NEW COLLEGES DELAYED AS YALE CUTS SPENDING

In the face of a bleak economic forecast, the construction of the two new residential colleges will be delayed, along with almost all other construction projects, University President Richard Levin told the News on Tuesday.

In a letter to faculty and staff, Levin also announced deeper cuts to the University’s operating budget. He called for spending reductions on staff salaries and non-personnel costs by 7.5 percent instead of 5 percent as previously planned. The endowment is still projected to lose 25 percent of its value by June, Levin said, but with no sign of improvement in the economy, he said financial recovery may take longer than the University had previously planned.

“I wish we could avoid these additional actions,” Levin wrote in the letter. “And I understand that meeting the revised budgetary targets will be challenging.”

CAPITAL SPENDING DELAYED

The colleges are not the only project to be postponed; most planned construction projects will be delayed in an effort to save $2 billion in capital spending. Work on all new buildings and renovations currently under construction will continue, Levin said, as will essential maintenance and the renovation of Morse and Ezra Stiles Colleges.

Levin said that even design work on other projects will stall until credit markets open up or gift funding is secured.

“To the extent we have gift money for the colleges,” he said, “we will be able to continue the design work.”

Funds have already been raised to support the planning of a new campus for the Yale School of Management, Levin said, and so that design process will continue.

Planning for the two new residential colleges has already made some progress. The architect, School of Architecture Dean Robert A.M. Stern ARC ’65, presented designs to the Yale Corporation over the weekend.

“I’m disappointed that the construction got delayed,” Stern said, “but I’m optimistic that we will move forward with the project as soon as circumstances will allow us.”

But the circumstances are too complicated and too volatile to predict when they might change in Yale’s favor. Besides gift funding, construction projects require borrowing, but the credit markets are broken, Deputy Provost Lloyd Suttle said. Even for Yale, with its top credit rating, there is barely any money available to borrow.

That rating is not something administrators want to jeopardize by taking on too much debt, Suttle said. A major factor in that assessment is the ratio of current debt to endowment value, so as the endowment declines 25 percent this year, it also limits the amount of money Yale can afford to borrow.

University officials had hoped to postpone any decision about delaying the construction of the colleges until 2011, when the University had planned to break ground. But in a telephone interview Tuesday, Levin said that projects related to the new colleges — mainly associated with clearing and preparing the site for construction — needed to begin in just a few months if the colleges were to open on schedule in 2013. In other words, this was the point of no return.

OPERATING BUDGET CUTS DEEPEN

Spending on salaries will be cut 7.5 percent in the 2009-’10 fiscal year, up from the 5 percent reduction Levin announced in December. Levin said he hopes to make the cuts through turnover and reductions in the number of temporary employees, but he did not rule out layoffs.

“I don’t think there’s any possibility we can manage without some layoffs,” Deputy Provost Charles Long said. “It seems inevitable.”

The cuts translate into the elimination of about 600 positions, which is more than can likely be achieved through turnover alone. Vice President for Human Resources and Administration Michael Peel said attrition is at its lowest rate in 10 years. In a recession, people tend to be less likely to change jobs because the job market is tighter, and less likely to retire because their investments are down.

Levin said one way to reduce the budget is to cut back on temporary and contract employees. He stressed the difficulties of laying off unionized workers, who are protected by labor contracts.

Even Yale’s highest-paid employees will feel the pains of the economic downturn. Staff with salaries below $75,000 will still receive a 2 percent raise. But now, instead of a $1,500 raise cap for employees making above $75,000, those faculty, staff and administrators will have their pay frozen.

Budgets will be cut across the University, Levin said, and not just personnel spending will be reduced. Instead of the 5 percent reductions in non-personnel spending planned in December, the University will now cut 7.5 percent next year and an additional 5 percent in the 2010-’11 academic year.

These cuts, which Suttle said are the deepest since at least the 1970s, will save the operating budget an additional $37 million next year, on top of the $100 million that was announced in December. The budget gap was created by the endowment’s essentially flat growth last year and projected decline this year.

The details of how these across-the-board cuts will break down in each department will be communicated in a memo this week, which will give budget planners targets and guidelines to start drafting their annual proposals.

Administrators are also planning to announce Yale College’s tuition for the upcoming academic year later this week.

Comments

  • Recent Alum

    Probably the best thing to come out of the global economic downturn so far.

  • Recent Alum

    Yale should dip into the endowment and buy up land in New Haven, while it is temporarily cheap.

    When things come back (in a few years… or 10), the equation is going to be very different. City centers are going to skyrocket in value, as the suburbs empty out due to unsustainable energy costs.

    If Yale doesn't expand now, it may be hemmed in forever.

    Also, tuition should be raised by a significant amount. Financial aid needs to be expanded as more middle class and low income families have trouble paying. But the wealthy families, who make up a significant portion of Yale students, should have no trouble paying more.

  • Anonymous

    Does this story really deserve the size 72 bold faced font that the YDN gave it on the physical cover today? I think not.

  • lana, alum

    Agree
    this is the best thing to happen in this recession! delaying the colleges
    They should cancel them!
    Why dilute the Yale name and experience with more students!
    there are plenty of other great colleges around for them! especially now
    This was just a plan to copy and keep up with Princeton!

  • josh

    good, now they can have the chance to correct their mistakes. i'm fine with adding more students, but:

    (1) choose somewhere closer to campus! building vertical if you have to! build over the cemetery! just don't put it out in the suburbia of science hill!

    (2) choose a contemporary architect to do it! thom mayne, neil denari, sauerbruch hutton, or someone else awesome. we have enough pretty historicist buildings on campus. let's get radical.

  • Anonymous

    May I second the comments of 'lana, alum?' Kill the expansion of Yale College. Being admitted and graduating from Yale should mean something. The new colleges would take Yale backward.

  • radical architecture?

    Because that worked so well with Morse and Stiles.

  • alum

    I agree that building them closer to campus would be a better idea. How about a high-density residential college in that parking lot behind the music school, with a couple of nice dormitory towers attached? Or convert HGS into a residential college and move the graduate students up to Trumbull/Prospect. Or that large site at Crown/College that was supposed to be a 5-star hotel but never went anywhere because of the economic crisis.

  • @7

    So, you're going to discount all architects from the last fifty years because one, who did many other fine projects, botched Morse and Stiles?

  • @Josh

    You scare me. A lot.

  • Recent Alum

    How much would it cost Yale to buy the New Haven green? This would be the perfect location for the two new colleges. The purchase would be unthinkable in a normal economy but these days New Haven must desperately need the money and land is cheaper than before.

  • y'10

    I think that this was a good decision…Yale needs to consider all consequences before jumping into big projects like this (the colleges were slated to be finished within the next…what…5 years?).

    @#2: Your tuition plan essentially calls for rich families to pay for the financial aid of poorer families. That is ridiculous. Yale's job is not to take from the rich and give to the poor, but rather to provide its own separate aid for poorer families. Also, the more they raised tuition, the more families would have to be included under this financial aid as less are able to pay. It is an immoral vicious cycle that would cause a rich minority to pay for the tuition of all their children's friends.

  • Sorry to burst your bubble…

    Hate to break it to you all, but the expansion is not going to be canceled, or even modified. It will be the same building, built in the same place and by the same architect - only a few years later.

    Sorry :)
    (As an old Bio undergrad and current grad student, is science hill really that bad? Sheesh!)

  • '05

    #11-
    good idea, but the green doesn't actually belong to the city. a small group of private proprietors own and care for it, each appointed for life. same with the cemetery. that's why neither location has ever really been a viable option for yale expansion.
    it would be great though. build a pair of colleges on the western third of the green, keeping the churches and the entire eastern section intact. old campus would become more of a center open space for the campus, and college street a better axis leading up towards prospect and science hill.

  • Trumbull 08

    Not that I think it's even remotely feasible, but to those of you suggesting building new colleges in the Green: Don't. The Green is essential for community life in New Haven and a center for all sorts of activities led by Town Hall.

    That said, I strongly opposed the idea of two new colleges in the first place, so I'm glad something led to their delay. I think when Yale does approach this again, it will do so only after addressing a lot of the other problems that affect student life.

  • 16

    I think the green would be a more effective public space if it were smaller. It's too big right now.

  • @ 8 by another alum

    I agree with the idea of high-rises; going vertical is both economical and greener and would allow them to build closer to central campus.

    Also it would be cool to have some beautiful modern residential colleges on campus anyway. emphasis on beautiful (sorry morse/stiles)

  • BlueQuaker

    As a Penn undergrad, I must say I am thrilled that Elis are shortsighted enough to keep Yale too small and allow the overflow of top talent to go to lesser Ivies.

    Thanks, Yale!
    <3, the much-improved Penn student body