March 3, 2010

Envisioning Cornell 2.0

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When what Paul Krug­man termed “the second worst financial crisis in the history of the world” loomed over the hills in late 2008, Cornell was caught by surprise. Within three months, Cornell watched its endowment plummet by 27 percent in value, a tremendous sudden drop that forced the University to scramble to its feet for cash after nearly a decade of expansion.In March 2009, $500 million worth of bonds were sold, and a series of controversial budget cuts followed that spring. In June, Cornell joined peer institutions such as Yale, UNC and U.C. Berkeley to launch a comprehensive self-examination effort led by Provost Kent Fuchs, known as “Reimagining Cornell”. 20 task forces, along with help from Bain & Co., an outside private consulting company, set out to evaluate Cornell’s infrastructure and trim Cornell into a leaner institution with a significantly reduced operating budget, while still competing with its peers to maintain its reputation and climb up in rankings.

This is not the first time Cornell had to deal with dramatic budget cuts. In 1933, Cornell suffered a salary cut of 10 percent for its endowed colleges as well as a 20 percent cut in allotments for instructors and assistants. During the 1949-1950 fiscal year, the overall budget was reduced by more than 10 percent to remove Cornell’s deficit at the time –– salaries were reduced, projects were postponed, maintainence was delayed and retired faculty members were not replaced. By the next year, Cornell’s budget showed a surplus and the morale was boosted again, according to Corey Earle ’07, associate director of student programs at the Office of Alumni Affairs.

However, the current situation towers over all of Cornell’s previous financial problems, and a large structural overhaul will be inevitable for Cornell to emerge from the recession with a manageable balance sheet and without drastically compromising education and research.

The Reimagining Cornell team is attempting to turn this financial wreck into a blessing in disguise. Since a large infrastructural overhaul will be required for Cornell to remain fiscally solvent until the economy recovers, Fuchs’ team is taking this opportunity to look into the future, reevaluate Cornell’s priorities and transform Cornell into a leaner, stronger institution.

A plan, entitled “Cornell University at Its Sesquicentennial: A Strategic Plan for Excellence,” lists five long-term goals for the University concentrated in five main areas: educational excellence, excellence in research scholarship and creativity, excellence in public engagement, faculty excellence and staff excellence.

The intention of the Strategic Plan and SPAC is to develop goals and aspirations for the next five to 10 years, and recommend actions for achieving them. “The Plan is intended to be a forward looking aspirational document,” said Lawler, the chair of the committee that drafted the plan.

“Cornell students will be able to take full advantage of the educational breadth and diversity Cornell offers, find it easier to cross college or program boundaries and have more opportunities to engage the world as part of their education. Moreover, the excellence of teaching, currently experienced by students, will grow even stronger,” Lawler continued.

However, “reimagining” an insti­tution the size of Cornell is a tremendous task –– many unpleasant decisions will have to be made, and sensitive discussions will take place.

“We all have learned that we have to be realistic about the rate of growth in our revenues,” said Kent Fuchs. “One of my biggest concerns is that we will reduce the size of our faculty, which will impact the reputation of Cornell.”

In the College of Arts and Sciences, for example, administrative costs only account for 10 percent of the operating budget, so cutting the budget by 15 percent would impact research and education even if all of the administrative staff is laid off. After reading the preliminary reports, Dean Peter Lepage of arts and aciences was pleasantly surprised by the potential size of non-academic savings, but is “concerned that we achieve the bulk of these non-academic savings.”

Currently, over 50 percent of the faculty is over 55 years old, and 30 percent of the faculty is over 60 years old. Many costly faculty positions could be eliminated in the next few years simply through attrition, but reducing the number of top notch faculty members will devastate Cornell’s reputation as a major research university. Instead, those behind the plan hope to improve recruitment and retention of faculty and bolster research programs, forcing the University to look harder at other areas for savings.

The question remains whether or not to maintain Ezra Cornell’s original vision to provide “any study” for “any person.”

“I believe we can’t just work harder, but we need to decide what we will stop doing, so we can focus on what is truly important,” said Fuchs. “As our budgets are reduced, I want us to also focus on what is important.”

Even though the official Strategic Plan has not been implemented yet, the University has already planned to closed down the Physical Sciences Library and eliminate the Dutch and Swedish language programs. At the Student Assembly meeting last week, Anne Kenney, the University librarian, explained her difficult assignment of having to weigh the costs and benefits of increasing library hours against maintaining a large collection of works.

Most recently, the Theatre, Film and Dance department was asked to consider reducing it’s budget by $1 million to $2 million, a potential nearly 50 percent reduction that is practically asking the department to “eliminate ourselves,” said John G. Hertzler, a resident professional teaching associate who will leave Cornell next year, along with many of the untenured faculty and staff members. While this drastic proposal aroused much controversy in the Cornell community, the administration still maintains that it is a prudent, albeit painful, decision made for the best.

“The basic problem is that scientific research is highly visible, highly expensive and has the promise to substantally improve human welfare,” said Prof. Ronald Ehrenberg, ILR. “Universities are ranked by their research funding, and the major research findings their faculty produce … This has led…the arts and humanities, and to some extent the social sciences to lose out in the internal competition for funds at universities, including Cornell,” he added.

“As we face tremendous financial pressures, including the continual withdrawal of state support for the contract colleges, we run the risk of losing what makes Cornell unique,” said Ehrenberg. “Contraction will be the general trend in public higher education –– state budget problems prevent them from financing their public higher education programs in the way that they should.”

One way to save money is to streamline the administration and view Cornell as a more centralized unit rather than a cluster of colleges and departments. The task force proposed to use a single budget model instead of the current standard of multiple budget systems. However, “how to [properly] reconcile the strengths of a highly decentralized structure with the need for more institutional or university-wide actions to deal with the challenges and opportunities of a changing environment” is still a challenging question up to debate, said Prof. Ed Lawler, ILR, chair of the Strategic Planning Advisory Council.

“I say [this proposed centralized structure] won’t affect students as much because it’s clear that cuts will be made regardless and this centralized model only changes who the responsibility for making cuts … would fall under,” said Rammy Salem ’10, president of the Student Assembly. Since a more centralized budgetary structure comes across may result in checks and balances issues, student-faculty alliances against controversial proposals may form in the years to come, Salem predicted.

Even though the budgetary structure seem irrelevant to the average Cornell student, the Reimagining Cornell project could seriously impact the holder of a Cornell degree. From a more selfish perspective, there is a large and positive correlation between school quality and future wages of its graduates, and a substantial amount of empirical evidence suggest that there is significant “causal effect of getting a degree from a highly ranked school”, said Prof. Michael Loveheim, PAM.

“Cornell isn’t just a four year expereince. We’re all Cornellians for life, and some students don’t realize that until a few years after graduation,” said Earle, the 13th person in his family to attend Cornell.

Although Lawler recognizes the immense complexity of the task before him, he is not discouraged. “These are dilemmas but they are not irreconcilable … all major research universities are dealing with the same basic set of problems … Some will deal with these better than others. Cornell is being proactive about them and that is particularly important.”

“The demand for a place like Cornell has only risen over time and will continue to do so as long as the returns to attending a school like this are high. We are in a temporary but deep financial hiccup, but the long-run trends regarding demand for high-skilled labor, which Cornell is good at producing, are very much in our favor,” said Lovenheim.

Original Author: Lucy Li