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Vol. LXIII, No. 2
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Wednesday, January 14, 2009
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Vol. LXIII, No. 2
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Wednesday, January 14, 2009
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Princeton University’s endowment, which supplies more than 45 percent of the institution’s operating revenue, is seeing a sharp decline as a result of the current economic crisis, President Shirley Tilghman said in a letter to the campus community issued last Thursday. From July 1 to October 31, the endowment lost 11 percent of its value, with the University estimating that by the end of the fiscal year the endowment could shrink by as much as 25 percent.
The University plans to reduce the endowment’s contribution to the general operating budget by $50 million next year. Spokesperson Cass Cliatt said that “departments across the University are being asked to decrease their budgets.” Ms. Tilghman’s letter mentioned that a few different initiatives would be scaled back as well.
The number of visiting faculty and fellows will be reduced, with all non-personnel administrative budget allocations being cut by five percent in fiscal year 2010. While already-authorized faculty searches will continue, additional search requests will be limited.
In addition to curtailing the endowment contribution, Ms. Tilghman’s letter announced that while the 10-year capital plan will see some projects deferred in order to save $300 million in total, the renovation of the Butler College dormitories and the new chemistry building on Washington Road will continue. Other new construction and renovation will commence, pending approval on a case-by-case basis.
Scaling back spending as a result of the economic downturn will not affect the University’s contribution to the Borough or its financial aid awards.
This is the fourth year of a six-year agreement stating that the University shall increase the contribution paid to the Borough during the previous year based on the percentage increase of the Borough budget, and the percentage increase of tax-exempt square footage on campus. In 2008, the University paid the Borough $1,176,730.20, an increase of $84,130.20 from 2007.
Ms. Cliatt reported that the scholarship budget for 2010 is projected to increase to $104 million, in order to accommodate more students. Additionally, Ms. Tilghman pointed out that the University has “been able to fully meet an unanticipated increase of about five million dollars in demand for financial aid this year” stemming from the 2008 Annual Giving campaign.
Noting that the University is in the middle of the “Aspire” fund-raising campaign, Ms. Cliatt remarked that though they are more than halfway to their goal, they “expect that the pace of incoming donations may slow as donors examine their finances.”
Besides the endowment, the other 55 percent of the University’s general operating budget comes from student fees, alumni donations, and government-sponsored research, Ms. Cliatt said, adding that “these areas are not as dramatically affected by the economic downturn, although we are preparing for alumni donations to slow, and we’re watchful of the availability of funds for government-sponsored research.”
Ms. Tilghman summed up by admitting that “the extraordinary depth of the economic downturn, coupled with the uncertainty of predicting its duration or impact, make it likely that we are at the beginning of a multiyear budgetary adjustment.”