Planning for a possible 25 percent fall in the value of the endowment by the end of June, Princeton is limiting salary increases and new hires, reviewing construction schedules, and cutting administrative budgets. Because families also have been hit by the economic recession, tuition and fees will increase by 2.9 percent for 2009-10, the lowest increase since 1966.
The endowment – which provides more than 45 percent of Princeton’s operating budget – was valued at $16.3 billion on June 30. But it declined 11 percent by Oct. 31, and because the value of some investments is not reported in a timely way, “it is certain” that the loss is greater, President Tilghman announced Jan. 8.
“Though this year’s downturn is deeper than what anyone could have imagined, Princeton will be able to protect its key assets,” Tilghman wrote. “Foremost among these is our human capital – the students, faculty, and staff who are the vital heart of a great scholarly enterprise.”
Cost-cutting measures for the 2009-10 year include the following:
- Though building projects already under construction will continue, decisions to begin construction on other planned projects will be made on a case-by-case basis.
- Administrative budgets will be reduced by 5 percent, and spending from restricted endowment funds will be cut by 8 percent.
- Salary increases will be limited and resources focused on the lowest-paid faculty and staff. Increases for the highest-paid individuals will be capped at $2,000.
- Requests to begin new faculty and staff searches must be approved in advance, “so that we can direct our limited resources to our most pressing needs.”
- Fewer visiting faculty and fellows will be hired.
Tilghman noted that Princeton has been able to meet an unanticipated need for $5 million in additional financial aid this year. In addition, graduate stipends are expected to increase by 3 percent for 2009-2010.