R. Albano

The University of the Arts occupies — or, more accurately, occupied — a series of grand old buildings along South Broad Street. Terra Hall, a 17-story Beaux Arts structure with a soaring stone facade and columns that was built in 1911 as a Ritz-Carlton hotel, served as the main academic building. Hamilton Hall, which housed the school’s administrative offices, was completed in 1826 as the Pennsylvania Institution for the Deaf and Dumb and is the oldest building on Broad Street. There was Gershman Hall, a former YMHA, and a few blocks west, the Philadelphia Art Alliance, one of only four surviving original mansions along Rittenhouse Square. All told, the value of the school’s real estate portfolio surpassed $160 million.

From the outside, in other words, UArts, which was formed in its modern incarnation after a merger in 1985 between the Philadelphia College of Art and the Philadelphia College of Performing Arts, two institutions whose origins date to the 19th century, looked to be on firm footing. Internally, though, the numbers told a more complicated story. UArts had a modest endowment of $62 million. Like many private universities without giant endowments, it was highly reliant on tuition revenue: Each year, roughly 75 percent of the school’s budget came from tuition. “There was always a sense that we didn’t have enough money,” says Karl Staven, a professor who worked at UArts for two decades, most recently as the director of the school’s animation program.

What there was never a sense of, though, according to anyone who worked at UArts, was imminent financial doom.

And yet on May 31st, the Inquirer reported that UArts was closing immediately, after the school’s accreditation had been revoked by the Middle States Commission on Higher Education. Summer classes had just begun. Students had placed deposits for the upcoming fall semester that very same day; others who were one course away from graduation were greeted with the disorienting realization that their would-be alma mater no longer existed.

The next day, the school’s president, Kerry Walk, and the chair of the board of trustees, a lawyer named Judson Aaron, released a simultaneously perturbed and somber statement blaming Middle States for announcing the news before they did, though they provided little additional information. “With a cash position that has steadily weakened, we could not cover significant, unanticipated expenses,” their statement read. In her single public comment since the closure, Walk offered only marginally more clarity, telling the Inquirer that she had discovered a cash flow problem on May 14th and that anticipated donations hadn’t materialized. Walk scheduled a town hall days after the closure announcement, but the meeting was canceled 10 minutes before it was set to begin. A day later, Walk resigned. (Neither Walk, Aaron, nor the three most recent UArts chief financial officers responded to requests for comment.)

It would have been one thing for UArts to close up shop slowly. It is no great secret that institutions of higher education are facing declining enrollment. Art schools, as purveyors of expensive degrees that do not come with the promise of high future earnings, occupy a particularly tenuous niche in the current marketplace.

But that doesn’t explain the suddenness of the announcement. Nor, for that matter, does declining enrollment. While UArts saw its enrollment drop from its pre-pandemic level of 1,861 students in 2019 to 1,207 in 2023, 2024 had been shaping up to be a banner year. According to internal admissions documents, the university had modeled a “budget” scenario for enrollment and, more optimistically, a “stretch” scenario. The schools of art, design, music, and film all exceeded the most ambitious “stretch” enrollment figures. Overall, UArts was expecting to enroll around 500 new students for the coming fall semester, up from 239 two years prior.

UArts’s recent behavior didn’t look to be that of an institution in crisis, either. In the past number of years, it had acquired the Philadelphia Art Alliance, launched a new Center for Immersive Media, renovated its Gershman student center, announced a new PhD in creativity, and concluded what it deemed a successful $67 million capital campaign. UArts had enlisted an architecture firm to dream up a “campus transformation plan” that would touch almost all of its campus buildings. Estimated price tag: $80 million to $100 million.

This looked to be a school bursting with bold vision, although it was also bursting with problems of a different kind — namely plumbing. UArts had experienced a number of leaks over the years: One nearly destroyed the university archives; another caused a flood that cut off the school’s internet. Most concerning was a series of leaks in the elevator banks of Terra Hall. As students and instructors shuffled between the building’s 17 floors, it was not uncommon to find multiple banks out of service. In at least one case, issues with the elevators forced classes to be canceled or meet remotely. This was the dichotomy of UArts. “Underneath,” says one former high-level administrator, “it was all being held together by duct tape.”

The audacious plan to transform UArts can be largely traced to one person: former president David Yager. Yager came to UArts in 2016 from the University of California, Santa Cruz, where he’d served as a dean. During interviews with the search committee, Yager spoke of modernizing UArts. “He was the candidate who was really more innovative, more forward-looking, a bigger-vision kind of person,” says Josie Burri, a former vice president of advancement at UArts. Others on the search committee weren’t so impressed. “Frankly stated, I didn’t have a good feeling about him,” says Mark Campbell, the former dean of the College of Art, Media, and Design. “There was a kind of arrogance. He was talking himself up so much that, later on in the process, one of the questions I asked him, which he was no doubt offended by, was ‘What wouldn’t you do as president?’”

Yager, it turned out, wasn’t the board’s first choice for president. The search committee had initially tried to hire Sam Katz, the former mayoral candidate who in the years since had founded a documentary filmmaking company. But the deal with Katz hit a snag, and once the board landed on Yager, Campbell started to get an answer to his question.

In his inauguration speech, Yager asked people to imagine the future of UArts in the year 2026. (He was not talking about a scenario in which the university ceased to exist.) He sketched a scene in which UArts would open a brand-new residence hall, an institute for collaborative arts and design, and a state-of-the-art exhibition space. There would be a new library and new interdisciplinary PhD programs. UArts, which had gone 140 years without a single endowed professorship, would in 10 years, Yager said, have more endowed chairs than any art school in the country.

During Yager’s seven years as president, he managed to turn a fair number of those pronouncements into reality. In 2017, he acquired the struggling Philadelphia Art Alliance, an artists’ club founded in 1915 that had exhibited works by the likes of Horace Pippin and Andrew Wyeth but in recent years had been running low on cash. Yager reportedly spent $3 million renovating the facility with vague plans to have it serve as an exhibition space. He didn’t get his new dormitory, but settled for a sparkling student center with a multimillion-dollar renovation of Gershman Hall. He launched the Center for Immersive Media, billed as a place where students could “explore the opportunities and implications of what it means to be immersed in data, simulations, stories, performances and digital communities” — whatever that meant.

I think the university spent a lot of time trying to look good, rather than to do good things.” — Bradley Philbert, former UArts adjunct professor

Yager also launched a PhD in creativity, a three-year, low-residency degree that promised to “transcend the hierarchies of conventional training” by focusing on interdisciplinary thinking. UArts tapped star academics like Henry Louis Gates Jr. to serve as dissertation advisers. In 2021, the school announced a partnership with Questlove and a Scottish whisky brand called the Balvenie in which one PhD student — the “Balvenie Fellow in the PhD in Creativity” — would be “selected by Questlove, in partnership with UArts and the Balvenie.”

Some of these initiatives felt like the actions of someone who got a bit too creative after a few drams of the Balvenie, but they were also right in line with a president fulfilling his pledge to modernize the institution. The question was how much you believed in the vision. “I think the university spent a lot of time trying to look good, rather than to do good things,” says Bradley Philbert, an adjunct professor who taught media courses. “David prioritized glamour projects,” says Campbell.

Even during Yager’s tenure, there were occasional hints that UArts’s finances weren’t as robust as the press releases announcing new initiatives would have had you believe. In 2016, Yager shared during a gala at the Bellevue Hotel that the school would be creating its first-ever endowed chair — a step toward fulfilling Yager’s splendid vision. Typically, an endowed chair is accompanied by a gift of $1.5 million to $2 million; the funds get added to the endowment and the university draws around five percent annually to pay for the costs of the professorship. The UArts endowed chair, which was for a glass artist named Daniel Clayman, came with a much smaller pledge of only $600,000. According to Campbell, who was dean at the time of the announcement, UArts only ever received around $80,000 of the $600,000 pledge. Clayman had already been hired, though, and after three years, unable to afford him, the university didn’t renew his contract. “In terms of a case study of messaging and managing a fund-raising process, David was way out front in announcing the gift, which never really came through,” Campbell says. (Clayman declined to comment. Yager, reached via email, called the details reported in this story “demonstrably false and/or misleading”; when asked to point out specific inaccuracies, he did not respond.)

In 2018, Yager presided over UArts’s first-ever capital campaign. In a press release, the university announced that its $50 million fundraising goal had been kicked off with a $25 million gift from Campbell’s Soup heir Dorrance Hamilton, which seemed to imply that the gift had been freshly made. But according to Campbell and Burri, this gift had been pledged in the mid-2000s, when Hamilton had earmarked $25 million for the school’s permanent endowment, to be doled out in $1.25 million annual increments upon her death. Hamilton died in 2017, while Yager was president. “Unless he had something to do with her death, he had nothing to do with the gift,” Campbell says. “But he counted it.”

In 2022, Yager proudly declared that UArts had raised $67 million in its fundraising campaign, exceeding expectations. Burri, who left her position as the head of fundraising in 2017, looks back now at that figure with befuddlement. “I don’t know where it could’ve come from,” she says. UArts never had especially deep-pocketed donors; during her time in charge of fund-raising, the biggest gift she ever received was $425,000. According to UArts publicity materials, the school had secured $17 million for capital projects, $14 million in “restricted” funds, $5 million in unrestricted funds, and $5.5 million for scholarships. Then there was the $24 million for the endowment, although assuming these were the Hamilton funds, UArts wouldn’t have received the final installment until around 2035. (In early June, the Inquirer erroneously reported that UArts’s endowment was $10 million lower in 2023 — after the capital campaign concluded — than in 2017, the year before it began. The implication was that UArts had somehow spent or lost the $24 million endowment gift, plus an additional $10 million, in just six years. In reality, it appears that UArts began counting the Hamilton money toward its endowment in 2017, a year before Yager publicly announced the gift. The $10 million endowment decline appears to be due to a change in accounting practices, not a drop in the actual dollar value. UArts’s financial crisis was not born of a failing endowment.)

As an administrator, Yager had a way of making his subordinates feel insecure in their positions. At the start of his presidency, he quickly signaled that he wanted to make personnel changes in the fundraising office. Burri left not long after. Her successor as the head of fundraising, Andrew Pack, had a checkered past: In 2009, the Inquirer reported that he had been fired as executive director of the Variety Club, a nonprofit providing programming for children with disabilities, after allegedly failing to inform the board that the organization had a $1 million shortfall on its $2 million annual budget. At UArts, he would occasionally fret about losing his job if he didn’t land certain gifts, according to a staffer who worked with him. Mark Campbell says that he bumped into Pack at a breakfast during UArts’s commencement weekend, just two weeks before the closure. According to Campbell, Pack turned to him, unprompted, and whispered that Yager had left the school in a deep financial hole. “He said, ‘I didn’t know how much these things were costing,’” Campbell recalls. (Pack denies worrying about his job security or saying anything to Campbell.)

Yager’s management style affected the faculty as well. “He had a very arrogant and demeaning way of speaking to people,” says Susan Skoog, who served under Yager as interim dean of the film school. One year at a faculty holiday party, Yager made a point to tell his audience that if they were hesitant about change, then UArts wasn’t the place for them. “He had a disdain for us,” says Laura Frazure, a UArts graduate who went on to teach sculpture at the school. “In his mind, we were parochial.” During negotiations with the faculty union over three contentious years, Yager lashed out at faculty who aired their grievances publicly, likening them to terrorists who used children as human shields.

By the spring of 2022, the faculty began to discuss a vote of no confidence in Yager and circulated a poll to gauge opinion of the president: 52 percent of the faculty supported going to the board to vocalize their displeasure with Yager; 32 percent supported a public vote of no confidence; and 16 percent supported the president. Ultimately, the faculty followed the less incendiary path of crafting a letter to the board outlining their problems. According to Frazure, who presented the poll results to board chair Judson Aaron, the board maintained that they supported Yager “100 percent.”

When Yager retired a year later, there had clearly been no erosion of support; the board named him the university’s first-ever president emeritus. “He had a big vision,” Burri says. “He could see what the university could be, and despite the financial challenges, he worked to make it happen — to fulfill it like an artist wants to fulfill their vision.” Burri, who worked closely with the board of trustees, says she believes they “wanted more than anything to see the University of the Arts shine, and to be what David could imagine it being.” But that was exactly the problem. “It was very seductive.”

When Kerry Walk, a former president of Marymount Manhattan College, was named Yager’s successor in August of last year, administrators and faculty alike met the news of her appointment with glee. “She was such a breath of fresh air,” Skoog says. Walk was the type of president who would show up for student film screenings and stay for the duration — something Yager rarely did, according to Mike Attie, the director of the school’s film program.

Enrollment at UArts was still tumbling, but Walk appeared to be clear-eyed about the challenge before her. In a faculty meeting, she openly shared that the school had a “three-to-five-year window” to turn around its finances, and she announced that the school needed to balance its budget — a new practice for the institution. (In prior years, UArts would routinely carry an operating budget deficit in the hundreds of thousands of dollars. In the fiscal year ending in June 2023, the school had a $9 million budget deficit, which was only partially offset by the sale of a former dormitory on Pine Street that netted $7 million.)

That a pronouncement like this didn’t cause immediate panic among the faculty tells you quite a lot about the finances at UArts. A five-year window to save the university was, apparently, not too different from business as usual. During bargaining with the faculty union, the administration didn’t evince major stress either. “At no point when we were at the table did they say the university is so desperate for cash that we could have to close in a week,” says Bradley Philbert, who served on the bargaining committee. According to UArts’s financial disclosures, though, the school’s cash reserves in 2023 had dropped to just $4 million, down from $17 million five years earlier.

The first sign of any acute financial concern came a few months into Walk’s tenure, during an October 2023 meeting with a group of senior leadership that included the deans. According to Skoog, who by this point was a permanent dean, Walk entered the meeting with Bryant Morgan, the school’s interim chief financial officer, and informed everyone that she’d recently discovered serious financial problems that she’d been unaware of when she accepted the job. Skoog says Walk didn’t spell out those concerns in detail, though Walk specifically stated she had “levers to pull” to get through the situation, including drawing on a line of credit. The deans were left with a message they’d received many times before: Get enrollment up.

After that meeting, Skoog and the other deans expected to receive frequent updates about the financial health of the school, but instead, Walk canceled multiple meetings. In January, she proposed meeting for drinks at Del Frisco’s, which didn’t exactly signal distress. And by the spring, the deans could report that they had in fact gotten enrollment up. The film school had so many new students that Skoog was in the process of hiring more instructors.

On May 31st, the deans received an urgent message from Carol Graney, UArts’s top academic administrator. She informed them UArts would be closing; 10 minutes later, the story hit the Inquirer. The next day, the deans met with Walk, who told them the school had been unable to make payroll. According to Skoog, Walk also mentioned there was a leak in Terra Hall, which would have cost $3 million to repair.

The deans peppered Walk with questions. If the problem was with payroll, why couldn’t she just furlough the staff? Whose decision was it to close — Walk’s or the Middle States accreditation agency’s? According to Skoog, Walk said she had informed Middle States of the cash flow issues, which they interpreted as meaning imminent closure. But Walk, Skoog says, seemed to indicate she didn’t tell Middle States that UArts would definitely be closing. When the deans asked about appealing the withdrawal of accreditation, Walk told them there was a low chance of success. “She seemed out of it,” Skoog says. “It felt like she was resigned, worn out.”

Middle States has a completely different account. According to Nicole Biever, the agency’s chief of staff, Walk first called Middle States about financial trouble on May 29th. In that conversation, Biever says, Walk informed Middle States that UArts may have to shutter on June 1st — just three days later. Middle States requested a report with more information, due the next day at noon; UArts submitted a response that was notably still absent specific details of what caused the cash-flow crunch, though the university was now proposing a closure date of June 7th, with notification to the staff on June 4th. In a May 31st phone conversation, Middle States president Heather Perfetti told Walk that three days’ notice wasn’t acceptable; she needed to inform people immediately. “It did not seem that she planned to make the announcement that day,” Biever says. That evening, Middle States published the decision to revoke UArts’s accreditation publicly on its website. The Inquirer published its article the same night.

The news came as a shock to virtually everyone — including Chekemma Fulmore-Townsend, the president of the Hamilton Family Charitable Trust. A few days earlier, someone from UArts had reached out to the Hamilton family with an unusual appeal: Would the family consider releasing funds from the $25 million gift that Dorrance Hamilton had left for the university’s permanent endowment? It was clear from the request, Fulmore-Townsend says, that UArts was in financial trouble. Though the $25 million gift was made through Hamilton’s estate — separate from the Charitable Trust — Fulmore-Townsend got involved by trying to assemble the various Hamilton family members to discuss the request. Before she could make much progress, though, the news broke that UArts had lost its accreditation. “We were surprised because we thought we were in the process of figuring out a plan,” Fulmore-Townsend says. Faced with this development, the Hamilton family and Fulmore-Townsend paused their resuscitation efforts. Incredibly, according to Fulmore-Townsend, no one from UArts ever mentioned a specific dollar figure that would have been needed to keep the university open. (Nathaniel Hamilton, the one family member who serves on both the Trust and UArts boards, did not respond to requests for comment.)

We wrote [the board] letters, saying we wanted actual numbers. Nothing, nothing, nothing.” — Susan Skoog, former dean of UArts’s film school

Other important constituencies were equally caught off guard by the shutdown. The day of the announcement, State Rep. Ben Waxman, whose district includes UArts, received a call from Walk informing him of the news. “I think she was surprised, almost, at how angry I was and how upset I was,” says Waxman, who tried and failed to get additional information from her. “And then at the end of the call she was like, ‘Well, I guess we’re gonna have a lot of questions to answer, huh?’” When Walk resigned as president on June 4th, Biever says no one from UArts told Middle States of the leadership change.

With Walk gone, the deans sought to band together to assume control of the university. One trustee pledged $25,000 to support an accreditation appeal effort. But according to Skoog, none of the other trustees were responsive. “The board would not respond to any communication from the deans at all,” she says. “We wrote them letters, saying we wanted actual numbers. Nothing, nothing, nothing.” Instead, management consulting firm Alvarez & Marsal was brought in to preside over the university’s disintegration.

What actually killed UArts remains a mystery, though this much is clear: The university had been facing serious financial difficulties well before mid-May. There were numerous indications of ill health: the fact that the school’s operating budget had been negative for each of the past five years; the fact that it had to sell a piece of its real estate portfolio in 2023 to cover its operating deficit; the fact that it had ended each of its last four years with only enough cash on hand to cover one month of operations. UArts held more than $45 million of long-term bond debt, and in January, Fitch Ratings reported that “absent significant changes in the trajectory of UArts’s revenue and/or expense profile over the next several years” the university’s “very slim margin of liquidity” could reach “untenable levels.” (The Inquirer, citing Laurie Wagman, a UArts trustee in her 90s and the only board member to speak on the record in the wake of the closure, reported that the school would have needed $40 million to stay open. That is an implausibly high figure: UArts’s entire annual budget in recent years has totaled around $75 million; an expense representing 53 percent of the budget doesn’t just materialize overnight. Walk’s assertion to the deans that the school couldn’t make payroll or afford an urgent maintenance repair suggests a smaller, though still fatal, cash shortfall. It seems possible that Wagman — who admitted she didn’t know what prompted the closure — was referencing that $45 million of bond debt, which, while significant, didn’t have a maturity date until 2045.)

I don’t know that there is a future because it was burned down so completely.” — Karl Staven, UArts former animation professor

In June, the deans spoke with the management consultant, which Skoog describes as “the worst meeting I’ve ever had.” The consultant, she says, went on about “liquidity” and boasted that he could sell UArts’s real estate within 30 days. That is one scenario. There’s another in which UArts might not end up entirely stripped for parts: Temple University is considering absorbing the institution. This would make some sense, connecting Temple to South Broad Street, though it wouldn’t really mean salvation of the old UArts, either. “I don’t know that there is a future because it was burned down so completely,” says Karl Staven, the former animation professor. “Even a merger would take a year to go on and you will have lost all the students. They have to move on.”

In the interim, a small group of employees was asked to keep working at UArts for the month of June to help finalize shutting down the university. Among those asked to stay were the school’s 20 or so program directors who helped run the various academic departments; most of them agreed to the work out of a sense of obligation to their former students who remained in limbo. They’d also been under the impression, not unreasonably, that they’d be paid for their time. Then, at the beginning of July, the consultants running UArts presented them with one parting surprise: They had reviewed the contracts and determined that, as program directors, they were already obligated to assist with planning-related matters during the summer months.

The consultants informed the program directors that their last day would be July 3rd — and that they wouldn’t be getting paid.

Published as “Anatomy of a Higher-Ed Disaster” in the September 2024 issue of Philadelphia magazine.