While financially sound, Princeton rethinks spending
Thursday, November 13, 2008
BY LISA RICH
PRINCETON BOROUGH — The shaky economy has prompted Princeton University to re-examine its long-term spending plans, including the timing and scope of several construction initiatives. Less money may be spent on raises, the school said.
University officials this week released a statement about spending changes in light of the economic downturn, including plans to adjust the 10-year, $4 billion capital plan.
“Certainly we are not immune,” said university spokeswoman Cass Cliatt, referring to the national and global economic crisis. “But at the same time, Princeton’s economic planning and strategy over the past decade has helped protect us in some respects.”
Cliatt said there has been no determination about which construction projects will be rescaled or delayed.
“That’s something we’re assessing right now and we have to look at a variety of factors,” she said. “Of course, the projects already in progress would have priority to continue. It’s the projects on the horizon that will be assessed.”
That could put a question mark over one major project — the initial building in the arts and transit neighborhood — that was announced by planners in September.
The project would comprise a large performing arts building with reflecting pool and two extensions that would “embrace” the community in front of Forbes College.
“There have been no decisions yet,” Cliatt said.
In Ewing, at The College of New Jersey, the financial crisis is on the university’s mind, but school officials do not plan anything in the near future.
“We have all been reading and hearing about the national and international liquidity crisis. Fortunately, to this point, The College of New Jersey has not seen significant impact from this recent turmoil,” President R. Barbara Gitenstein recently told the university board, a university spokesman said yesterday.
“In addition,” the president said, “by refinancing variable rate bonds to fixed rate bonds this past spring, we have avoided disruptions and higher costs in our long-term debt. In sum, please rest assured that the college remains financially sound and fully capable of meeting its operational and financial obligations — short term and long term.”
Officials at Rider University did not respond by deadline yesterday to questions about any spending changes because of the economy and its effects on the school.
Princeton’s response to the economy mirrors what some other top-flight schools also have considered.
Earlier this month, officials at Harvard University announced they are bracing for spending cuts in the anticipation that federal grants will be harder for students to obtain.
Both Ivy League schools plan to pump more funding into student financial assistance, with Princeton’s Office of Financial Aid estimating it will spend an extra $3 million or $4 million toward helping students cover tuition expenses.
“We recognize that our students will be experiencing greater need as a result of the circumstances in which they and their families find themselves because of current economic conditions,” stated Provost Christopher Eisgruber, “and we will be stepping up to meet that need.”
Eisgruber and other officials such as President Shirley Tilghman first revealed the budget adjustments at two forums earlier this month in front of the Council of the Princeton University Community, according to Cliatt.
There, Tilghman said she instructed the Office of Financial Aid to ensure every student request for financial assistance is met, and to see that no student leaves Princeton because of the inability to pay tuition.
The university, however, will not change its five-year, $1.75 billion fundraising campaign launched last year, Cliatt said.
A separate initiative known as the bridge-year program, to be funded through financial aid, also is not expected to change, she said.
The bridge-year program provides funding for a year of enrichment experience abroad for students admitted to Princeton but have not started their freshman year.
In terms of financial stability, “Princeton is incredibly financially healthy,” stated Carolyn Ainslie, the university’s treasurer and vice president of finance.
Part of that analysis is based on the university’s endowment performance. This year, the endowment accounts for 48 percent of the operating budget income. At the end of the last fiscal year in June 2008, the endowment was at $16.4 billion, she said. While the endowment has climbed sharply in the past two years ending in June, the recent market slide has taken a bite out of those returns, university officials said late last month.
The efforts at Princeton and Harvard mirror what’s happening elsewhere in the country. Dartmouth College is looking at reductions in spending after its endowment lost $220 million.
“These are hard times,” Eisgruber stated. “No institution, including this one, can be entirely insulated. We are in the process of looking at our budgets and our operations to find the right ways to adjust for what we are seeing.”
In addition to construction delays at Princeton, the pool for merit salary boosts will likely get smaller.
“We do not expect at this time that it’ll have any impact on the way we approach staffing,” Cliatt said. “Effectively, this will affect raises.”
Contact Lisa Rich at firstname.lastname@example.org or (609) 989-5692. Staff writer Kevin Shea and the Associated Press contributed to this report.