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 email@example.com.