By Greg Forester, Staff Writer
Princeton University has revised earlier budget projections and now expects to see a 30 percent decrease in the value of its endowment by June 30, according to an e-mail President Shirley Tilghman sent to the university community Monday.
The new projections — which state that an endowment that was valued at $16.3 billion in 2008 could fall to $11.4 billion — mean the university workforce “will have to contract in size” to accommodate future cuts in spending.
”The steady growth in faculty and staff that we have enjoyed over the last 10 years must end,” she wrote.
Also, the university does not expect things to improve during the 2010 fiscal year and will therefore revisit the 2010 budget that the board of trustees approved in January and institute long-term cuts for more savings.
”With the prospect of a 30 percent decline in value by June 30, 2009 followed by the likelihood that next year will see no rebound in earnings, we must begin detailed planning for that multi-year budget reduction process…” Ms Tilghman wrote.
In her e-mail, Ms. Tilghman mentioned the expansion of the group of faculty and staff members who will not receive a salary increase this year to all those making more than $75,000, resulting in $4 million in savings.
The expansion comes after employees informed the school they were willing to forgo their increases to prevent layoffs.
Because it will “take multiple years” for the school to make up the 30 percent endowment decrease, the school will have to expand reductions in spending to save the endowment for “future generations,” according to Ms. Tilghman.
The school plans on expanding its program of 5 percent cuts to departmental, nonpersonnel budgets and 8 percent cuts to each department’s endowment spending to the fiscal year after next. Those cuts stem from a university goal of $170 million in savings over the next two years that could be “difficult to achieve,” according to Ms. Tilghman.
Those cuts in this year’s budget mean $88 million in savings, or 6.8 percent of this year’s $1.3 million operating budget.
