How Schools are Handling Recent Budget Cuts

by Vault Education Editors | May 06, 2009

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Bloombergannounced today that Dartmouth College would lay off 60 employees anddecrease hours for many more as part of a 10 percent cut ($72 million)in its annual budget. The school is making these and other cuts afterits endowment suffered an 18 percent loss (about $700 million) over thepast year.

What does this mean for students?

In an effort to close the gap in their budget,Dartmouth will follow the growing group of elite schools raising theirtuition. It will raise its tuition 4.8 percent, which is more thanPrinceton University's tuition increase (2.9 percent) and about on parwith Cornell University's. Although Dartmouth has no plans to fire anytenure or tenure-track professors, Dartmouth's layoffs will force theuniversity will cut 30 to 35 classes. Dartmouth will also be haltingany on-campus construction. And at a school where facilities andhousing were already at maximum capacity, that "pause" will cause afurther crunch. Luckily, study abroad continues to be a popular option(students from across the country are studying abroad in the samenumbers as last year) and the university's D Plan helps cycle studentsoff campus.

Falling in line

Dartmouth isn't the only top school to be hit hardby the recession. Harvard, now famously, lost 22 percent of itsendowment in four months of 2008, and expects that its total losses forthe 2008 fiscal year will be around 30 percent. Yale University alsosuffered huge losses, as its endowment dropped 25 percent. Most schoolshave scaled back any hiring searches tremendously, and many, includingYale, have imposed salary caps and freezes. Like Dartmouth, almost alltop schools have also "paused" any construction or allocation of newfacilities.

Academically, schools are trying to change as little as they can. However, that isn't always possible. Last week, The Brown Daily Heraldreported that Brown's graduate school would bear the brunt of theuniversity's plan to "reduce expenditures, constrain expansion andlimit major new obligations." The graduate school was a large part ofBrown University's 2001 Plan for Academic Enrichment, and any expansionor growth has been indefinitely postponed. Luckily, the graduateschool's humanities department received a $3 million endowmentgrant--good news in an otherwise dismal season. On the other side ofthe country, The Daily Californianreported that the University of California system is making cuts to itsart departments on all its campuses, which will lead to fewer studentperformances and exhibits.

On the nonacademic side, the Harvard ManagementCompany, which manages its endowment's investments, etc., alsoannounced today that it would be laying off 25 percent of its staff.And the Stanford Graduate School of Businessannounced in January that it is including layoffs (of about 49 peoplein total) as part of its efforts to cut its annual budget by 10percent. Luckily, the GSB has been able to make budget cuts withoutaffecting its "academic priorities," such as "student programs, the newMBA curriculum introduced in 2007, financial aid, the Sloan Master'sProgram, faculty research and the school's PhD program."

Harvard University's student newspaper, The Crimson, has created a tableto track top universities' efforts to cope with their significant lossin endowments. It is still to be seen how successful schools will be atprotecting their "academic priorities" moving forward.

Filed Under: Education

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