As the world experiences significant turmoil in the marketplace, Princeton is not immune from the effects of the downturn in the economy. Although the University is in better shape than many of its peers and fortunate that its endowment has grown at an above average rate in recent years, the value of the endowment declined by 11% from June 30 through October 31, 2008 and current planning assumes that it could decline by a total of 25% by the end of this fiscal year. Because income from the endowment contributes more than 45% to the University’s operating revenue, the University is seeking significant administrative savings to reduce spending by $50 million in its operating budget for fiscal year 2010 (July 1, 2009-June 30, 2010).    

Princeton’s senior administration, with input from departmental representatives, is assembling a savings plan to meet the $50 million target while protecting the University’s core priorities and human capital. The University has instituted a position vacancy management plan whereby all new searches for term, temporary, and regular employment must be approved in advance by a review committee. Other savings will be found from reducing expenditures on such annual programs as landscaping and classroom renovations, reducing the number of faculty visitors and fellows, and adopting more modest salary increase pools than originally projected.     

$10 million of the $50 million goal will come from administrative savings, which will fall into two categories. First will be a 5% reduction in all non-personnel administrative budgets. In order to help managers achieve these savings, Executive Vice President Mark Burstein and Vice President for Finance and Treasurer Carolyn Ainslie are leading a working group that will design a set of recommendations that can be implemented at the departmental level. The recommendations may include increasing efficiencies and decreasing costs of centralized procurement, reduction in the use of printed materials in favor of web-based communications, elimination of redundant personal computers or extending the replacement cycle of technology, and the reduction of discretionary spending in departments.  

The second category will consist of central budget reductions and possible cost recovery opportunities. The opportunities may include

• evaluating telephone services in dorms and the wiring of University buildings;
• pursuing additional energy and utility savings;
• auditing patent revenue;
• evaluating fees charged by the University to external groups;
• reviewing eligibility for benefits and improving the tracking of short term disability, long term disability, and worker’s compensation cases;
• streamlining the use of rental and storage space to reduce fees;
• evaluating a centralized inventory management program;
• consolidating fleet management.

These preliminary ideas will not reach the $10 million goal for administrative savings and we ask the entire Princeton community to help identify additional savings opportunities. In determining whether to move forward with a suggestion, we will apply the guiding principles that 1) the savings won’t negatively impact the University’s core mission; 2) the idea is relatively easy to implement; and 3) the savings can be achieved quickly. The size of the savings, while important, is not all that is important.

Ten $50,000 savings may be as valuable as a single $500,000 initiative. The overall goal to reach $50 million in savings in fiscal year 2010 will require a thoughtful and dedicated process over the coming months. We are asking anyone with ideas to submit them to the working group via email at savings@princeton.edu.  

• Town Hall Meeting Invitation
• President Tilghman's Letter
• Purchasing Savings Tools