Dear Colleagues:
In September, 2009 I wrote to the community about our need to address a difficult financial situation for the administration and the Danforth Campus schools. I indicated in that communication that I would report in early 2010 on the results of our planning effort for fiscal year 2011 (FY11) and beyond. This letter summarizes the key results from our planning to assure our financial strength and to continue our quest for enhanced quality and impact in our missions of education, research, patient care, and service.
Several key planning parameters have been reaffirmed. First, we will continue to support the financial aid needs of our students. Even though there are signs of a recovering economy, we know the recovery is uneven and additional financial aid resources will be needed in the future. We will continue to respond to changing needs in financial aid for students so they can complete their degree programs at Washington University. Second, each of the seven schools operates with the understanding that available financial resources must meet the current program needs, while assuring enough flexibility to recruit new faculty, to respond to academic opportunities, and to meet unanticipated expenses like those associated with increased financial aid for students. Third, we embrace the overarching goal from our ten-year strategic plan to “enhance our global leadership today to benefit the world tomorrow.” Realization of our aspirations as a university will require continuing effort to become more efficient, while seeking to secure new financial resources to accelerate the pace of developing new initiatives.
The planning for FY11 and beyond has resulted in the elimination of some positions. Unfortunately, about 25 part-time and full-time employees have lost their jobs, and approximately 25 unoccupied positions have also been eliminated. These human resource reductions have occurred in central administrative areas and in the Danforth Campus schools. Individuals who have lost their jobs were given advance notice, severance and job search assistance. Every employee was treated with respect and sensitivity. However, no amount of sensitivity and concern can overcome the news of losing one’s job. Overall, reductions in staffing and in non-personnel administrative expense in the central administration alone have reduced annual expenses by about $10 million, a 6.5 percent reduction, over a 2-year period.
An example of an administrative expense reduction has been the elimination of the printed version of the Record. The Record is now an electronic publication and appears daily, not weekly as did the printed version. In this instance, it is arguably the case that we have simultaneously reduced expenses, improved the effectiveness of our communications, and reduced the amount of paper consumed. We have also changed some of our health benefits programs, resulting in substantial cost reductions. Other examples of cost reduction include reduced spending on library materials and subscriptions, improved automation of purchasing processes, electronic distribution of personnel forms and tax documents, reduced cleaning frequency for office spaces, elimination of contracted mail services and reduced number of daily mail deliveries, use of less expensive outsourced providers for selected services, reduction of landscape work, and new efficiencies in energy use. Many members of the community have contributed ideas to help us reduce expenses, and some of these ideas are still being evaluated.
Some have asked whether we are finished with our planning to reduce expenses. The answer is that we are always trying to find ways to improve our efficiency and to reduce the rate of growth in our expenses. Our community expects us to strive for excellence in all that we do, and that includes all areas of our administration. We must continue our efforts to improve our efficiency. For example, our campus sustainability plan includes an ambitious goal to reduce the amount of energy consumed through the application of technologies, such as automatic controls and new lighting.
While finding ways to become more efficient and to reduce expenses, we have also embarked upon a focused fundraising campaign, Opening Doors to the Future: The Scholarship Initiative for Washington University. This effort is intended to provide new financial aid resources of at least $150 million by June 30, 2014. We have already secured more than $35 million toward this goal. These funds will help support needier current students while also assuring that we can provide financial aid resources necessary to continue to attract a talented and diverse student body.
The value of our endowment has increased by about 10 percent since July 1, 2009, but the Board of Trustees has already determined that the spending from the endowment will decrease again next year by about $10 million. However, new endowment gifts, like the $30 million to establish the John C. Danforth Center on Religion & Politics, provide support needed to undertake new academic initiatives that will maintain the vibrancy of our academic enterprise and help us sustain our record of progress in building the quality and impact of our educational and research programs. Our outstanding faculty have won competitive research awards totaling more than $100 million over two years from the federal “stimulus” program announced last year, a major contribution to the well being of our research enterprise. The success of our faculty in this highly competitive era; our recently announced partnership with St. Jude Children’s Research Hospital; and major new gifts from Alvin J. Siteman for innovative cancer research and from the Gates Foundation to combat tropical diseases, all signal confidence in our research potential. Thus, while endowment spending is down this year and next by a total of $20 million, new gifts and very competitive faculty research proposals are helping to sustain our strong academic programs.
The intense planning effort and resulting reductions in staffing and administrative expenses have been difficult. I am grateful to leaders who have worked with sensitivity and care to achieve these savings. We are now well prepared for FY11 and beyond. The acutely difficult period of late 2008 and 2009 is over, but it reminds us to be wary of an uncertain future with respect to financial well being. We need to continue to constrain the rate of growth of expenses, even as we work to build the quality and impact of Washington University through the best education, research, patient care, and service. Hard work and creativity serve us well, and we have had an abundance of both. As we look to the future, we must achieve special levels of sustained dedication and innovation. I thank you for your commitment to the University and its mission in the era ahead.
Sincerely yours,
Mark S. Wrighton