Hiring freeze imposed on non-faculty members Hiring freeze imposed on non-faculty members (October 30, 2002)

Shortfall next year estimated at $20 million or more

by Don Kazak

Facing reduced investment income from a sluggish economy, Stanford University Provost John Etchemendy has announced a university-wide hiring freeze.

The university is looking at a 2003-04 budget deficit of $20 million to $25 million, and is aiming to cut its general fund by about 8 percent on average, Etchemendy said.

Stanford cut its budget by 5 percent for the current fiscal year, the first such cuts in almost a decade.

Academic departments and other budget units have been asked to come up with proposed budget cuts of 5 percent, 7.5 percent and 10 percent. "We'll then apply those (cuts) with discretion," Etchemendy said, with the average likely to be around 8 percent.

The freeze does not affect faculty positions, postdoctoral research students or student assistantships.

The university has a general fund budget of about $500 million, but that also includes fixed costs, like utilities.

The sagging economy has hit Stanford particularly hard in some of its investment income. One of its pool of investments, Etchemendy said, normally has a return of between 5 and 7 percent. This year, the return on that investment account was 0 percent. "That has a huge, immediate hit on the budget," he said.

Stanford has a regulated "payout" in income from its $8 billion endowment, but that is tightly regulated by the university's Board of Trustees and by a formula, so it doesn't vary much from year to year.

One aspect of the economic downtown which has also hurt Stanford financially is that it is forced to spend more money on financial aid. As the parents of its students have a tougher time making ends meet, Stanford, unlike most private universities, has a "need-blind" admissions policy, where students are accepted for enrollment regardless of their ability to pay. The university then uses a variety a financial-aid programs to help them cover the costs of tuition and room and board.

"Families are less able to pay a Stanford tuition, so our financial aid costs will go up," Etchemendy said.

The plan to cut next year's budget was announced at last week's Faculty Senate meeting. It gives academic departments and other budget units several months to plan for proposed cuts before final decisions are made next spring. The Board of Trustees adopts the next year's budget each May.

In a memo to his colleagues, Etchemendy explained the hiring freeze is "a cautionary measure so that we do not fill positions now that will have to be cut later this spring or summer. It is my hope that by exercising restraint we can absorb some of the impact of the current financial environment on the university as a whole."

As of last Friday, only senior university officers, including academic deans, vice presidents, vice provosts and other equivalent senior administrators are able to approve any hiring.

As of Nov. 30, any open positions not authorized for hiring by those senior academic officers and administrators will be eliminated.

E-mail Don Kazak at dkazak@paweekly.com This story was posted on PaloAltoOnline.com Monday morning.