The darkening economic forecast has prompted Yale to deepen cuts in next year’s budget and delay almost all planned construction projects, University President Richard Levin announced today in a letter to faculty and staff.

Spending on salaries will be cut 7.5 percent in the 2009-2010 fiscal year, up from the 5 percent reduction announced in December. Levin said he hopes to achieve the cuts through turnover and reductions in the number of temporary employees, but he did not rule out layoffs.

“To the extent that layoffs are necessary, we will make sure that affected individuals are provided support and guidance,” he said.

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 deeper cuts will save the operating budget an additional $37 million next year, on top of the $100 million that was announced in December.

In an effort to save $2 billion in capital spending, most planned construction projects will be delayed. 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. In the letter, Levin went further than he did in December, saying now that even design work on other projects will stall until credit markets open up or gift funding is secured.

Planning for the two new residential colleges has already made some progress, as the architect, School of Architecture Dean Robert A.M. Stern ARC ’65 presented designs to the Yale Corporation over the weekend. But now the delay in capital planning casts their future into doubt.

Employees with salaries below $75,000 will still receive a 2 percent raise. But now, instead of a $1,500 raise cap for those making above $75,000, those employees will have their pay frozen in order to preserve more staff positions.

The projected 25 percent loss to the endowment remains accurate, 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, and I understand that meeting the revised budgetary targets will be challenging,” Levin wrote, adding that Yale will continue to recruit faculty and protect financial aid.

In a telephone interview with the News on Sunday, Levin said that while the financial health of the University has changed little since December, the global economy has deteriorated significantly in that time.

“What’s changed is the general macroeconomic backdrop,” Levin said Sunday. “The prospects of an early recovery seem less than they did two months ago. The recession looks deeper, it’s spread more widely around the world, and it looks like a harder problem for us.”