Yale tries to fill budget gap

When Yale’s endowment lost $6.5 billion three years ago, University administrators took decisive action to cut expenses while still preserving the school’s core mission — academics.

Over the past three years, the University put all capital construction projects on hold to save $2 billion, allowing only essential or ongoing renovations to continue. YaleNext, an overhaul of the University’s administrative systems, saw its budget slashed nearly in half and highly paid staff were subject to a salary freeze.

This fiscal year, the University spent reserves in a series of “one-time actions,” Provost Peter Salovey said. Once used, these funds cannot be replenished. Though the University still faces the same expenses, the “one-time action” funds are largely depleted. Salovey said administrators “knew it was a risk” to rely on such funding, and the total cost of the one-time actions outpaced the University’s initial estimates.

“The one-time actions bought us time,” Salovey said, “but they don’t balance the budget long term.”

Now, with a $68 million gap to close in the 2011–12 budget, Salovey said the University is searching for budget cuts with “sustainable consequences.” As non-academic and academic units are asked to scale back budgets for the third consecutive year, administrators and professors alike are asking the same question: What is left to cut?

UNIT-BY-UNIT

In the next two months, the officers of the University — Levin, Salovey and Yale’s six vice presidents — and deputy provosts will meet with directors, deans and department chairs to decide where cuts can be made, Salovey said.

“I think what is possible to trim will vary in different parts of the University,” he said. “All units are going to go through a budget process generally led by a deputy provost or an officer but the outcome of that process will differ unit-to-unit.”

Each unit’s budget reduction will vary depending on how much annual endowment income it receives, Salovey said. Few units are fully funded, with the exception of the Beinecke Library, the Center for British Art, the Lewis Walpole Library and the Institute for Sacred Music and other small programs . Endowment income covers a University-wide average of 35 percent of costs for units.

Funds are restricted to certain uses based on donors’ wishes, Deputy Provost Lloyd Suttle said in an e-mail Thursday, and deputy provosts will review the funds available to each unit with relevant academic administrators. Four program and department heads interviewed said they must wait for these meetings before they will know specifics of the cuts.

Still, the newest cuts will be different from those made in the past, said Paul Freedman, acting chair for the History Department. Previous cuts were made across the board, he said, but not every unit will make the same reductions this time.

“We’re apprehensive,” Freedman said, adding that he does not know what cuts the administration will ask the History Department to make. “It will be a process of negotiation to some extent.”

Freedman said he does not know how much endowment income his department receives each year to cover costs, but feels certain it is far less than the 35 percent University-wide average.

Sociology Department Chair Julia Adams and Computer Science Department Chair Avi Silberschatz both said they have not heard specifics from the Provost’s Office about pending cuts.

Steven Fraade, chair of the Judaic Studies Program, said his program is mostly funded by its own endowment and is largely self-supporting. The program has been most affected by holds on faculty searches instead of financial cutbacks, he said.

BUYING TIME

At the heart of the University’s efforts to trim the 2011-12 budget is the search for a substitute for $60 million of reserves used to balance the current budget.

The money for such one-time actions came from fund balances — unspent income from endowment gift funds or spent-down gifts, Suttle said. Endowment income and gifts carry over from year to year, and figured heavily into the $60 million that helped buffer the University this year.

One-time funds were not entirely consumed this year and many departments still have reserves, Suttle said, but the funds will not hold up forever.

“Since they are truly ‘one-time’ funds, we cannot count on them being available indefinitely,” Suttle said, “so we need to develop a sustainable budget that does not rely on them over the long term.”

Yale has worked toward a sustainable budget for the past three years by tightening spending on non-essential costs such as travel and social events and cutting nearly 250 jobs. Academic departments have had requests for additional hires delayed, and Salovey has committed to hold the Faculty of Arts and Sciences to its current size of 710 members.

On the whole, Yale has tried to protect academic departments from the impact of budget cuts. Salovey said Yale constantly looks to lower administrative costs and will consider consolidating personnel for further savings. But shrinking the budget for the University’s central administration will not shelter departments from the newest round of reductions.

“They have tried to cut the central administration first or things that don’t have a direct effect on students and faculty, but they’re getting to the point now where they do have to start cutting those things,” Freedman said. “It’s not going to be directly more noticeable, but they’ve already cut most of what’s easy to cut.”

Comments

  • Sara

    Cut the expensive Yale shuttle. New Haven is small enough that students can walk, bike, take CT Transit, or dial 777-7777. Given the poor condition of sidewalks and bike lanes around the campus (especially in the current snowstorms) it is obvious that priorities are misguided anyways, since most students already walk everywhere. Spend more on public resources and less on shuttles for the special interests.

  • yalie13

    Sara, you obviously are unaware about how many people, especially graduate students, are dependent on the shuttle to get around campus. It’s not a special interest, and CT transit is almost completely useless for these routes.

    We can certainly be more fiscally responsible with the shuttle service, but if you asked everyone who uses the shuttle to start using a cab, New Haven’ll end up looking like New York City, it’d be environmentally reckless to say the least, and it’s absurdly expensive. Walking to many places on campus, like say from science hill or the divinity school to the medical school, can take a good fourty-five minutes to an hour.

    The shuttle system is the definition of a public resource.

  • harbinger

    How about the people who take the shuttle for two blocks? Or to go to the nail salon, bars, and Woolster Square for pizza? The dining hall and custodial workers who use it as their own private taxi back and forth to work, leaving me standing in the cold for an hour. Most places on campus can be covered in a 15 minute walk that doesn’t need a shuttle or security car. But we like our perks and getting treated like to young gods we know we are. Keep the bus for a regularly scheduled route around campus for the long distance trips. Everything else we can get rid of. If you must go to Wooster, spring for a cab.

  • yalie13

    Sounds like an interesting point, harbinger.
    Why don’t you go do a study and figure out how many people actually take the bus to go to nail salons, bars, and wooster square, and then if we subtracted that from other commutes, figure out how many buses end up being empty and unused. Subtract also the dining hall and custodial workers (who by the way are an equally important part of our yale community) using it as a “private taxi” back and forth from home to work and see how many buses go unused.