SOARES: Paying for our vibrant future

When President Levin and Provost Salovey updated the faculty and staff on the University’s financial situation last week, they had some good news — we’ll make it through the 2013 fiscal year without “deep across-the-board” cuts — and some bad news: Our piggy bank is still running low.

It all began three years ago, when the U.S. economy collapsed spectacularly and took our endowment with it. The 2008-’09 fiscal year left a $350 million gap between our revenues and expenses, prompting a series of austerity measures. In the years since, we fired some people, froze some salaries and gradually chipped away at the deficit.

But we’re still lagging behind. According to projections, Yale’s deficit will extend into the 2013 fiscal year. In this context, last week’s email from President Levin and Provost Salovey warned staff and faculty that the future will be “challenging,” and “targeted reductions” will be necessary. And, though a balanced budget may address the issue in the short term, the memo cautioned that merely balancing the books won’t be enough “to secure a vibrant future for Yale.”

That is bad. It means that, if we don’t find a long-term solution to the budget problem, Yale may be unable to afford all the things we’ve grown accustomed to: fairly-traded foods at the dining halls, Master’s Teas with the almost-famous and the sort-of-famous, and Yale Police’s walking escort service, 2-Walk. Such a fate must be avoided.

But how can we bridge Yale’s budget deficit? The first option is to cut costs. In the 2010-’11 fiscal year, Yale’s operating expanses added up to $2.7 billion. Salaries and wages accounted for 46 percent of that sum, or $1.2 billion. Add in employee benefits, and we’re sitting at $1.6 billion. That’s a whopping 63 percent of our expenses. Granted, the University employs a lot of people: between faculty, postdoctoral associates, administrative staff and unionized service personnel, 13,217 people claim Yale University as their employer.

But that’s where things get tricky: If all University employees — from President Levin to the janitor who cleans his office — were paid equally, individual compensation would be $90,792 in wages alone; factor in employee benefits, and we’re talking about $123,629. My math may be suspect, but that, I think, is a lot of money.

With that in mind, the most obvious strategy would be to cut wages. However, as econ majors will tell you, wages are sticky: because of expectations, contracts and other things, wage levels are as movable as the Great Pyramid of Giza. To tighten our collective wallet, then, we’ll have to look elsewhere.

The bathroom might be a good place to start. In 2010-’11, utilities — water, electricity, etc. — accounted for 2 percent of our operating expenses, or $54 million. In an effort to reduce costs, we should implement a shower-rationing system: seven showers per week in warm months, four when the winter sets in. Extra showers will be allotted to in-season athletes and other key student groups.

That, however, won’t be enough. “Other operating expenditures,” a nebulous category that includes “services, materials and supplies, and other expenses” cost us some $594 million in 2010-’11, or 22 percent of our operating expanses. Toilet paper, I believe, falls under this category. To reduce costs, we should shift away from the two-ply rolls found at most Yale bathrooms and supplant them with the single-ply stuff. According to some rough calculations, the sandpaper-like stuff will save us $1.1 million per year.

But cost-cutting alone won’t cut it. Efforts should also be made to raise revenue. In the 2011, the Yale University Press generated a measly $32.2 million in revenue. Though its mission to aid in the “discovery and dissemination of light and truth” is admirable, the Press should also keep an eye on the demands of today’s readership. Thus, in order to increase its profitability, the Press should make immediate plans to acquire rights to a vampire book of some sort.

More money can also come from students. Net student income — room and board, tuition and fees — accounted for $240.5 million in 2010-’11, or 8.6 percent of our operating revenue. That’s pretty good, but we can do better. Raising tuition is bad PR, so we should focus on some of the less-visible fees. Laundry revenue, for example, could be doubled by raising the per-load price from $1.25 to $2.50. Similarly, a 15-cent price hike on black-and-white prints could double the revenue of our copy machines.

Neither the austerity measures nor the revenue-raising initiatives described above will meet universal approval. But they’re necessary. After all, our vibrant future hangs in the balance.

Teo Soares is a junior in Silliman College. Contact him at teo.soares@yale.edu.

Comments

  • gradstudent16

    Give me a break. From a report put out last year by GESO: “Between 1993 and 2005, Yale’s total faculty increased by about 25% while tenured faculty ranks increased by only 13.5%. Yale’s administration, by contrast, has grown dramatically. Between 1993 and 2007 Yale’s total workforce grew by 39.3%, while the administrative ranks grew by 59.7%.”

    This used to be a university with an administration. Now it’s an administration with a university. The YDN just reported on this last week: http://www.yaledailynews.com/news/2012/jan/13/administrative-growth-raises-concerns/

    It’s shocking to see people talking about rationing showers and toilet paper when the president of the university makes $1.6 million a year, and an army of administrators — whom we didn’t even seem to need a decade ago — aren’t far behind. What’s worse than the possibility of minor discomfort to undergraduates, though, is the reality that the administration is gradually eating alive the academic mission of the university — cutting budgets even when the overall pot is growing, refusing to hire new faculty. Decades ago, a Yale historian said he was afraid to tell President Kingman Brewster the names of promising up-and-comers in history, for fear that Brewster would go out and hire them. That was a much poorer Yale than the one in this article, and yet Yale today is cutting at the academic departments that are supposedly the core of its mission, in boom and bust.

  • basho

    this was a good article until you got sarcastic, but you’re right that administrative bloat is a huge problem

  • ldffly

    Thank you gradstudent16. Levin needs to go. I’m sorry to say it but he has not been good for the overall mission of Yale. The expansion these last 15 years has not been for the best.

    My pet peeve. Yale wants to engage in capital expenditures that will burden future budgets with maintenance, if the university is responsible enough to maintain the new capital assets. Let’s be clear. Yale has not always been so responsible. Is the Yale administration again going to behave like a typical state highway department? Project a new road, raise the money, then build it. 10 or 15 years later, the road is falling apart. No money for maintenance? So what do we do? Raise taxes, create toll roads, or have bake sales? Somebody better do the financial projections and at the same time clarify the mission of the university.

  • Lake_Balbina

    well, this would be a non-issue if newt was the president (just of yale, let’s not get too ahead of ourselves.
    http://www.politico.com/news/stories/1111/68729.html

    good article, sarcasm included. the article makes this issue seem as ridiculous as it really is.