Eisgruber ’83: Second round of budget cuts inevitable during next fiscal year

President Tilghman said at the start of the meeting that the University “is trying to be as open and transparent, and [to provide] as much information, as we possibly can” about financial matters. The purpose of the meeting was to give an “overview of where we are now and what we need to do to ensure that we continue to support this University and its academic mission,” she noted.

“Obviously right now we’re in extraordinary circumstances,” she added. “What’s happening with the budget affects every one of us.”

Eisgruber said that though the University was trying hard to minimize the impact of the initial budget cuts on faculty and staff, these effects would likely become more severe in future years.

“There’s going to be more of an impact on jobs in the second round [of cuts],” he explained. “There’s no other way that we can reach the numbers we’re looking at now.”

Throughout his presentation, Eisgruber stressed that the budget changes the administration is making reflect a new fiscal reality for the University.

“It’s certain that we’re going to have to have a second round of budget cuts next year,” he said, explaining that these measures are in response to “a long-term effect rather than a short-term emergency.”

The University is projected to suffer substantial financial losses, Eisgruber said, noting that the University is still planning for the endowment to lose a quarter of its value by the end of the fiscal year in June. This would mean a loss of about $4 billion for the endowment, which was valued at $16.4 billion last June.

Forty-eight percent of Princeton’s revenue comes from the University endowment, and as the endowment has declined in value, the University has been forced to spend a larger share of it. While officials try to keep the level of spending between 4 and 5.75 percent of the endowment, Eisgruber said he expects the rate to rise to more than 6 percent by the end of the fiscal year. Some of this increase will cover the $8 million rise in financial aid spending that the University expects to provide as students and their families continue to be feel the effects of the recession.

Despite what Eisgruber referred to as the “depressing” nature of most of the data he presented, he emphasized that Princeton is well-prepared to weather the financial crisis, especially when compared to many of its peer institutions. “The University has the highest endowment per student of any of our peer institutions, he noted, adding that “all of this [economic distress] for us happens against a background of strength.”

As the University makes serious changes to its budget plan over the next several years, Tilghman said that it must keep in mind the preservation of the University’s major goals, including commitments to student financial aid, graduate fellowships and making efforts to bring about faculty vacancy savings which are anticipated to reduce the number of layoffs the University would otherwise resort to in the future.

“We have clearly identified our priorities: To maintain the quality of the student body … and to do absolutely everything we can to preserve the quality of our faculty,” she said.

“We’re in this together, folks,” Tilghman said, ending the meeting with a prediction that Princeton will “get through this as strong an institution as we are today, and maybe even a little bit stronger.”