October 31, 2008

Skorton Responds to Budget Cuts

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President David Skorton outlined several measures the University will take to combat state budget cuts and revenue losses resulting from the Wall Street crisis in a e-mail sent to the Cornell community yesterday. Though the long-term effects of the current state of the economy will not be known for several years, actions will be taken immediately in anticipation of further cuts and continued losses.
“While we cannot be certain about the dimensions, depth and duration of the difficulty, we are confident Cornell is in a good position to adjust operations and budget to address a loss in revenue in the wake of the financial crisis, relying on the institutional expertise and commitment of faculty, staff, alumni, students and friends,” Skorton stated.
In order to locate areas in which funds and resources can be used more efficiently, the University is conducting a 45-day university-wide review of operation effectiveness, financial policies and procedures, with the intention of eventually streamlining operations and offsetting costs. Recommendations from the “rigorous” review will be incorporated in next year’s academic budget, the press release stated.
“As you know, we have been having to deal with the real cuts coming from the state as a result of the budget problems Albany is facing,” explained Tommy Bruce, vice president for University communications. “Cuts affect programs, and, in addition, what we are dealing is with a loss of revenue in the wake of the Wall Street situation.”
The measures outlined in Skorton’s statement, Bruce explained, are a preemptive measure that will allow the University to prepare for what is still to come.
“We are trying to do things that remove pressure down the road even if we are still waiting to see what the impact will be,” Bruce said. “We want to position Cornell to its best advantage so it remains a strong, vibrant, successful university in the long run.”
Effective this Monday, the University will institute a pause on non-professorial hiring from outside C.U. One reason for this — in addition to saving costs in the short term — is to “preserve employment opportunities for our high-performing employees who might be dislocated in the near term,” Skorton stated, referring to employees who may be laid off in the coming months. The hiring pause is set to last until March 31, 2009.
Though it appears likely that some employees will be laid off, Bruce underscored the University’s commitment to minimize any firings. “We are going to slow down our hiring such that we keep positions open, so it will generate savings this year in order to offset any pressure that might be on our human resources,” he said. “The president made very clear that we have no intention of addressing the challenges that the recent economic crisis has created by doing it ‘on the backs of our people.’”
In addition, construction projects in early phases will be put on a 90-day hold to allow administrators to reassess projects, determine how much of a priority they are and how they fit in the University budget. As such, all projects that do not have construction contracts will be postponed, those currently in the design phase will be allowed to complete the phase and then be put on hold, while those which have not yet progressed to the design stage will be reviewed before any further actions. Furthermore, physical infrastructure projects, information technology capital investment projects and local transportation and housing projects, which have not yet been initiated, will also be delayed.
Notably, though, development on Milstein Hall, which has been plagued with setbacks since planning began in 2001, will move forward. “Milstein has been deemed a high priority with the intention of going forward,” Bruce said.
When asked about whether the University sustainability efforts will be affected, Bruce asserted they would continue. “The statement doesn’t affect that initiative and the initiatives that have been undertaken by the University on the sustainability agenda. The issues we are looking at are what are our construction projects, how do they meet our priorities — which should go forward and which should be delayed,” he said.
Skorton signed the American College and University Presidents Climate Commitment in Feb. 2007, declaring his dedication to developing a plan to achieve carbon neutrality in terms of greenhouse gas admissions. Last year, the Board of Trustees approved a plan to make all building projects that exceed $5 million try to achieve Silver Leadership in Energy and Environmental Design standards.
Programs in the contact colleges, many of which receive direct funding from the state, will likely be hit harder by budget cuts. Still, Skorton highlighted the importance of approaching financial cutback from a unified perspective. In his State of the University Address on October 20, Skorton said, “In dealing with pressures of the moment and the near-term future, we need to approach our challenges as one institution.”
In spite of pressure from budget cuts, C.U. “will remain focused on the need to attract and retain the best and brightest students, faculty and staff,” Skorton stated in yesterday’s e-mail, noting specifically the commitment to move forward with the new financial aid initiative and maintain faculty and staff pay programs.
The ambitious financial aid program, which Bruce described as a “hallmark” of Skorton’s presidency, was announced last year, and is set to commence in the fall. It will eliminate need-based loans for all undergraduate students from families with income under $75,000. The initiative will cap annual need-based loans at $3,000 for undergraduate students from families with incomes between $75,000 and $120,000.
In order to secure funds to be able to move ahead with the new financial aid policy, the University may increase the portion devoted to financial aid in the capital campaign, Bruce explained. “Cornell needs to be strong on financial aid. It is not the time to back off,” he said.
For the time being, no plans to alter the timeframe or goals of the Capital Campaign are in the works. “Cornellians have been extraordinarily supportive of their alma mater through thick and thin. There is no doubt that we do expect a slowdown simply because of what has happened in the economic picture. It affects everybody. We do believe that once the market reestablishes itself and economy improves, we will be making our goals in the campaign. There is no indication we should back off,” he said.
Regarding tuition, Bruce acknowledged that “students and families are faced by these economic times,” but he said that with inflation, the price of tuition will likely go up. A tuition increase would be consistent with rising national college costs.
In addition to sending out a university-wide e-mail about the plan, C.U. hopes to engage the community by hosting public meetings in which members can give feedback and discuss plans. The first meeting will take place on Wednesday in Bailey Hall, followed by one on Thursday. In addition, people can submit ideas to an electronic “suggestion box,” available at www.cuinfo.cornell.edu.