The University’s budget deficit for the fiscal 2014 year was likely near zero.
Yale has made strides to close the gap between revenue and expenses in the years since the recession, but the deficit in the University’s central operating budget was still $39.2 million in fiscal 2013. Though Provost Benjamin Polak said the figures on last year’s deficit have not been finalized yet, he said the 20.2 percent return on the endowment during fiscal 2014 and higher than anticipated revenue from the Yale School of Medicine dramatically reduced last year’s budget deficit. Still, he cautioned that the positive budget news will not change the University’s plan to continue to cut costs.
“We budgeted to have a University-wide deficit [in fiscal 2014], and we might still, but it won’t be big,” he said. “I don’t want to say that it will break zero, but it might.”
Looking forward, however, Polak said there is no reason to alter previously made budget targets.
Last spring, the University announced plans to reduce administrative costs by 5 percent in three years and by 9 percent in five years. At the time, Polak said that in the vast majority of cases, units were already coming in on or under budget.
For the current fiscal year, which began in June, Polak said the University has reduced its central administrative costs by 3.5 percent. In the future, cuts are not planned to be as large, he said.
Neither Michael Peel, Vice President for Human Resources and Administration, nor Shauna King, vice president for finance and business operations, responded to multiple requests for comment.
Polak cautioned against extrapolating the positive results from fiscal 2014 to future years. He noted that the possibility of rising gas prices in the Northeast, coupled with increased pressure on the healthcare system, could have dramatic implications for budget predictions.
“It’s extremely good news that our medical school had a great year — it’s very likely because of tremendous work over there,” he said. “[But] looking now and looking 10 years out, there’s uncertainty there.”
While faculty members interviewed said they doubted that the University would use the smaller than anticipated deficit to ease cuts on their units, they were split on how effective the school has been in reducing costs.
Assyriology professor Benjamin Foster GRD ’75, Near Eastern Language and Civilization’s director of undergraduate studies, doubted that the University will ease budget restrictions on his department, but said they should consider doing so.
Joel Rosenbaum, a professor of Molecular, Cellular and Developmental Biology, said he does not expect the University to ease the “financial crunch” caused by budget reductions for many departments. While he added that continued positive growth of the endowment will find its way into departments, it will take time.
Rosenbaum added that budget cuts should remain a prominent subject of discussion.
“I think most departments have already been cowed by [department] chairs and the Provost into accepting the budget cuts,” Rosenbaum said in an email. “The cutting of departmental budgets should be one of the principal topics of discussion in a faculty senate, should one be organized.”
However, others expressed more confidence in the University.
Jessica Labbe, Deputy Director for Finance and Administration for the Yale University Art Gallery, said the gallery’s duty is to preserve the museum’s collection of objects for the benefit of future generations.
“We understand the University’s obligation to likewise preserve the value of its endowment assets, and honor the discipline of its spending rule,” she said. “We would of course embrace any consideration of budget relief, but would not expect significant target revisions as a result of FY14’s stellar endowment return.”
Last November, as a result of the $39.2 million deficit, the Provost’s Office 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.
In an Aug. 2014 email to the Yale community, University President Peter Salovey wrote that he expects the budget to be balanced by fiscal 2016, the fiscal year beginning July 1, 2015 and ending on June 30, 2016.