January 26, 2009
Vol. 28 No. 8

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    Provost outlines cost reductions that preserve academic mission

    By Steve Kloehn
    News Office

    Provost Thomas Rosenbaum laid out the framework and a rough timetable for making cost reductions at the University, in an e-mail sent to the campus community on Thursday, Jan. 15.

    Building on an e-mail from President Zimmer in October, Rosenbaum explained that the nation’s economic downturn has put pressure on the University’s budget, especially in five key areas: endowment investment losses, an increased need for student financial aid, increased costs to borrow for building projects, increased competition for federal funding and a drop in patient care revenue at the Medical Center.

    Rather than resort to blunt, across-the-board spending cuts or hiring freezes, Rosenbaum wrote that the University is in the midst of a rigorous process of identifying its priorities and finding savings elsewhere in order to protect the core mission.

    “First, and most importantly, we must preserve the significant progress we have achieved in supporting our faculty and students, investing in our academic programs and facilities, and expanding our civic engagement,” Rosenbaum wrote. “All our decisions must serve to enhance our academic excellence over the long term.”

    Rosenbaum’s message follows close on the heels of news from University Medical Center CEO James Madara, who wrote a Friday, Jan. 9 letter calling for cuts of $100 million, or roughly 7 percent of the Medical Center’s annual budget, in the next fiscal year. (See related story.)

    Based on estimates of some University holdings and outside calculations of college and university endowments as a whole, Rosenbaum advised that the endowment losses since the peak of the market were likely similar to peer institutions, roughly 25 percent.

    He wrote that academic units at the University were being asked to find a combination of cost savings and revenue increases totaling 2.5 to 5 percent each, while administrative units have been asked to find proportionately greater savings, between 3 and 9 percent.

    “We believe that the deans and vice presidents should have maximum flexibility to adjust their budgets in order to direct resources toward their most mportant priorities,” Rosenbaum wrote. “Deans and officers are discussing their preliminary plans with one another, in order to ensure that decisions made in one area will not have unintended consequences in another area.”

    The provost wrote that this process, begun in the fall, will continue through January. He added that many members of the University will hear more details in coming weeks from deans, officers and other leaders as plans develop.

    Some planned new construction or renovation projects will likely be delayed as the University trims costs, but he wrote that planning would continue so that projects accelerate as the financial picture improves.

    Rosenbaum stressed that one area in which the University will not compromise is financial aid for undergraduates and graduate students. Recognizing that the economy will make it harder for some students to pay for their education, he wrote that individual circumstances might actually result in a larger financial aid package for a student in need.

    Rosenbaum also asked members of the University community not to lose sight of the reasons the University needs to steward its resources carefully, as well as make difficult decisions about how to direct those resources.

    “As President Zimmer recently noted in a letter to alumni, the value of the University of Chicago has never been more apparent than during our world’s current challenges and volatile times,” he wrote. “Our mission is to produce students who can think critically and assess the changing landscape; to contribute scholarship that blazes new trails and illuminates solutions to the world’s most pressing problems; and to ensure that we benefit from and contribute to the larger community of which we are a part.  

    “Our response to the current challenges will ensure we remain focused on that mission and position us to achieve our highest ambitions.”