In an e-mail to the Washington University community, Chancellor Mark Wrighton announced on Wednesday morning that the value of the University’s endowment has declined approximately 25 percent since July.
Wrighton proposed several cost-cutting measures in response to the downturn.
“With the decline in the value of our endowment, coupled with leveling of research support, constraint on the rate of tuition growth, uncertain prospects for philanthropic support, pressures on health care costs, and the prospect of increased needs for financial aid, we must take some actions to assure that our University remains strong into the future,” Wrighton wrote. “We will constrain the growth of administrative expenses, compensation expenses, and commitments to new building projects.”
No decrease in financial aid
The e-mail did not mention any cuts to financial aid services. Henry Webber, executive vice chancellor of administration, said that the University does not plan to reduce the amount of financial aid given to students.
“I can assure you that the University absolutely expects to continue to provide excellent financial aid services,” he said. “The process that we’re talking about is designed to look at the process of financial aid, not the amount.”
Furthermore, Wrighton said that the University is actually trying to increase financial aid in light of the market’s downturn.
“We anticipate we will expend more for financial aid in the next academic year than this year,” Wrighton told Student Life. “We expect our endowments to support our current students and recruit another crop next year.”
Student Union President Brittany Perez expressed satisfaction in seeing the University stand by its financial aid commitments. Perez said that the administration should make sure to keep the University accessible to students regardless of economic status.
“Wash. U. has been doing a good job of supporting families who would not otherwise afford to send their kids here,” she said. “I would like to see bigger financial aid packages be available to more students so they’re not limiting the applicant pool.”
Construction delays may come
Wrighton, however, announced plans to “scale back, eliminate, or delay capital projects.”
Although some initiatives will be delayed, Webber said that others would continue as planned, particularly those expected to save money for the University.
“Sustainability planning will continue,” Webber noted. “Using our energy resources very efficiently is even more important than it was before this, ensuring that we can be as efficient as we possibly can be on the capital projects side.”
Wrighton’s e-mail stated that the current renovation of Wohl Center on the South 40 will be “slowed,” although he did not specify how. Wrighton also announced that the planned $20 million expansion of Mallinckrodt Center has been postponed indefinitely.
Dean of Students Justin Carroll explained that the South 40’s long-term construction would be delayed, but that the first stage of the Wohl Center’s new building, which will include kitchens, a dining space and residences, would be completed on schedule. He also stated, however, that much in the way of construction remains uncertain.
“At this point we’re still planning to finish Wohl on the timeline we’ve originally mapped out,” Carroll said. “There’s not been any specific decision made. It makes sense in this environment to be thoughtful how we move ahead.”
In contrast, the Chancellor proposed no change to the scheduled completion dates of the BJC Institute of Health and the new engineering complex, which are expected to open in late 2009 and the summer of 2010, respectively.
Perez praised the administration for staying on schedule with those two buildings, and said that although these delays may seem inconvenient, this development demonstrates the complexity involved in planning construction.
“Students may feel like Wash. U. keeps building buildings and adding residences to campus, which is very costly, and students often don’t understand where that money comes from,” she said.
Wrighton cuts own salary
Wrighton proposed a reduction in his salary by almost 10 percent over the next year—a 5 percent cut as of Jan. 1, 2009 and another 5 percent cut effective July 1, 2009. In 2006, Wrighton received $490,500 in direct compensation, in addition to contributions to his benefit plan and an expense account, according to the latest available copy of the University’s public tax return.
The school deans and vice chancellors also volunteered to freeze their salaries in the coming year.
Despite proposing to cut his own salary, the chancellor did not call for a hiring freeze or a total freeze on faculty compensation. Wrighton cited the need “to attract and retain key members of the faculty and staff and to provide financial resources to do so when needed.”
“The deans of schools will be responsible for overseeing administration,” said Wrighton. “The deans will be reviewing their budgets and their programs, and the charge to the deans is to make sure that they can have the programs within the financial constraints that they are working with.”
Webber added, however, that several of his employees have offered to take pay freezes.
“Administrative salary increases will certainly be smaller than they were in recent years,” Webber said. “I’ve received several e-mails from members of my staff who volunteered to freeze their salaries. I do not envision, at this time, a salary freeze for everyone. Our hope is to protect our lower-paid employees.”
In the e-mail, Wrighton also announced the need “to continue our progress in improving gender balance and building greater representation of members of minority groups.”
In addition, the e-mail stated the University plans to employ a stricter process for hiring within the administration in non-academic areas, what Webber called a “belt-tightening measure.” He said that the process would be expanded, and crucial positions would still be filled.
“One of the things we have to do is reduce our administrative costs,” he said. “Undoubtedly there will be positions that we would like to fill that we don’t. We will fill essential positions. That’s what a cutback means: things you would like to do but can’t do.”
Rob Wild, assistant to the chancellor, said that the administration does not plan to initiate a hiring freeze, as the University of Missouri System has done in response to a similar endowment decline. Webber added that even so, developments may move at a slower pace.
“I do imagine that as a result of this it may take a bit longer for certain kinds of repairs to be made,” Webber said. “That means working smarter.”
With additional reporting by Eliza Adelson
--"Elite" Lecturer, WashU, 1999-2007
--"Rank and File" Contract Adjunct Lecturer, five local colleges, 2001-2009 [and beyond?]
--Technically still unemployed, with COBRA health insurance "benefits" about to run out
--In the same boat with the rest of you!
Then if he takes an additional 5% pay cut (based off his new salary of $475,000), he will be making $451,250.
Now, let's see what that means as a total pay cut: ($451,250/$500,000)*100 = 90.25%Oh what a cunning, cunning man he is. Are we supposed to take his motives as noble when he stakes a claim that he is taking a 10% pay cut... when he is actually only taking a 9.75% pay cut!!!!!-Z