Cornell to Slash Budgets for Ithaca, Medical College
January 26, 2009
By Janet Frankston Lorin - Bloomberg
Cornell University will slash its annual budget by 5 percent at the main campus and 8 percent at the medical college because of reduced state funding, endowment losses and a drop in donations.
David J. Skorton, president of Cornell, outlined the cuts for fiscal 2010 in a posting yesterday on Cornell’s Web site. The main campus is in Ithaca, New York, and Weill Cornell Medical College is in New York City. The reductions will save $50 million in Ithaca and $13 million at the medical school, according to the statement.
Cornell follows other selective schools that have announced budget cuts, workforce reductions and tuition increases to combat falling endowments. In a report this month, Moody’s Investors Service, the New York-based debt-rating company, called the outlook “negative” for credit conditions in higher education.
“Prompt correction is necessary to confront a persistent negative financial outlook sweeping the entire higher education sector,” Skorton said in Cornell’s Web posting.
Princeton University announced today a 2.9 percent tuition increase, its lowest since 1966. The Stanford Graduate School of Business, near Palo Alto, California, earlier this month fired 49 staff members, or about 12 percent of its non-faculty workforce, anticipating endowment declines. Dartmouth College on Jan. 22 said it would reduce spending by 8.6 percent after its endowment dropped 18 percent. Cornell’s endowment dropped 27 percent in July through December, after being valued at $5.39 billion on June 30.
New York University today announced its endowment fell 19.6 percent from June 30 to Dec. 31 to just over $2 billion. Its endowment had been valued at $2.16 billion as of June 30.
While the school has not canceled faculty searches or capital projects, it doesn’t expect fundraising to be as robust as in recent years and won’t increase salaries, president John Sexton said in a letter to the community. The school also is developing contingency plans in case of a budget shortfall.
“Thanks to the measures that were taken before the economic crisis struck, NYU’s budget is sound, but we cannot be complacent,” Sexton said. At Cornell, an additional 5 percent “correction” to its budget will take effect by July 2010, reflecting “organizational efficiencies and revenue enhancements,” Skorton said. Salary increases for faculty and nonunion staff are being suspended, he said. The school will draw on $150 million in reserves “over the next two fiscal years” to bolster cash flow, he said.
Tuition will rise 4 percent at endowed Cornell colleges, the lowest percentage increase at the school in 43 years, and 7.2 percent at others, Cornell said. A pause in campus construction, disclosed in October, will be extended through June, according to the statement. Skorton said he volunteered to cut his pay 10 percent.
About 20,000 students attend Cornell, a private university with 14 undergraduate and graduate schools, including colleges of arts and science, engineering, law and architecture.
Ten Cornell schools are privately endowed and four others are state supported, including units for agriculture and veterinary medicine.
To contact the reporter on this story: Janet Frankston Lorin in New York firstname.lastname@example.org.