While next year’s budget is the largest in University history, the $1.73 billion spending package nonetheless includes modest cost-cutting measures meant to cope with the poor economy.

The budget, approved by the Yale Corporation at its meeting last week, represents a 12.3 percent increase from last year’s budget and will be the University’s seventh consecutive balanced budget. But after several years of nearly unprecedented endowment returns, this year’s package shows the effects of the poor economy, with slower growth in program funding and a small number of staff cuts.

Yale administrators maintained the budget cuts are far from the hiring freezes and budget cuts at some peer institutions.

Yale Provost Susan Hockfield said the capital budget is not complete and will likely be finished by the June Corporation meeting.

As part of an effort for “a little more discipline and tightness in the budget” in the face of the poor economy, the University engaged in some cost-cutting by cutting a “modest” number of staff positions and freezing supply budgets for the year, Yale President Richard Levin said.

Levin said the University granted fewer requests for new funding this year because of the budget restrictions.

“There was less room for new initiatives this year than in past years, because of the economic slowdown,” Levin said.

Hockfield said some programs, including the new biomedical engineering department and the Center for Language Study, have received additional funding. The budget also provides for increases in financial aid in Yale College and the graduate school.

But Levin said the University was still able to continue programs that are getting started and lack sufficient gift-based funding.

“We continue to supply a number of projects that are just getting started and still need operating budget support,” Levin said.

In the professional schools — especially the School of Medicine — the University had to budget some reliance on reserve funds to make up for the schools’ budget shortfalls, Levin said.

In recent years the University has invested considerably in some of the professional schools and hopes to reap the benefits in the next few years, Levin said.

“[But] we’re going to have a few years where we need to use reserves to close up the budget,” Levin said.

At the Corporation meeting this weekend, the Office of Finance and Administration presented a 10-year retrospective of Yale finance, Hockfield said. Levin said the report foreshadows the planned re-examination of the Yale 10-year plan, when the Corporation will consider whether it can achieve the targets it predicted in the late 1990s or whether Yale needs to “maybe slow down a little.”

In addition to precautionary steps already taken, the budget could still be subjected to some tweaking, Deputy Provost Charles Long said.

“It’s still a preliminary budget, but it’s pretty much in shape,” Long said. “There are some things we need to do still to reduce some expenses.”

For several years Yale managed to avoid budget troubles that began to plague other institutions because of the University’s conservative endowment-spending rule and a smoothing rule that spreads out loses or gains over a three-year period.

“There’s nothing we can see in the environment that’s going to make income better in ’05 than ’04,” Long said.

Hockfield said though the slowing economy has caught up with Yale’s budget, the University seems to be outperforming many of its peers.

“I think Yale is situated very well relative to our peers but there’s no question the economy will put pressure on us,” Hockfield said.