The sagging economy has finally caught up with some of the country’s most prestigious universities, several recent announcements indicate.
With many universities planning to set their 2004 fiscal year budgets in April, a number of Ivy League institutions have announced plans such as hiring freezes, program cuts and staff reductions, designed to avoid anticipated budget deficits. Harvard University recently announced it would tighten hiring policies, while Dartmouth College, Brown University and Columbia University have all predicted budget cuts. Though Yale has not made any specific announcements yet, administrators said this year’s budget will be tighter than in previous years.
David Warren, president of the National Association of Independent Colleges and Universities, said Yale may not have made any specific announcements yet because the University feels it is still too early in the budget planning process.
“It may well just be timing with respect to next year’s budget,” Warren said. “I’m sure they’ll have something to say.”
Yale Provost Susan Hockfield said the University will be somewhat conservative in assessing various programs and requests for the coming fiscal year.
“We’re being very careful — and we’re examining very carefully any requests,” Hockfield said. “We know that next year’s budget is going to have some problems, but we’re still planning to have a balanced budget.”
While Yale will be careful with its budget planning, Hockfield said she does not anticipate implementing measures other institutions have recently announced.
“They’re certainly not of the scope other schools are taking on,” Hockfield said. “I don’t anticipate any sort of the things we’ve heard.”
Warren said the recent announcements are not particularly surprising. Colleges with large endowments are likely to be significantly affected by the economic downturn because they rely on their endowments for a significant percentage of their budget. In contrast, smaller schools rely heavily on tuition revenue.
“[Ivy League schools] rode the market up — and now they’ve got to find a way to make up for those lost funds,” Warren said.
Warren said many schools use three-year smoothing policies for their budgets, and because this is the third year of the economic slowdown, institutions are now feeling the effects.
He said a number of institutions will likely introduce some type of freeze or delay on construction in order to prevent budget deficits.
“[They're] all facing variations on the same theme,” Warren said. “But none of these are happy decisions because you’ve been coming off a very robust time.”
Brown Executive Vice President of Finance and Administration Elizabeth Huidekoper said Brown still anticipates a balanced budget for the coming fiscal year, but the university will make some budget cuts to pursue specific priorities, such as faculty hiring.
“It’s a challenge — it’s certainly meaning it’s harder for us to accomplish what we want to accomplish,” Huidekoper said. “[But] it does help when you are very clear what you stated as your priorities.”
Dartmouth Provost Barry Scherr said Dartmouth intends to cut approximately $6 million from the school’s budget. While he anticipates a balanced budget, Scherr said it is still early enough in the planning process that Dartmouth could potentially end up with a small deficit, or even a small surplus.
Dartmouth’s biggest concern is the 2005 fiscal year, Scherr said. He said he is concerned about income from some of the revenue sources, such as gifts.
Warren said that though he understands the short-term pains of the recent announcements, the Ivies are going to be “sound and solid” through the recession.
“They will weather this, there’s no question about it,” Warren said.