University salaries frozen University salaries frozen (March 07, 2003)

Layoffs expected later in year as Stanford faces $25 million deficit

by Bill D'Agostino

Attempting to lower the number of anticipated future layoffs, Stanford University officials announced last week that most of their nearly 11,000 employees will not receive raises this year.

The pay freeze for faculty and staff will save the university between $7 million and $8 million -- only around a third of the school's projected $25 million deficit -- so layoffs are still expected.

"But forgoing raises will minimize the need for such cuts," Provost John Etchemendy wrote in a Feb.26 letter to staff and faculty.

Raises have typically been given every year on Sept. 1 at Stanford, which has a $500 million general fund budget.

"In this economic climate it makes more sense to freeze salaries for a year rather than increasing layoffs, which is a bad thing for individuals that might be laid off but also puts more of a burden of work on people who remain," said Tim Warner, Stanford's vice provost for budget and auxiliaries management.

Etchemendy also announced that he and President John Hennessy, as well as other top university officials, have voluntarily cut their own salaries 5 percent. Warner had no details about how much would be saved by the action.

A few employees -- unionized staff with bargained salaries, for instance -- will not be affected, and neither will graduate students and post-docs. Also, employees could still get one-time bonuses for extraordinary merit and a few whose salaries are below market rate could still get raises.

The pay freeze is not expected to be continued the following budget year.

To deal with the remainder of 2003-2004's shortfall, departments have been asked to develop budgets with 5 to 10 percent reductions.

Stanford is projecting a 6 percent growth in expenses for the next fiscal year, but only a 2 percent increase in income.

University officials primarily blamed their budget woes on the state of the economy overall -- since income from investments has decreased dramatically. "That's the principal cause," Warner said.

Around $5 million in expenses has grown to rising student subsidies. The university has a "needs-blind" admission policy -- meaning a student's ability to pay is not considered when they apply -- so as the economy goes sour, the need to give incoming students more assistance increases.

Other factors included growing healthcare expenses, added costs from new construction and rising student subsidies.

A hiring freeze has been in effect at Stanford since October. Last year, the university cut $16.3 million.

Bill D'Agostino can be e-mailed at bdagostino@paweekly.com