NEW YORK -- The Fashion Institute of Technology, which is celebrating its 50th anniversary this year, is facing bigger challenges than ever. While grappling with city and state budget cuts, FIT is also trying to keep pace with a rapidly changing fashion industry.

"The school is at a crossroads," said Allan F. Hershfield, president of the college, in a recent interview in his office. "Technology is changing so rapidly. And we also need to prepare ourselves globally so we can remain vital into the 21st century. Over the next few years, we have to intensify our ties to all the industry we serve and also pay attention to the new ones as they come up."

To stay vital past the millennium, FIT -- whose graduates include such industry luminaries as Calvin Klein, Norma Kamali, Byron Lars, Victor Alfaro, Andrea Jovine and Michael Kors -- is seeing more of a need to be innovative. Its new strategies range from adding more cutting-edge equipment to more creative fund-raising.

Some of these steps include:

A Quick Response-Electronic Data Interchange Center, which simulates information flow between retailers and manufacturers and which opened this year.

Creating the world's first college fragrance studio, where students can develop their own fragrances. It also opened this year.

Starting this fall, requiring fashion-design students to take such "survival" courses as business management, production and strategies for starting a business.

Launching an international marketing program within the next few years. The school currently offers a specialization in international trade.

Developing a separate computer-graphics program to be phased in within a few years.

Making foreign language a requirement for an increasing number of its undergraduate degrees over the next few years.

Establishing a center that would provide much-needed classroom space, additional auditoriums for special events and an incubator that would provide space for entrepreneurs to develop and test products.

Expanding its exhibits at the 20-year-old Museum of FIT beyond fashion. From this October through January 1995, for example, the Museum will showcase about 200 recycled products, from lamps made of reused thermos bottles and wire mesh to kelly bags made of recycled inner tubes.FIT, which is on West 27th Street between Seventh and Eighth Avenues, has over the years broadened its definition of fashion beyond apparel. The school, whose original mission was to prepare workers for jobs in the textile and apparel fields, now offers programs in 26 related fields, from toys and interior design to packaging.

Its biggest growth occurred from 1976 to 1985 when FIT rapidly added such programs as general illustration, jewelry and interior design while developing marketing programs. During that period, the school added four academic buildings and two additional dormitories and student enrollment jumped from 5,400 to nearly 10,000. Today, there are 12,266 students.

The college was originally called the Fashion Institute of Technology and Design, but dropped the word "design" in 1959. It was founded on one floor of the High School of Needle Trades -- now the High School of Fashion Industries, at 225 West 24th St. -- and has constantly responded to sociological changes.

Recently, it has strengthened its offerings in home-furnishing courses in response to the renewed consumer interest in the home. And with the renewed interest in garments like the Wonderbra and the Karl Lagerfeld-inspired corset, FIT -- which dropped courses in foundation garments in the early Sixties -- may reintroduce them, said school officials.

Four years ago, FIT dropped its fur courses, which were started in the early Eighties, in response to a waning fur industry and a lack of interest among students. The millinery program has also been on a roller coaster. The school beefed up millinery in the Forties and Fifties when hats were popular, canned the program in the Sixties when the bouffant hair style killed hats but reintroduced it in the mid-Eighties.

FIT, which is part of the State University of New York, now believes that it needs to apply these same innovative strategies in its fund-raising efforts, given the tight fiscal environment.

Over the last five years, FIT has survived six successive budget cuts that added up to a 20 to 30 percent decline in federal and state money, said Hershfield. Tuition for some 8,000 part-time and 4,000 full-time students has doubled over the last three years, although it is still relatively inexpensive. Associate-level New York City residents pay $1,050 a semester, while out-of-state students pay $2,525."We need to be more proactive in our fund-raising efforts -- now more than ever," said Hershfield, who created The Leading Edge, a repository for donations for the school's capital expenditures, two years ago.

"Until my arrival, the main focus had been on raising money for scholarships," said Hershfield, who came on board in September 1992. But he added that to stay viable, the school -- which raises about $750,000 to $1 million a year to fund overall expenses -- needs to find better ways of raising money to keep up with the latest technology. Under The Leading Edge, about $300,000 was raised to expand a computer-aided design laboratory, which is to open this semester. It will provide students with additional access to computers. Peter G. Scotese, chairman of the FIT board and former chief executive officer of Springs Mills, used his contacts in the textile industry to help raise the money, said Hershfield.

"I think senior government officials under all administrations tend to take the garment industry for granted," Hershfield said, pointing out that the apparel industry here adds up to a $14 billion-plus business.

Hershfield is hoping that the anniversary events, which are expected to raise $1 million, will give FIT's image a boost and help raise awareness of its essential economic link to the city. They include the annual dinner-dance, which this year honors Bergdorf Goodman, the store that in 1956 provided the seed money for the school's fashion buying and merchandising program -- the first college-level merchandising program in the U.S.

The Educational Foundation for the Fashion Industries, which established FIT and now serves as an advisory body, contributes about $1.3 million per year in scholarships. However, in recent years, the fund has been hampered by declining interest rates. To cut costs and keep tuition in check, FIT has had to reduce library hours by 10 percent; cut back on travel for professors for seminars and trade shows; delay the purchase of new equipment, and scale down projects, like the 12 1/2-story Center for Design and Related industries, Fashion and Related Industries, which would house an incubator and much-needed classroom space.

FIT also implemented a retirement-incentive program three years ago, which led to 45 to 50 senior faculty members taking early retirement. Full-time faculty is about 180, which Hershfield believes is "very low" for a school of such size. In the late Eighties, FIT full-time faculty peaked at about 220.This fall, FIT is adding six full-time faculty members, and Hershfield said he has given permission to add another three for the second semester.

"We really need about 25 to 30 more," he said.

"The school is a treasure to the city, and I absolutely love it," said John J. Pomerantz, chairman and chief executive officer of The Leslie Fay Cos. and vice chairman of the FIT board. One of the buildings is named after his late father, Fred P. Pomerantz, who was one of the school's founders. "But the city is cutting back on funding, and therefore the school has to be more innovative in reaching out to the various industries to get through this financial crunch."

"FIT is a voice crying out in the wilderness," said Bud Konheim, president of Nicole Miller and a board member of FIT for two years.

"The city and state have their own concerns. But if this were L.A., and the movie industry needed help, everyone would respond. People here have to understand the role that design plays. It's not a flaky thing that some Wall Street guy can quantify."

In fact, the fast-growing marketing division -- which includes cosmetics, fragrance and toiletries, direct marketing and international trade -- now has as many students as the more traditional programs in fashion design and fashion buying and merchandising.

FIT has bolstered its programs though its ties with other industries. Its students were involved in proposing designs for new uniforms for Transit Authority workers, and Lechter's -- a housewares retail chain -- is putting into production designs for two kitchen gadgets created by interior design students.

"FIT has this incredible way of developing and nurturing talent -- not only do the teachers invite individuality of expression, they also focus on the business of fashion," said Calvin Klein. "These kids learn the essentials of the business -- from entrepreneurship, image and marketing to the retail environment."

FIT also gets its students jobs.

"While certain areas are tightening up, there are other opportunities where our graduates can find jobs," said Roslyn Dolber, career-placement director at FIT since 1963, adding that 90 percent get jobs within several months of graduation.Given the department store consolidation and increasing lack of buyer autonomy, students in the fashion-merchandising program no longer view traditional buying jobs as ideal or glamorous. Only about 30 percent of the students in the fashion buying and merchandising program take retail buying jobs, compared with 83 percent in 1975. Most graduates now take jobs as store managers at specialty chains like The Gap, get into manufacturing or take jobs in public relations.

Hypermarkets and electronic retailing will also be the growing fields, predicts Dolber.

While designer houses continue to recruit FIT students, those opportunities are limited. Students are now being recruited by such hot companies as The Limited, J. Crew, MTV, QVC and Wal-Mart.

Some say FIT's shift away from fashion design has created a different ambience on campus, catching at least one visiting alumna by surprise.

"During the time I was there, if you weren't a fashion design student, you were considered some weirdo," said dress designer Jeannette Kastenberg, class of 1984. "Departments like advertising and photography were small back then.

"The creativity isn't there anymore," she said, adding that, while giving a lecture a year ago, she discovered a sea of tailored pleated pants and Gap T-shirts in the audience. "Back then, we were all funky and fun. I wore sequined football shirts with tights and running shoes."

"Everybody seems a lot more practical," said Michael Kors, an FIT graduate who now gives lectures at the school. "When I was a student, we would hang out at Studio 54, wearing silk shirts unbuttoned down to our waists and tight jeans. Any time we spotted a designer, we would want to know where they got their inspirations. Now, students ask hard-core business questions like where we source our garments.

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