The University has set a goal of $82 million in budget cuts for the 2009–10 academic year, and similar cuts may be needed for the following year, administrators said at a meeting March 4 on Princeton’s financial outlook.
Princeton’s endowment supports almost half of this year’s $1.3 billion operating budget, and spending from the endowment normally rises by 5 percent each year. But the economic downturn has led to a sharp decline in the endowment’s value. As a result, the University is budgeting for endowment spending to decline by $74 million in the coming year.
In addition, the 2009–10 budget must absorb an expected $8 million increase in financial aid. Provost Christopher Eisgruber ’83 said the University expects that nearly three of every five undergraduates will be on financial aid “as we move through the recession.”
The spending cuts will bring the University’s endowment spending only “about halfway back” to the preferred range of spending 4 to 5.75 percent of the endowment’s value per year, Eisgruber said, “which is why we are certain we will need a second round of cuts.”
Almost $20 million in savings is projected to come from slowing the spending of restricted endowed funds, such as endowed professorships, that are controlled by individual academic departments and programs. The University plans to save another $14 million by redirecting the spending from some endowed funds to cover other costs that are consistent with the funds’ restrictions, but that previously were supported by general University funding or other sources.
Princeton has not instituted a job freeze, said Lianne Sullivan-Crowley, vice president for human resources, but administrators are “aggressively” reviewing every staff position that becomes vacant to determine if it can be eliminated or reconfigured. She said the University “can’t guarantee people’s jobs won’t be affected” in future years, but added that all options would be considered before layoffs.
Previously authorized searches for tenured and tenure-track faculty remain active, but term and visiting faculty appointments generally will be approved only for courses required for a degree or certificate.
All regular University employees are eligible for raises, which will be capped at $2,000; the annual savings from reducing the salary pool is expected to be about $6 million. Pierre Joanis, director of labor relations, said the University is working to insert similar provisions in union contracts as they come up. “We’ve had some measure of success to date,” he said.
Eisgruber noted that Princeton’s budget actions have not been as severe as those taken by many of its peers. “We should feel very fortunate to be part of this institution,” he said.
The University also hopes to save $21 million by cutting new initiatives and reducing startup packages tied to new faculty hires, and plans to reduce printing and mailing, storage, and utility costs.Executive vice president Mark Burstein said Princeton will examine whether the calendar could be adjusted, noting that some institutions save money by closing between Christmas and New Year’s.