Yale avoids cuts, for now

Of all the schools that make up Yale, the one that appears to be first to respond to the economic downturn seems to be — fittingly — the business school.

The School of Management’s deputy dean, Stanley Garstka, said he is now combing through a spreadsheet model of all the school’s programs and expenses to cut back on some expenditures, such as food at events. The school is not freezing hiring, but it did withdraw four job postings that Garstka said the school could no longer afford to fill. SOM, he said, is taking preemptive measures now in the hopes of avoiding more drastic cuts later.

“At SOM at least, we’re trying to get ahead of the curve on this and stop doing things or cut back on doing things that aren’t necessarily essential,” Garstka said this week. “We’d rather not be subject to a draconian rule; we just want to lop off those expenditures that impair the operation the least.”

Those actions appear to make SOM the first division of the University to start trimming expenses because of the economic crisis. After an October message from University President Richard Levin asking budget managers to forgo unnecessary spending, the heads of other schools and departments said they have acted cautiously and are not mulling cuts. Administrators said they are determined to avoid cancelling operations.

Provost Peter Salovey said the University is committed to maintaining its current operations. If economic conditions worsen, plans for certain projects may become more modest or long-term, but Salovey said the hope is to get by with delaying — rather than canceling — them.

In a telephone interview last week, Levin said he would wait until after the holidays to consider further action, in order to give markets a chance to settle down.

“If the markets experience an even larger downturn, we’d obviously think about even more significant measures,” he said.

In an Oct. 21 memo to faculty, Levin said “managers should forgo any unnecessary spending through the balance of this fiscal year and will exercise caution in submitting budget proposals for next year.” But managers — from academic departments to professional schools to the Association of Yale Alumni — said their budget proposals have long been stable and conservative; at this point and time, they do not anticipate having to make sacrifices.

The School of Forestry and Environmental Studies — like SOM — is on track to move to a new building and hire a new dean, plus some new faculty. FES Deputy Dean Alan Brewster said the school expects to stay on that course even as the environment school, like the broader University, enters a period of economic uncertainty. FES has savings to back it up, he explained.

“We don’t see at this point any major changes in our direction,” Brewster said.

Neither do his counterparts in other offices of the University.

“While any requests for increases or new projects will obviously need to be scrutinized, justified, and evaluated for their importance to the University, that is no different [than] the process that has always been in place,” Phil Jones, head of University Career Services, said in an e-mail message.

The main concern right now is to shelve major new initiatives, said Harold Attridge, dean of the Divinity School, where endowment income provides 60 percent of the budget.

Academic department chairs said they have long practiced disciplined spending, so they do not expect major changes.

The chair of the Economics Department, Christopher Udry, said his department’s budgeting has already been “cautious and conservative” for several years and does not need to adjust now. The same goes for the History Department, said chair Laura Engelstein.

Overall, managers at Yale said while they are carefully monitoring budget projections, it is too soon to tell how they will adjust their planning.

“We’re always prudently watching our costs,” said Jane Lee, director of business operations for Yale College. “Right now we’re proceeding on course until we’re told otherwise.”

The confidence of Yale’s department chairs stands in stark contrast to their counterparts at schools hit harder by the financial crisis. Administrators at Dartmouth, which announced a 10 percent budget cut last week, have yet to determine how the $3 or $4 million cut to the Arts and Sciences budget will be distributed. Dartmouth Economics chair Steve Venti said he worries about how the reductions might come down on his department, although he said it is too early in the budget process to identify what those specific reductions might be.

It is early for Yale, too: how the University’s next budget shapes up will become clearer in December, when Levin issues planning guidelines and managers start meeting with provosts to review their requests. Salovey said dipping into leftover grants, endowment funds and other reserves is a good way for departments to sustain operations through this recession.

“Now’s not the time to save for a rainy day,” Salovey said last week. “Now’s the time to use the savings.”

But so much depends on how long the economic downturn lasts or if it worsens, Salovey said. If it does, the University may have to rethink its approach, and is already planning for any eventuality, he said.

It is unclear whether the measures at SOM portend similar cuts in other parts of the University. But for now, the consensus up and down the University’s budgetary ladder seems to be that Yale’s current operations will not shrink — at least not yet.

Reporting was contributed by Raymond Carlson, Lawrence Gipson, Patrick Lee, Paul Needham, Eric Randall, Derek Tam and Victor Zapana.

Comments

  • Alum '02

    Princeton has just cut $300 million in capital projects; I wonder if Yale will have to follow suit.