Along with national increases in poverty and unemployment, the financial difficulties created by an economic downturn have made their way to The Hill.

The Board of Trustees met Oct. 31 and Nov. 1 to discuss measures to deal with recent trends.

Syracuse University’s endowment fell from $842.5 million to $674.4 million between 1999 and 2002. This is accompanied by higher costs of insurance and utilities, possible cuts in aid to private higher education from the state, and a fluctuating economy, said Nicole Brown of SU News Services.

If nothing is done, the current plan could lead to a projected deficit of $5 million in two years, she said.

John Hogan, director of budget and planning, generated a list of options to deal with the situation, although he commented, “I’m not sure plan is the right word right now.” Options include: cutting salary growth from 3.5 to three percent, salary and general cost freezes, deferral of planned construction and cost containment policies on SU’s base budget.

“We’re simply planning for the future, to be prepared in the event that things go bad,” Hogan said. “Hopefully that won’t be necessary.”

Chancellor Kenneth A. Shaw asked that the undergraduate tuition fee not increase at more than the expected six percent.

Shaw submitted his own three-step solution, which consisted of revising the five-year planning guidelines, finding sources to cover important budget requests and creating a full contingency plan in the event of an economic downturn. Also, no single year deficit should exceed $2 million, cumulative deficits should not exceed $5 million and the five-year budget should not leave SU in debt.

Some uncovered budget items include faculty development funds, increases in pay for part-time instructors, pay increases to make wages more competitive in terms of the overall market, increased support for graduate assistants and fellowships, increased library funding and additional financing for fund-raising programs. Decisions on these expenditures will occur at the end of December, Brown said.

In his address on Sept. 25, Shaw alluded to future economic problems.

“By 2003-2004, there will be $1.3 million less for our operating budget and $1.1 million less for the various restricted accounts, including school and college accounts and scholarships,” he said.

Cuts in the endowment should not affect scholarships since they are a planned expense billing with tuition. If enrollment declines due to problems with the economy, Hogan said that would affect most operating costs, such as maintenance, utilities and insurance, but not scholarships, student programs and tuition.

This will not disturb plans to renovate the lower Hookway Fields, because of the low operating costs and most of the funds coming from the athletic department, Brown said.

Some students worried the budget issues would affect tuition, scholarships and the quality of the university along with the deferred construction.

“I don’t want tuition to get any higher, because I have to pay for my fifth year,” said Amelia Setar, a freshman architecture major.

Other schools like Cornell and Duke are taking similar precautions. They are adopting hiring freezes, program changes and other measures to decrease costs. Duke University’s $700 million “Building on Excellence” plan is being reassessed in light of new economic challenges. Cornell University is dealing with the situation in a similar way to SU, Brown said.

“First of all, we’re not in any financial crisis,” said Carolyn Ainslie, vice president of planning and budgeting at Cornell. “I will tell you that our primary activities of teaching and research will be protected.”

Cornell will start by restructuring their administrative support staff, drawing on financial resources, and looking for new ways to generate revenue, said Ainslie. Cornell will not re-evaluate or defer construction, since mostly gifts to the university fund it. Scholarships should not be affected, either.

“What we’re trying to do is just make people aware that there is currently a projected deficit that we need to deal with,” Hogan said. “I’m hopeful that the Senate Budget Committee will find a way to solve the current projected budget deficit.”

Published on November 12, 2002 at 12:00 pm