Per the latest announcement from David Skorton, the University's financial situation -- just like the rest of the nation's economy -- will continue to be bleak. Fortunately, Cornell has a cushion of funding in its endowment that it can rely on in times like this. Unfortunately, Cornell's endowment has likely lost over thirty percent of its value in the past year. From Skorton: As I mentioned in my message to the campus on December 16, 2008, we are facing a 10 percent budget shortfall caused by a combination of reduced state funding, a structural deficit in our operating budget, the loss of 27 percent in our endowment over the past six months and a decline in philanthropic gifts. Prompt correction is necessary to confront a persistent negative financial outlook sweeping the entire higher education sector.Cornell's Board of Trustees yesterday voted unanimously to adopt a set of proposals to protect the strength and character of Cornell, while dealing with financial challenges that impact all aspects of the university's balance sheet. To be successful, the plan will require support, involvement and sacrifice from faculty, staff, students and alumni. Once completed, Cornell will be best positioned for future growth and competitive strength.
All told, the Trustees have approved a $185 MM draw from the endowment to support the University's revenue stream over the next year -- $150 MM for general purposes and $35 MM explicitly for financial aid.
Other highlights include:
-- A ten percent ("voluntary") reduction in Skorton's pay... exactly like we proposed two months ago.
-- A pay freeze for all employees, coupled with a smartly designed one-time bonus for staff making less than $40k a year.
-- Continued hiring and construction freeze on campus.
-- A tuition increase of 4 percent for the endowed schools, and a 7.2 percent increase for the contract schools. Notably, there is now no discount given to out-of-state students in the contract colleges.
-- A 5 percent ($50 MM) budget cut in general expenses out of the Ithaca campus and an 8 percent ($15 MM) budget cut in general expenses at Weill-Cornell.
All told, this amounts to reasonable and prudent action. And it doesn't amount to eating one's seed corn... yet. It will be interesting to see if the University will attempt to raise any revenues through a bond offering, as Harvard and Princeton have both done in recent weeks.
