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Hard Times at Rockefeller U
3 December 2008 4:42 pm
Rockefeller University President Paul Nurse has joined the growing line of research institution heads who've been forced to deliver bad news to faculty and staff in the wake of the financial meltdown. Today, an email he wrote to university staff, obtained by ScienceInsider, described a 15% decline in the endowment since July. This will necessitate delays in planned renovations and possibly a reduction in administrative positions. But he said that for now there's no plan to put a brake on faculty recruitment:
We will not make any peremptory decisions, nor will we take actions that might impact negatively on Rockefeller research in the long term. However, it is clear that our expenditure needs to be contained, and then reduced, if we are to succeed in balancing the budget in the years after 2010. Briefly, the endowment, from which we receive roughly one third of our operational funding, lost around 15% of its value between July 1 and October 30.
Full letter after the jump.
From: Paul Nurse
Sent: Wednesday, December 03, 2008 at 3:15 PM
Subject: University Finances
The Rockefeller University and the World Financial Crisis
The financial turbulence of recent weeks shows no sign as yet of abating. It is now anticipated that volatility in the markets may continue for some time, and that the influence of the downturn in the nation’s finances will persist, possibly for a number of years. In common with other scientific research and educational institutions, Rockefeller cannot escape the effects of these dramatic developments.
We can, however, start to make contingency plans so as to prepare ourselves for the difficulties that might lie ahead. In response to this situation, Rockefeller’s administrators and trustees have begun a review of the economic assumptions and models that drive the budget planning process. The short-term cash flow problems that developed earlier this fall have been resolved, but longer-term budget issues will remain as proceeds from the endowment fall along with the decline of the stock market, and revenue from federal grants and private donations become less reliable.
The forthcoming issue of Benchmarks will contain a detailed account of the recent financial history of the University and of the anticipated consequences of the current financial downturn. I wanted to write to you now, however, to let you know our immediate plans.
We will not make any peremptory decisions, nor will we take actions that might impact negatively on Rockefeller research in the long term. However, it is clear that our expenditure needs to be contained, and then reduced, if we are to succeed in balancing the budget in the years after 2010. Briefly, the endowment, from which we receive roughly one third of our operational funding, lost around 15% of its value between July 1 and October 30. The system of determining the level of spending from the endowment income takes into account fluctuations so that a longer period of time is used to gauge the impact of stock market changes. This means that the effects on the spending are less dramatic than they might be, but they are longer-lasting. We do not, of course, know what the months ahead will hold in terms of further stock market falls. We can anticipate that the effect on federal funding and private grants will be significant – affecting a further third of our income. The last third relies on charitable donations; this income is likely to be influenced by the market changes, but to what extent we do not yet know.
Much therefore remains to be determined over the coming months. The officers of the University will be meeting for two day-long sessions, the first in December and the second in February, to analyze the impact of the financial situation on our budget planning and to re-work, if necessary, the budgets for 2010 and beyond. We will formulate a plan for the coming financial year, when we hope to have a balanced budget, and a series of longer-term plans based on various cost reduction scenarios.
In the immediate future a review group will assess all vacant administrative positions to determine whether they are essential to operations. If they are not, the vacancies will not be filled. We will discuss the level of future salary increases. Annual salary increases have averaged three to four percent in the recent past; a range of options will now be under consideration, including providing a smaller than usual increase.
Every effort will be made to preserve the current lab funding formula, which has been in place over the last several years. We will, however, look critically at the costs of providing bridging funding to labs whose grants have not been approved, and at the cost of special projects and start-ups. Fees and charge backs for resource centers will also be assessed.
We may be able to defer maintenance on some of our buildings, without causing great inconvenience to the occupants. We will defer the planned renovation of Welch Hall until we have secured the necessary funding for this, over and above the money still required to complete the CRC and CBC. These two construction projects, which are essential for our research program and recruitment, will proceed to completion.
The recruitment of new faculty will continue. This provides the lifeblood of the University and it is possible that the financial downturn will even work to our advantage, if other scientific research institutions find themselves unable to recruit at this difficult time. We will, however, examine carefully the costs of hiring while we make decisions on recruitment.
All of us can participate in finding ways to save costs. It is important that we all play our part in saving energy, reducing waste, resisting the purchase of items that are not essential to our operations, and thinking carefully about what we can do to help this institution stay on course.
I will be holding a town hall meeting early in 2009 and will welcome discussion of these matters. Please refer to the next issue of Benchmarks for further background on the present situation and more detail of our plans for facing these challenges.