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Fighting endowment losses, top schools face cuts

After reporting double-digit endowment losses during the recession, colleges and universities - even elite ones - are outlining specific strategies for slashing their budgets.

Some schools are bracing themselves for even deeper cuts than they anticipated just months ago.

In a Feb. 24 statement to the community, Yale President Richard Levin announced a revised budget for the university - which is projecting a 25 percent loss for this fiscal year - and a 7.5 percent reduction in the salaries and benefits of all non-faculty staff, up from a 5 percent reduction announced in December.

The university plans to lay off as many as 300 employees, the Yale Daily News reported March 2.

Levin also called for a 7.5 percent cut in non-salary expenditures, up from 5 percent cut and a salary freeze for university employees making over $75,000 a year.

In the statement, Levin explained that worsening economic conditions had led administrators to re-evaluate earlier cost-cutting plans.

"The mounting evidence suggesting a prolonged recession has caused us to recognize that we need to take a more aggressive approach to budget reductions for the coming fiscal year," Levin said in the statement.

Dartmouth announced last month that it would be laying off 60 employees and decreasing wages for another 28. Seventy employees have already accepted buyouts, and the university implemented a 10 percent cut and a hiring freeze last fall, according to media and university reports. A Feb. 9 statement from President James Wright announced a freeze on most salaries and wages and budget reduction of $72 million over the next two years.

Cornell President David Skorton issued a statement on March 6 that discussed the school's worsening financial situation and outlined a dramatically expanded budget-reduction strategy.

"The size of Cornell's required budget reductions has grown in recent weeks, reflecting diminished investment performance and other factors dictated by the realities of the marketplace," he said.

Skorton's letter also included a 15 percent cut in endowment spending this year, with even larger reductions planned for fiscal years 2011 and 2012. The university - which is facing a $230 million budget deficit - also plans to sell up to $500 million in taxable bonds and cut its budget by $60 million. The letter announced a "voluntary retirement" program, and the Cornell Daily Sun reported Monday that the school has laid off 35 employees this fiscal year so far, with more layoffs expected to come.

Stanford University has also been forced to make larger sacrifices than previously anticipated. Last week, Provost John Etchemendy reported that the university - which now estimates an endowment loss as high as 30 percent - would be cutting its budget by $100 million over one year, instead of the two-year time frame announced in January.

Princeton is also seeing significant reductions to its budget. Administrators plan to cut the school's operating budget by $82 million in the next fiscal year, according to a March 5 article in the Daily Princetonian. The university also plans to borrow $1 billion to limit spending out of its endowment, which is projected to decrease by 25 percent.

At the same time, however, Princeton has increased its commitment to student aid, increasing its financial aid budget by $8 million, or 13 percent, according to the Daily Princetonian article.

Princeton is not alone in this regard: In his letter, Levin stressed that Yale will maintain its financial aid programs, and Penn has launched a number of initiatives aimed at improving aid.

In a letter to the Penn community, President Amy Gutmann announced a $17.6 million increase to its financial aid budget and the university's lowest tuition increase in more than 40 years.

"With the mounting financial stress that many of our students and families are experiencing right now, we feel a responsibility to relieve some of their pressure," the statement said.



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