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Vol. LXIII, No. 15
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Wednesday, April 15, 2009
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Vol. LXIII, No. 15
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Wednesday, April 15, 2009
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Given the severity of the economic downturn, Princeton University’s endowment is now expected to decrease 30 percent, instead of the 25 percent projected in January. In a letter sent to the university community last week, PU President Shirley Tilghman elaborated on the cuts necessary to adjust to the loss.
The fiscal year 2010 budget will likely see the elimination of raises for tenured faculty and staff with salaries over $75,000. The proposal was endorsed by the University officials who set salaries, namely, the Priorities Committee and the Committee on Appointments and Advancements. The Finance Committee of the Board of Trustees also accepted the suggested cut, which is expected to save approximately four million dollars next year.
While each University department has already been asked to reduce its operating budget by five percent, and its income from restricted endowment accounts by eight percent, Ms. Tilghman wrote that “we are now certain that a reduction of similar magnitude will be required in the 2010-11 academic year, which means another eight percent cut in endowment spending on top of this year’s reduction.”
Ms. Tilghman mentioned that Provost Christopher Eisgruber would issue a two-year savings target to department managers to be achieved by the 2011 fiscal year. The goal is to cut $170 million over that time frame.
At the end of the 2008 fiscal year on June 30, 2008, the value of the University’s endowment was $16.3 billion, according to University spokesperson Cass Cliatt.
In her January letter to the University community, Ms. Tilghman wrote that the endowment supplies 45 percent of the University’s operating revenue. In her most recent letter, she noted that “we will be spending 6.7 percent of the endowment’s value next year, well outside our target range of 4 to 5.75 percent. If we are to preserve the spending power of the endowment for future generations, we must begin to bring our spending closer to the policy that governs how much of the endowment we may prudently spend each year.
“This is a time that calls for us to be as thoughtful as possible about what is most important to the success of Princeton, and to preserve those qualities aggressively,” Ms. Tilghman noted while declaring that “the steady growth in both faculty and staff that we have enjoyed over the last 10 years will end, and the University will have to contract in size.”
The scheduled beginning of new capital projects will also be delayed. “Any decision to go forward with a renovation or new construction project will be made on a case-by-case basis, contingent on having 100 percent of the funding in hand,” Ms. Tilghman commented, adding that the “highest priority” projects that are part of the 10-year capital plan will be continued “at the moment when funding becomes available.” Such projects include the new Lewis Center for the Arts building, the Neuroscience Institute, and the Andlinger Center for Energy and the Environment.