Rising energy costs won't cause cutbacks

Despite millions of dollars in unexpected energy costs resulting from the impact of Hurricane Katrina, the University will not cut planned expenditures for the 2005-06 academic year, the University budget director said.

Instead, the University will use endowment income to meet a projected budget shortfall, even as administrators consider energy conservation strategies to contain costs.

"Right now, there is no plan to make dramatic short-term cuts in the budget. We plan to avoid that," said Stephen Gill, the University budget director and associate provost for finance.

Though this year's $20 million budget for energy costs included several million dollars for projected cost increases, sharply rising natural gas prices will force the University to spend significantly more than that, Gill said.

"Last January when we set the budget, we were in a period of high energy prices," Gill said. "We built several million dollars into the budget to cope with what we believed the price level would be."

Since Hurricane Katrina, however, energy prices have risen far more dramatically than anyone anticipated. Though Gill did not provide an exact figure for the expected energy budget shortfall, he said natural gas price increases of 30 to 50 percent will leave the University several million dollars short.

The $950 million University budget includes a $500,000 increase in faculty and staff salaries and $600,000 for the maintenance and improvement of Dillon Gym. It also allocates funds for an increase in University Health Services staffing, the production of a health and wellbeing newsletter and the hiring of a part-time health educator.

Gill said efforts to craft conservation strategies are ongoing.

"In the facilities department, there is a group of managers looking at energy conservation strategies," he said.

Other universities are also feeling the financial strain of higher energy costs. According to The Daily Pennsylvanian, officials at the University of Pennsylvania estimate that rising oil and natural gas prices will add nearly $7 million to Penn's energy costs this year — a 20 percent increase over the $32 million it spends annually to heat its buildings.

At Yale, as at Princeton, officials have said they will avoid budget cuts and redouble their conservation efforts.

"We are of course concerned to reduce our energy consumption," Yale President Richard Levin told the Yale Daily News. "We're interested in doing that in the long term, regardless of the short-term economy's involvement."

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Mark Burstein, the executive vice president of Princeton, was unable to offer details on conservation plans because of meetings with University trustees last week.

The trustees oversee transfers from the University's endowment income to the operating budget, which is governed by a spending cap limiting annual increases of the transfer to 5 percent.

Gill said that rule may change in the future but that it won't happen in time to alleviate the current budget crunch.

"Trustees are always reviewing that spending rule," Gill said. "That would be an option that's on the table not for this year, but maybe in a year or two."