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Declines in returns on its endowment, in gifts and research funding all has Stanford University preparing for a 10 percent budget cut in 2009 and an additional 5 percent in 2010, according to Provost John Etchemendy.
Etchemendy, speaking to the university’s news service, said that layoffs are inevitable and will be done on a school-by-school, department-by-department basis. Even if the university froze its salaries, it wouldn’t save enough to avoid layoffs, he said.
Etchemendy, President John Hennessy and other members of the university cabinet took voluntary 10 percent pay cuts last month in response to the university’s budget situation. Schools and departments have been instructed to prepare budgets with 5 percent, 7 percent and 10 percent budget cut scenarios.
The university will cut its $800 billion general fund budget by $100 million in the next two years.
The university expects a 20-30 percent decline in its $17.2 billion endowment, which would be unprecedented. Etchemendy said there have been declines in its endowment in only eight of the last 45 years dating back to 1964, with the largest decline being 8 percent in 1974.
“Combine this with the steady decline in federal research funding, a decline in gift dollars and an increase in financial need on the part of our students, and the result is an unprecedented decline in the university’s expected revenue,” Etchemendy said.
The university is also cutting expenses with some departments canceling attendance at conferences completely. Faculty and staff will no longer be able to fly to Europe on business class to attend conferences.
Final budget decisions are expected in March, Etchemendy said.
The university has increased its financial package for employees who will be laid off, Etchemendy also announced. Under the enhanced plan, employees who are laid off will receive 60-day notices, during which they are not expected to work. After that, they will get another month’s salary in a lump sum, plus the severance pay, based on length of service, they would normally receive. For longer-term employees, the total package could be 14 months of pay plus accrued vacation. And employees will also receive five months of support in looking for a new job through an outplacement service.
Read the Stanford Report Q&A with Provost John Etchemendy.
Oh my! Stanford faculty traveling to Europe to attend conferences won’t be able to fly Business Class? I say we put together a fund to help cover their costs so they don’t have to sit with the rest of us.
Not.
I think you mean that Stanford is expecting a 20-30% decline in the TOTAL value of its endowment, not a 20-30% decline in earnings from its endowment. The latter would not be such a big deal.
To Chris;
You are correct. Etchemendy said Stanford expects the endowment to be down 20-30 percent by next Sept. 1.
$800 Billion general fund budget???
Brandeis asked its faculty and senior administrators to volunteer to take a 1% paycut. Couldn’t Stanford mandate a larger cut, and/or reduce working hours, rather than lay people off??
Maybe Stanford should consider bringing some top-notch managerial talent on board – Like Robt Nardelli, the man who took a $20 million bonus for destroying what was good about Home Depot, then went to Chrysler and helped preside over their demise while taking flying around the country on his private jet? Or what about the guy who took $12 million for running WAMU for three weeks?
(With people like him running our corporations, BabyBush and Cheney in charge of the government for eight years, with Donald Trump and Paris Hilton as cultural heroes, and a whole generation of kids who would rather test-message instead of read, who ledarn about current events fromJay Leno, and who meet imaginary “friends” on Facebook,
I suspect we are wtnessing the final decline of our once-proud civilization.)
Oh dear they will only have 12 to 13 BILLION dollars left in their endowment.
Call the paramedics, I’m about to faint!
Why is it that seemingly everybody from individuals to corporations to universities like Stanford is reacting the same sensible way to the budget crisis: cut expenses, lay off people and try to live within new lower means? Everybody except that is governments and their unrealistic employee unions?
CALPERS has also lost 30% + of it’s endowment…but Palo ALto still is promising the same outlandish retire-at-55 packages to its “hard working” workers. We’re just going to pay more (they say 5% of payroll) into the pension fund to make up the difference. Layoffs here? Haven’t heard about it, even though we’re staffed at twice the ratio of employees to workers as other towns. In fact only in Palo Alto is it business as usual it would seem. Every place else seems to adapt to changing circumstances.
How long will it be before this catches up with us and we’re bankrupt like Vallejo?
Let me see – The President of Stanford takes a 10 per cent pay cut and still gets paid over $600,000. The doctors at Stanford make somewhere between $200,000 – $400,000 each depending on a combination of salary and bonus payments. They are not taking a cut. The ones who are again shouldering the brunt are those loyal staff members who work hard and make about $35,000 a year. It teaches the Stanford students only one thing….get rid of anyone who really needs a job and take token pay cuts and make a big noise about it. These guys Hennessy made their zillions in the tech industry and they don’t even need their current salary. The only way for them to show to the university they care is do what others do – Take a $1.00 a year salary until they figure out a way to be more kind and warm hearted than they are. In short, the people who run Stanford hate Americans.