U. postpones $695 million in construction projects

The University will postpone an estimated $695 million in construction projects due to severe endowment losses, President Tilghman said in an interview with Bloomberg News last Thursday. Princeton will delay buildings for neuroscience research, arts and engineering, Tilghman said.

“We have had to put all of our capital programs on hold,” Tilghman said. “We are not initiating any new construction projects.”

Tilghman’s announcement comes more than four months after the University said it would cut $300 million from its 10-year capital plan. Though no projects were eliminated from the long-term building plan, some were postponed beyond the plan’s 2016 end date.

It is unclear whether this most recent announcement means that the University has postponed an additional $395 million of capital plan spending, or whether Tilghman was referring to a broader estimate of construction spending that grouped capital plan funding with other spending from annual budgets. Tilghman and University spokeswoman Cass Cliatt ’96 did not respond to requests for comment from The Daily Princetonian.

The capital plan, which allocates funding for major building projects, is separate from the Campus Plan, which outlines the specifics of new construction and renovation .

The University Board of Trustees had originally approved $3.9 billion in funding for the capital plan, which went into effect in 2006. In November, the University had already spent or irrevocably committed $1.47 billion of those funds.

Tilghman also told Bloomberg that the administration is planning its budget based on a forecast that the endowment will decline between 25 and 30 percent by the end of the fiscal year on June 30. This latest projection is more dire than Tilghman’s announcement on Jan. 8 that the administration was preparing for the possibility of a 25 percent decline. With the endowment valued at $16.4 billion on June 30, 2008, the difference between losses of 25 percent and 30 percent would be roughly $820 million.

“I think it would be foolish if those of us who depend so much on endowments were not thinking hard about how we construct our endowment and the way we invest our endowment,” Tilghman said in the interview. “So indeed we are thinking about liquidity in ways that we have never thought about liquidity before. We are thinking about how we manage risk in ways that we didn’t have to think about it before.”

Tilghman added that University administrators were now asking themselves how much liquidity an institution like Princeton — which depends on its endowment for 48 percent of its operating budget — needs at a given time.

As of last November, deferred projects included a storage facility for the University Art Museum, a satellite building for the museum slated to be part of the Arts and Transit Neighborhood, new faculty and staff apartments, a renovation of Green Hall and assorted renovation and landscaping projects. The start date for the construction of the new neuroscience and psychology buildings was also pushed back until June 2010.

Tilghman told the ‘Prince’ last November that University officials decided against postponing other parts of the capital plan, including other elements of the construction of the Arts and Transit Neighborhood and the planned reconstruction of the Butler Apartments. But she added that the University would be “constantly reassessing [its financial situation] as the year goes on,” explaining that additional cuts could come as early as this spring.