University on track for budget cuts

Administrators across the University are working to cut their budgets and rein in spending.

With the hope of eventually replacing Yale’s current $39 million budget deficit with a budget surplus, the Provost’s Office has distributed one-, three- and five-year budget targets to the University’s 40 units — which include Yale College, the graduate and professional schools, museums and several administrative units — that will require reductions in personnel and nonpersonnel costs. According to senior administrators, these targets for fiscal 2015 are being met while departments are already working on future goals.

“The most important reason to look into the future is to avoid layoffs,” Provost Benjamin Polak said. “Avoiding them entirely would be hard. We want this to be done [in a way] that’s the least disruptive possible. That requires planning.”

Polak said the University hopes to reduce administrative costs by five percent in three years and by nine percent in five years. In the vast majority of cases, he added, units are already coming in on or under budget.

Deputy provost for academic resources Lloyd Suttle echoed Polak, saying that many people across the University are working to develop long-term financial plans that will address the projected deficit in the fiscal 2015 budget and place the University on sound financial footing moving forward.

“We’re seeing units come in the vast majority of cases on or under budget,” Polak said. “I’m a little encouraged, but it’s still a very tough budget environment. It’s going to get harder.”

Polak expressed confidence that costs would be reduced five percent over the next three years, but cautioned that the nine percent target will be much more difficult to reach. Achieving further levels of savings requires some imaginative thinking, Polak added, pointing to the possibility of various parts of the University performing certain tasks collaboratively instead of independently.

In higher education institutions, reducing costs by nine percent over five years is hard, he said: Many of the University’s operating costs are very difficult to reduce.

“We all need to be involved in this,” Polak said. “We have to be all committed to keeping administrative costs down. That needs to be University-wide.”

Officials from various schools and departments said they are working diligently to reduce costs while maintaining the integrity of their programs. Most officials interviewed said they felt the budget cuts were a fair response to the deficit.

Vice President for Human Resources and Administration Michael Peel said his unit is on track to meet or exceed the first-year savings targets and is already working to bring budgets close to the three-year target by fiscal 2015.

Still, he emphasized that budget cuts require making difficult decisions. The human resources department at Yale has been through several rounds of cost reduction since 2009, so finding alternative ways to save money has become more difficult, he said. Peel added that leaving vacant positions unfilled and shifting some work from internal sources to external resources will achieve most of the savings targeted for Human Resources.

“I think the budget targets set were prudent given the size of the reoccurring deficit,” Peel said in an email. “Those of us with budget responsibility now have planning parameters for the intermediate term — three to five years. The longer the planning cycle, the more University leaders are able to make these changes in a thoughtful and methodical manner, reducing the impact on our people and organizations.”

University Librarian Susan Gibbons said library services submitted a fiscal 2015 budget within the proposed targets, but the spending constraints forced the University Library to be “much more critical and evidence-based in the decisions that [it is] making about collections, services and staffing.” Gibbons added, though, that she did not think there would be discernible differences in the quality of the library in the next fiscal year.

Deputy Provost for Science and Technology Steven Girvin said his units have stayed on track for fiscal 2015 cuts by consolidating vacant administrative staff positions, using department endowments to cover essential programs rather than incremental activities and reducing the scope of facilities renovation projects.

“We do have a structural deficit which we can cure only by making some further modest budget cuts,” he said. “Not doing this would eat further into the endowment and not be fair to future generations at Yale.”

The Yale University Art Gallery plans to achieve its target by continuing its tight focus on cost control, coupled with its ongoing fundraising efforts, according to Jessica Labbé, the museum’s deputy director for finance and administration.

Financial staff members in the Athletic Department have been working over the past months with the Provost and University Budget Offices to support the University’s short- and long-term budget development goals, said Forrest Temple, Senior Associate Athletics Director for Finance. He added that the Athletic Department believes in the plan and remains committed to its success.

The School of Management and the School of Medicine set their own targets and are not subject to the provostial budget targets, said SOM Dean Edward Snyder and Medical School Dean Robert Alpern. While Snyder said SOM currently has an operating deficit and hopes to balance it soon, Alpern said the School of Medicine is on track but remains dependent on many external factors, including decisions made in Washington.

Half of the Ivy League posted budget deficits for the fiscal year that ended in June 2013. Yale had the highest deficit at $39 million, followed by Harvard at $33.7 million.

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