For the first time since 2009, faculty, students and staff will see diminished austerity as the University significantly slows down its budget cuts for Fiscal Year 2012, which began in July.
In June, Cornell announced that its structural deficit — which had been projected to grow to $215 million by 2015 — will be reduced to only $15 million by June 2012. If market conditions continue as expected, the University hopes to have its books balanced by Fiscal Year 2013, according to Elmira Mangum, vice president for planning and budget.
The University has gradually eliminated its deficit from $148 million in 2009 to $102 million in 2010 to $40 million in 2011. Administrators hope to gain an additional $35 million to $40 million of savings over the next three fiscal years, according to a University press release.
With firmer financial footing in sight, the University will only modestly scale back the cost of its multi-billion dollar operation, by about 1.6 percent — $30.1 million — in Fiscal Year 2012.
“There isn’t as much urgency to cut back; people are learning to live within the budgets we have now,” said Max Pfeffer, senior associate dean of the College of Agriculture and Life Sciences. “After we had steep budget cutbacks … I think we’ve adjusted and at this point are trying to maintain balanced budgets by stewarding our resources very carefully.”
Last year, still feeling the aftershocks of the 2008 financial crisis that crippled its finances and squashed its endowment, Cornell slashed its operating budget by $82.7 million, or 4.4 percent — condensing programs across the University, reducing the size of its support staff and, administrators say, reaping the initial savings of various streamlining initiatives. This followed an operating budget reduction of $60 million in Fiscal Year 2010.
The University will close its remaining budget deficit largely through new procurement and information technology systems, according to a University statement. Cornell’s finances also benefited from a $1,875 tuition hike and from the resurgence of its endowment, which — after plunging 27 percent in the recession — surged 20 percent in Fiscal Year 2011.
“If we eliminate the structural deficit, instead of paying old bills, we get to pay new ones, create new ones that are strategic and help steer us into the future, rather than paying for the past,” Mangum said.
While reductions will likely be less noticeable this year, budget cuts since the financial crisis have provoked passionate opposition from students, faculty and other members of the University. And with funding for higher education entangled in the budget crises of several branches of government and a volatile market, it is not entirely clear that the University is out of the fiscal forest just yet.
Making $200M Deficit Disappear
Mangum emphasized that the expenditure reductions have come from strategic cuts, rather than those that would impact the quality of education or research at the institution.
“It’s not touching the classroom, except that the faculty may have to work with someone a little farther away in another location rather than in the same building,” she said.
She explained how, during the first two years after the market downturn, the University removed more than $175 million in fund balances — money held in rainy day funds — from campus and administrative units to pay down debt-service, capital expenses and other one-time operating expenditures.
“After using reserves to pay debt-service and other nonrecurring expense, we turned our focus to the balance — much of which has become known as the structural deficit. Since that time, our focus has been to deal with the structural component of the operating budget deficit,” Mangum said.
To help eliminate the structural deficit, the University has implemented the Administrative Streamlining program, 10 initiatives that administrators hope will save $75 million to $80 million “on a permanent basis.”
“The streamlining program is focused on administration: It does not go down to the dean’s office or into the academic community,” Mangum said. “[ASP] is focused on the administrative services we provide, meaning academic program administrative changes are not necessarily occurring from the center but occurring from within the schools and colleges who are challenged to also evaluate their programs and the viability of their service models.”
In Fiscal Year 2012, Cornell’s colleges — which are defined as major academic or administrative units, Mangum said — are expected to cumulatively cut their budgets by $16.1 million. While substantial, this reduction is about half the $31 million cut by colleges in Fiscal Year 2010 and around 40 percent less than the $25 million they cut in Fiscal Year 2011.
“[Cuts by college units this year] are considerably less than they were in previous years,” Mangum said. “At this point, we are primarily focused on balanced reductions coming from [administrative streamlining] … as opposed to previous years, which included a combination of overall downsizing as well as becoming more efficient.”
While Mangum emphasized that the cuts by colleges “are being driven by the Administrative Streamlining Program,” some individual colleges and departments have been hit hard by reductions in the last few years.
The Department of Theatre, Film and Dance, for instance, lost at least 11 staffers after being told to cut its budget by around $1 million, producing a maelstrom of discontent from the department’s professors and students.
Similarly, cuts to the Department of Mathematics, the elimination of Department of Education and the administrative transfer of the Africana Studies and Research Center into the College of Arts and Sciences — all cited as necessary to meet new financial obligations — have produced dissent across the campus.
Citing fiscal restraints, the University has also ceased funding for, among other offerings, courses in emergency medical services, the Knight Visual Resources Facility, the Physical Sciences Library and the English for Academic Purposes program, which provided writing seminars for non-native speakers.
Yet Mangum defended the outcome of the last few years, saying that Cornell had managed to maintain its offerings while other colleges cut back.
“It feels very painful, but we’re relatively well positioned,” she said. “I think this campus is managing its reductions in the higher education community very well.”
Mangum did recognize, however, that the ASP cuts have fallen hard on the University’s support staff. The University cut the size of its 7,000-member support staff by about 700, or about 10 percent, over the 2009 Fiscal Year.
“People felt like it put a lot more work on their plates, but the challenge of changing your organizational structure when you remove support staff is to change the way that they work,” Mangum said. Mangum added that there were no plans to increase the number of support staff members.
Fragile Economy Imperils Recovery
While much of Cornell’s finances appear to have stabilized, the future of an integral component of its revenue stream — government appropriations — looks increasingly bleak. Nearly half of the reduction in the University’s 2012 budget is due to a 9.3 percent, or $12.6 million, state cut to the contract colleges.
Over the last four years, state funding for the State University of New York higher education system has seen its budget slashed by about 30 percent — a reduction that been state’s funding for Cornell’s four statutory colleges by a comparable amount, according to Charles Kruzansky, the director of Cornell’s government affairs office.
“It is painful, and it is significant in the context of the several years of the state’s fiscal problem,” Mangum said in a June press release.
The College of Agriculture and Life Sciences, a contract college, has been particularly hard hit by the state funding reductions.
Mangum added that an uncertain market could cause additional havoc on the University’s budget plans.