Washington U tightens its belt; Wrighton takes salary reduction
This article first appeared in the St. Louis Beacon: November 19, 2008 - Washington University Chancellor Mark S. Wrighton warned students and faculty to expect a "significant reduction" in spending during the next fiscal year due to deteriorating economic conditions. The expected spending cuts will affect capital projects, staff positions, and pay raises, he said.
News that the state's wealthiest private university was taking an economic hit came two days after the state's biggest public university, the University of Missouri system, announced a spending freeze because it expects less state funding during the current fiscal year and beyond.
Wrighton's announcement was a surprise because one school spokesperson said as recently as Monday afternoon that he had heard nothing about economic conditions adversely affecting university operations or about changes that may be made as a result of the economy.
Wrighton stressed that the university remained "blessed with financial strength." But he said the value of its assets had declined a whopping 25 percent since the start of the current fiscal year, which began July 1.
He said the drop meant the board of trustees was likely to set lower spending levels for the next fiscal year. He said other factors influencing the spending cuts, beyond the decline in the university endowment, included constraints on tuition growth, uncertain philanthropic support, health care costs and a growing need for financial aid.
Wrighton also added that he intended to reduce his salary 5 percent in January and another 5 percent in July. Last year, Wrighton earned $738,000. He said that the university's deans and vice chancellors had volunteered to accept no salary raises this coming year as well.
Some capital projects will be either delayed indefinitely or slowed down, he said. They included $20 million worth of work on the Mallinckrodt Center. But he said there will be no delay in work on the BJC Institute of Health, scheduled to open late next year; and on Bauer Hall, which will open in the summer of 2010.
Here is the text of Wrighton's message:
November 19, 2008
To the Washington University Community,
Next week we will pause for the great American tradition of Thanksgiving. The Washington University family has much to be thankful for, including a wonderful community of talented students, great faculty, outstanding staff, highly successful and supportive alumni, and many, many friends. Thanksgiving is a time to reflect on our many blessings, to relax, and to enjoy family and friends.
But this Thanksgiving season will be difficult for many, and I am concerned about the hardships members of our community are facing, including our students and their families. Our entire country faces enormous and immediate challenges stemming from rapid deterioration in the economy that resulted in sharp employment declines; significant losses in the value of investments held by individuals, foundations, and institutions; and anxiety about what lies ahead. Washington University, as strong as we are, is not immune to the changes of the last several months.
Washington University is blessed with financial strength. However, the value of the invested assets of the University has declined considerably during the months since the start of this fiscal year (FY09) that began on July 1, 2008. Since July 1, the value of the endowment has declined approximately 25 percent. The Board of Trustees will set the spending rate from the endowment for the next fiscal year, and I anticipate a significant reduction from the amount we had previously been planning for FY10. With the decline in the value of our endowment, coupled with leveling of research support, constraint on the rate of tuition growth, uncertain prospects for philanthropic support, pressures on healthcare costs, and the prospect of increased needs for financial aid, we must take some actions to assure that our University remains strong into the future. Whatever the origins and whatever the length of the economic decline, it is important to respond to this new environment. We will constrain the growth of administrative expenses, compensation expenses, and commitments to new building projects.
To our talented students, you are a principal reason for our existence, and we are fortunate you selected us for your education, whether you are in your first year as an undergraduate or working toward your graduate or professional degree. We have a commitment to you, and we have the strong desire for you to complete your degree program here and join the ranks of other successful Washington University alumni around the country and around the world. Each of you has the potential to complete your degree here, and we do not want your financial challenges to preclude a successful outcome. Education is at the heart of what we do, and we will do our best to meet your needs.
To our faculty and staff, you have contributed significantly to the rise in quality, visibility, and impact of the University. Our students and alumni can count your commitments and achievements as blessings. I am thankful to each of you for your creative and dedicated work. Unfortunately, as we consider the financial environment within which we are working, the traditional financial rewards associated with hard work and achievement will be limited.
For FY10 we will not be able to sustain past levels of salary increases, and we are planning lower increases in compensation this year. The Vice Chancellor for Human Resources will be working with all supervisors to encourage that compensation increases, in general, be higher for those who are lower in total compensation. I have discussed these matters with the Chair of the Board of Trustees, and I proposed and will implement a reduction of my own salary by 5% effective January 1, 2009 and another 5% reduction effective July 1, 2009. School Deans and Vice Chancellors have volunteered to have no increase in their compensation in the year ahead. These leaders have been asked to review carefully the compensation of their faculty and staff and to assure that their programmatic plans for FY10 can be achieved with realistic expectations of revenue. All Vice Chancellors have been asked to reduce the rate of growth of administrative expenses as we plan for FY10 and to identify opportunities for expense reductions in the current year.
While we must exercise restraint in compensation and administrative expenses, it will be vital to continue to attract and retain key members of the faculty and staff and to provide financial resources to do so when needed. It is imperative that we remain in a position to add people to maintain momentum in improving our quality and impact, to secure philanthropic support for the University, and to continue our progress in improving gender balance and building greater representation of members of minority groups. We also may need to apply new resources to initiatives that will contribute to our future strength, including in areas such as exceptionally promising academic initiatives, compliance, safety and security.
Our programs are strong now and must remain so. New staff additions in the administration will be very limited and require considerable additional justification. New additions to the administrative staff of the central administration must have approval of a committee that includes Executive Vice Chancellors Henry S. Webber, Chairman, and Michael R. Cannon, and Vice Chancellors Barbara A. Feiner and Ann B. Prenatt. Open positions will be reviewed and this same group will determine whether such positions will be filled. New, recurring and one-time commitments to expand the central administration for FY10, some of which have already received “soft approval,” are being reviewed and may be eliminated, scaled back, or delayed to reduce the rate of growth of expenses.
It is also important for us to scale back, eliminate, or delay capital projects. For example, planned renovation and expansion of Mallinckrodt Center at a cost of over $20 million will be delayed indefinitely. The redevelopment of the South 40 will be slowed. New capital projects for schools will be required to have a much larger fraction of the costs assured in the form of philanthropic contributions before construction begins, rather than relying on accumulated reserves. Reserves may well be needed to address financial aid and other future needs.
Two capital projects already underway must be completed. The BJC Institute of Health will be finished in late 2009 and will provide much needed space to respond to research opportunities in medicine in connection with our BioMed 21 initiative. Stephen F. and Camilla T. Brauer Hall will be completed and open in the late summer of 2010 to enable us to expand education and research in biomedical engineering as well as in energy, environment and sustainability. Both of these capital projects will enable the expansion of programs to uncover new knowledge that will respond to critical challenges we face as a nation. In addition, halting or slowing these projects would end up costing us more in the long run.
To our loyal alumni, parents, and friends, we thank you for your support and encouragement. Many of you have been financially supportive in the past, and that support has secured for us the financial strength to be flexible at this time of uncertainty. Your support has provided a large endowment for financial aid, for faculty professorships, for programs, and for facilities. We have flourished because you have helped us. In addition, through your own accomplishments and association with Washington University, you have encouraged others to view Washington University more favorably. Many among you have encouraged prospective students to explore Washington University for their higher education. At this time of Thanksgiving, I count you as key among our many blessings, and it is my hope that these challenging times are not too adverse for you and your families.
To all who are in the Washington University community, I have several requests. First, let’s be supportive of each other. These are not easy times. Befriending those in need at this time can be very meaningful. For those who are able, please continue to support us financially, with special emphasis on support of our scholarship programs. Second, if you are in a situation where you see employment opportunities for the talented students and alumni of the University, please contact us to make these positions known to our graduating students. Internships for continuing students can also make a difference. Finally, to all who encounter talented people seeking a great university experience, refer them to us! We thrive because an exceptional group of students joins us each year, and we encourage prospects to visit us and learn more about what we do and how well we do it.
At all times, but especially in a time like this, we need to balance idealism with pragmatism; optimism with realism. For myself, I pledge to continue to do my best to take actions now that will not compromise our prospects for excellence in the future. This letter summarizes some of our near-term plans; we may have to undertake efforts to introduce greater constraint as this year unfolds.
As uncertain as these days are, I remind everyone of the great year we are having: we welcomed a world-class group of students this fall; a tremendous group of new faculty joined us this year; we rejoice in the successes of our continuing faculty like Mary Jo Bang, Professor of English, who won the 2008 National Book Critics Circle Award in poetry; we launched the Institute for Public Health; we dedicated Harry and Susan Seigle Hall; we opened the Danforth University Center; we hosted the Vice Presidential Debate; faculty, students and staff contributed to establishing that water exists on the surface of Mars; and faculty, students, and research staff in the School of Medicine have reported path-breaking research to understand, through genome sequencing, the origins of cancer. Let us work together to continue to enjoy national and world leadership in education, research, and service as one of America’s finest research university communities.
While we face challenges, I am confident that our financial strength, dedication, and creativity will sustain our great university. Even with these challenges in mind, I encourage you to take the coming holiday break to reflect on our many blessings.
Mark S. Wrighton