Chairs ponder long-term effects of budget shortfall

FILE PHOTO JUGGLING ACT: Provost Alison Richard is struggling to assemble a budget despite computer problems and the strict spending rule.

Provost Alison Richard has yet another balancing act on her hands.

Richard will not have a budget ready for the Yale Corporation meeting this weekend and will be juggling numbers until the Corporation's meeting this June. A drop in the endowment's performance this year, coupled with Yale's strict adherence to its endowment spending role, led to a shortfall of $5 million in the budget, while complications with Yale's new computer system (Project X) compounded Richard's problem. Despite these fiscal difficulties, she remains confident. "We will get to a balanced budget--we always do," she said, "The numbers all settle down."

Why can't Yale make up the difference by dipping further than usual into its $6.6 billion-dollar endowment this year? Several years ago, Yale economists created "the spending rule," which bases Yale's endowment spending on the performance of investments, the previous year's spending, and inflation. The policy is designed to regulate endowment spending so that in lean years, the budget will not undergo a huge decline. Nobel prize winning economist James Tobin, one of the creators of Yale's spending rule, said the rule helps to "protect the students of the future," ensuring that the endowment will be there for their education.

According to the Provost, the budgetary problems this year relate not to the spending rule, but to difficulties with switching computer systems. "Most of what is making this year difficult is going from one chart of accounts to another chart of accounts," Richard explained. "We're changing the account system to a different way of representing and compiling budgetary information. It's an added burden...but it's no more of an issue than in every other year."

University President Richard Levin,
GRD '74, echoed the Provost's sentiments, but conceded that "[Yale] may need to refrain from certain hoped-for increases in order to balance the budget for 1999-2000." That said, Leving made it clear that enhancements to student services and to graduate student financial aid that have been announced will be implemented.

While the $5 million shortfall this year this year is not huge, some departments, most notably the science departments, have concerns about the impact of fiscal tightening on their long-term expansion plans. Graduate Dean of Engineering Richard Barker, TC '50, GRD '55, said that funding for construction of new engineering facilities depends on increases in investment performance of the endowment. He pointed out that should the dollar value of the endowment fall, "We may have to quickly haul in some of the commitments that we have in progress for building buildings so that we do not overstep our financial capabilities."

Historically, the engineering program has had to compete for space with other expanding programs. During the period from 1960 to 1980, it was pulled out of Hammond Laboratory and lost almost all of its space in Dunham Laboratory. Now the spectre of a tight budget may again threaten the engineering department's growth.

"We're running out of space," Barker said. "We want to make new [faculty] appointments, but we have nowhere to put them." Barker is equally concerned that a downturn may affect the program's ability to both attract and retain quality faculty. "We have brought people in here with the understanding that we're doing better. We bring them into an environment where there are not piles of money, but piles of plans for spending money," he said. "If we no longer have confidence that any of those plans are going forward, or if word gets around that Yale isn't doing so well...it will significantly impact faculty hiring and retention of faculty."

Molecular Biophysics and Biochemistry (MB&B) Chair Joan Steitz worried that fiscal tightening will make it difficult to hire new faculty and even to meet the expenses of running the MB&B de-partment's large, active research projects institute. "More faculty will have to spend more time negotiating for funds to fix equipment than is necessary, resulting in wasted time," she said. Chemistry Chair Donald Crothers,
JE '58, said that his department was also concerned with the maintenance of laboratory equipment.

History Chair Robin Winks said that his department likewise could benefit from increased funding. He believes that his department is already pared down to its "bare bones." He was most concerned that "cuts should not be made in the purchasing budget for the University Library, which is already pared back more than it should be."

Departments that have received the Administration's go-ahead to expand are sure that the University will provide them with the necessary funds. Political Science Chair Ian Shapiro, GRD '83, LAW '87, stated, "We will be able to expand; we have been given what we need for replacing and hiring faculty."

Steitz also speculated that this year's moderate fiscal tightening could affect the University's ability to implement its new faculty diversity plan--especially the aspect of the plan that allocates new resources to departments and fields with very few women. "I'm concerned that the new resources the president recently announced to increase diversity of the faculty may be impacted," he said.

Other Yale administrators, including director of the project management division in the Yale Office of Facilities Arch Currie and Athletic Director Tom Beckett, remained confident that their future plans would not be compromised. Beckett said of the immediate future, "Five million dollars is really not a significant amount of money, when compared with the total Yale budget."

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