March 7, 2009

Trustees Vote to Allow University to Take on Debt, Reduce Endowment Spending

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The Cornell Board of Trustees unanimously agreed this afternoon to allow the University incur up to a half-billion dollars in debt and scale back its endowment spending.

The Trustees authorized the University to sell up to $500 million in taxable bonds to provide working capital and institutional liquidity.

The University is also set to reduce spending from the endowment by 15 percent starting July 1, with further cuts planned for subsequent years.

“[The University] can’t keep taking the money out as if it were a larger endowment,” President David Skorton said in an interview Friday.

Provost Kent Fuchs said today that this 15 percent reduction in endowment spending means that there will be $35 million less funding available for units and departments of the University.

“In less challenging times, we might have avoided some of the difficult decisions that lie ahead,” Skorton said in a statement released to the Cornell community. “But a new reality is at hand for higher education as well as for the rest of our economy.”

These decisions are the last two pieces of Cornell’s plan to deal with an estimated $200 million budget shortfall, according to Skorton. The University has already cut the Fiscal Year 2010 Budget by $50 million and reallocated $75 million of unrestricted funds. Other initiatives to streamline the budget include a voluntary retirement program for certain staff members, which Vice President for Human Resources Mary Opperman introduced last week.

Skorton emphasized that while the University does face financial troubles, the Board of Trustees has remained steadfastly committed to its newly announced financial aid initiatives.