UM President Shalala outlines grim budget outlook, plan for reducing costs
By Zachary S. Fagenson
A letter from University of Miami President Donna E. Shalala to the university community outlines a grim set of steps the administration is taking due to the economic crisis.
With a hiring freeze already in effect for all permanent and temporary faculty and staff, the university will forego salary increases during fiscal 2010, all schools and divisions will submit plans for a 5%-10% expense reduction and capital budgets have been frozen along with a handful of capital projects.
"Positions meeting crucial university needs are being filled," Ms. Shalala wrote. Any exceptions will require approval by the management committee of Executive Vice President Thomas J. LeBlanc and Senior Vice Presidents Joe Natoli and Pascal J. Goldschmidt, dean of the Miller School of Medicine.
Among capital projects to be shelved are the new Student Activities Center, the Miguel B. Fernandez Family Entrepreneurial Center, a Wellness-Center expansion, an ambulatory-care facility at the Miller School of Medicine and an expansion of the school's Sylvester Comprehensive Cancer Center.
Work on the Robert and Judi Prokop Newman Alumni Center, however, will move forward.
Smaller expenditures won't evade the scalpel, either
"We have already put in place programs to reduce spending on travel, maintenance, office supplies, printing, mailing, equipment upgrades, entertainment and special events," she wrote.
The stock market, which has eliminated trillions in investor wealth over the last few months, has placed the university's finances at the edge of an economic chasm.
"Our endowment has taken a significant hit," Ms. Shalala wrote, "[losing] more than a quarter of its value due to market declines and spending distributions."
This decline will reduce next year's budget by about $3 million to $4 million and has "significantly impacted the funding status of [the university's] Employee Retirement Plan, resulting in the need for very large cash contributions during each of the next several years."
As she thanked employees for doing what's necessary to achieve the university's mission, Ms. Shalala said there will also be challenges on the revenue side of the equation.
The lack of a federal budget for the National Institute of Health would only allow 90% of the amount it awarded to be paid out. That, combined with cuts in existing research grants from the Florida Department of Health, has created significant challenges for the university's sponsored research.
And after raising nearly $1.4 billion during the "Momentum: The Campaign for the University of Miami," fundraising is down 6%.
Meanwhile, freshman admission numbers are on par with last year but there is "an abiding concern about the crisis affecting students' ability to pay tuition."
In a Dec. 1 letter, however, she said that concerns would not deter the university from admitting the "most well-qualified students."
That same letter outlined measures to be taken if the economy, and the university's finances, were to take a turn for the worse.
Now that it has followed through on that contingency plan, the only thing left to do, Ms. Shalala wrote, is "to be flexible and realistic."