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With the economic unknowns of the pandemic, the administration quickly and drastically cut costs. The move sparked backlash among Yale’s faculty, who argued that the cuts were made without enough reflection and could have long-lasting adverse effects.
On April 7, Yale instituted a hiring and salary freeze for the 2021 fiscal year, despite faculty advising the University not to panic last spring. They argued the freeze might cause more problems for Yale’s academic mission than the pandemic’s economic effects would.
At the end of the 2020 fiscal year, in part due to the cost-saving measures, Yale posted a $125 million operating budget surplus, and will invest some of the money in a fund to finance future science building projects. Given Yale’s relative financial security, the Faculty of Arts and Sciences Senate argued in a letter last month the University should aggressively hire and take advantage of an opportunity to attract the best faculty and surpass its peers. 334 of Yale’s faculty signed the letter.
But, the signatories cautioned, time is of the essence. The salary freeze saved about $5 million. If the University restores the 20 planned hires cancelled by the freeze this year, the FAS letter argues, there would be no net financial impact. But if Yale waits until next year to fill those positions, the letter continues, the same 20 hires would cost between $6 and $7 million — a net loss. University officials said that soon as they realized the fiscal situation was not as dire as it might be, Yale thawed the freeze, however.
“The financial losses from COVID-19 have been small compared to those in past financial crises, yet the cutbacks to faculty hiring … that have been imposed are large, disruptive to the core mission of the FAS, and yield relatively little financial benefit,” the letter reads. “Freezes in faculty hiring and graduate student recruiting mean losing ground in teaching and scholarship and in making the discoveries that move knowledge forward.”
After the letter came out, FAS Dean Tamar Gendler told faculty that the University was already doing what they recommended. The budget for the next academic year includes a raise for all FAS ladder and instructional faculty, she wrote. Additionally, Yale had thawed the hiring freeze and made 30 FAS hires, only five fewer than a normal year.
Matthew Jacobson, FAS Senate chair, said Gendler’s email was a heartening development, and that the FAS Senate plans to work closely with the administration to continue the hiring efforts. Last spring, Yale was in a “fog of uncertainty,” he wrote, so it was understandable to slow decisions. But now the “fog has lifted,” and Yale can decisively speed its hiring, he added.
But the effects of the short hiring freeze are still felt. Last spring, the FAS Senate Executive Council emphasized institutional stability. With its multibillion dollar endowment and operating budget, the COVID-19 pandemic didn’t put Yale at risk of a financial catastrophe, they wrote. Across-the-board cuts could disproportionately affect departments that need to make hires for strength or even survival, they said.
Alessandro Gomez, professor of mechanical engineering and materials science, said that his department lost a candidate last spring due to the freeze. Now, it has to start the search from scratch. The Mechanical Engineering and Materials Science Department has not grown in 30 years, even as enrollment has tripled. Department size is particularly important in engineering, Gomez said, and Yale has the smallest department of its peer institutions.
Gomez said that the view among many of the faculty is that a “thaw” to the hiring freeze is not bold enough.
“If anything, we should seize the moment, especially for departments that are certainly in need of growth,” Gomez said. “This is an opportunity for us to hire real stars, as opposed to perhaps good candidates but not at the very top, and not having places like Stanford or MIT snap them away.”
Yale is in a unique position during the crisis, faculty claimed. Professor of chemical and environmental engineering and of biomedical engineering Paul Van Tassel said that Yale competes with both Ivy League institutions and large state schools for candidates. Last year, his department made an offer to a candidate who chose to go to a state school.
While public institutions — that rely more on state appropriations over investment income — cannot hire, Yale’s significant endowment revenue means it can, he said.
In Gendler’s email to FAS ladder faculty, she said that Yale is seizing its current opportunity. Five of the six departments in the School of Engineering and Applied Science have searches. Other science, social science and humanities departments are also conducting searches.
Though the University is moving ahead with hiring, Vice Provost for Academic Initiatives Pericles Lewis said that it has to continue to be cautious in case the economy changes.
“If you think about the context where there was a huge amount of uncertainty,” Lewis said. “Many schools at the University depend a lot on charging tuition, we didn’t know if we’d have students. We didn’t know what would happen with research grants, and so on. I think we just felt that it was a time to be cautious.”
Last spring, the FAS Senate Executive Council argued that the endowment spending rule, which governs how much money the University can spend from the endowment in any given year, smooths the effects of fluctuations in Yale’s wealth on the University’s spending. By doing so, it helps ensure that Yale has the money to support its mission in both the present and future. For other schools that rely almost solely on their operating income and not on endowment income, a deficit of that size would require them to drastically cut costs.
The FAS Senate argued the spending rule counsels against making cuts while still assessing how significant losses are. It emphasizes that changes to spending should be gradual to allow for careful reflection and for the full extent of a loss to be understood, the senate claimed.
University Provost Scott Strobel wrote in an email to the News that the University estimates the pandemic’s impact on revenue and expenses will be more than $250 million.
But in a report last June, former FAS Senate Chair John Geanakoplos wrote that one lesson from past financial crises is that there have been many crises, and after all of them Yale has eventually emerged richer than before.
“Assuming that Yale’s endowment return matches the market, Yale is already richer now than it was before the crisis, even after subtracting the $250 million COVID-19 losses,” Geanakoplos said in a speech at the most recent FAS Senate meeting.
The FAS Senate is an advisory body.
Rose Horowitch | rose.horowitch@yale.edu