Chancellor Mark S. Wrighton will give a “State of the University” address at 8:30 a.m. Thursday, April 23, in Edison Theatre.
Wrighton will be joined by Henry S. Webber, executive vice chancellor for administration; Barbara A. Feiner, vice chancellor for finance and chief financial officer; and Ann B. Prenatt, vice chancellor for human resources. After the speech, all four will be available for questions from the audience.
For those unable to attend, the presentation will be broadcast live via a link on the University’s home page at wustl.edu. It also will be recorded and available online after the presentation at wustl.edu.
Deans of individual schools also will hold similar forums to communicate with school faculty and staff and address school-specific issues.
Below is the text of an e-mail sent to the Washington University community April 14 outlining the Chancellor’s goals and initiatives.
To the Washington University community,
The financial situation for many individuals and organizations has deteriorated significantly since September of 2008, and the speed and depth of the downturn is an unprecedented experience for most of us. I remain confident about Washington University’s long-term financial well-being. However, we will most likely face significant financial problems in the next several years. On Nov. 19, 2008, I communicated to you about steps being taken then to address the economic challenges. I write again now to convey what has been done to prepare for the next fiscal year, FY10, that begins on July 1, 2009, and what we must do in the year ahead. I will also discuss aspects of our long-range planning process.
We all understand that the rise in unemployment is hurting many people, and that the business environment has been extremely challenging. Despite the March upturn in the stock market, the estimated value of the University endowment, as of the end of March 2009, is at least 25 percent below the value on July 1, 2008. We are not alone in this magnitude of decline, and we understand that the value of the invested assets of many other universities, individuals, foundations and cultural institutions across the country is similarly depressed.
During this time of continuing constraint, it is important to reaffirm the basic principles that guide our decision-making. First, we must sustain our commitment to excellence in teaching, original scholarship and service to society. Our students and faculty are vital to our future success and must be supported.
Each of our enrolled students has exceptional potential. We must ensure that all of our students are able to complete their degree programs, even if their families suffer a financial setback.
Second, the University has benefited enormously from a talented and dedicated staff, and the University must reciprocate by supporting our colleagues who bring enormous benefit to our faculty and students. I know the value of being employed at a great institution like Washington University: Working here provides a source of income and a source of pride.
As chancellor, I pledge that our leadership team will do its very best to support our entire community and make every effort to minimize reductions in personnel. Unfortunately, at this point, it is not possible to predict the depth and longevity of the current financial downturn. In order to minimize reduction in employment, we will strive to improve efficiency, reduce non-compensation administrative expenses and secure new sources of revenue.
Our current challenges are great, but we also have significant opportunities to improve the University. Indeed, the University has just completed a comprehensive planning process called Plan for Excellence that was started in early 2006. Each of our schools and a number of other entities undertook careful planning and identified ambitious objectives for the next 10 years, with the overall aim of enhancing the quality and impact of the University. The Plan for Excellence was overseen by a Steering Committee of Trustees, chaired by John F. McDonnell, a vice chair of the Board of Trustees. National Council members, faculty, staff and students have played a role in developing our plans.
The Board of Trustees met in March of 2009 to review and discuss objectives stemming from the Plan for Excellence effort. The Board embraced five broad priorities for the next 10 years: (1) strengthen diversity and improve gender balance and inclusiveness in all segments of the University community; (2) continue to strengthen the undergraduate program; (3) build uniformity of excellence in graduate and professional degree programs; (4) continue to invest in areas where we have realized global leadership, especially in medicine and social work, and take advantage of these strengths to enhance the University’s quality, impact and visibility in other areas; and (5) enhance the financial resources of the University, with special emphasis on financial aid for students at all levels. These five priorities will be additional guides to our decision-making and efforts to secure resources for the future.
Realization of the objectives from our Plan for Excellence will contribute to the future growth in quality and impact of Washington University. All schools, the libraries and leaders of student affairs have exciting opportunities for improvement, and we are anxious to pursue them. Interdisciplinary themes of importance involving all schools also emerged from the planning. Examples of University-wide initiatives include: the Institute for Public Health; education and research related to energy, environment and sustainability; the Gephardt Institute for Public Service; the Skandalaris Center for Entrepreneurial Studies; the McDonnell International Scholars Academy; and the Friedman Center for Aging.
Our planning also affirmed our mission in the St. Louis community, including contributing to improving public education, enhancing community health and creating new jobs. Thus, while cognizant of the current constraints, we will remain committed to pursuing leading initiatives that have been developed from our three-year planning process. These initiatives will be developed at a pace consistent with the availability of funds.
The current situation will require us to reduce expenditures in some areas while we make significant investments in others. For example, we have made a commitment to expand our investment in alumni and development programs to assist in sustaining, if not expanding, philanthropic support for key initiatives, including financial aid for students. This reflects our commitment to support priorities that strengthen the University.
At its planning meeting, the Board of Trustees set the overarching goal for Washington University for the next 10 years to be: Enhance Our Global Leadership Today to Benefit the World Tomorrow. As we make our plans for the immediate future, we will be mindful of this goal, our five top priorities, exciting initiatives and our fundamental principles. As I communicated last November, we have to manage the present with an eye to the future, employing tactics to deal with our current challenges that do not compromise our ability to thrive later.
Let me now turn to the fiscal problems before us. The scale of our financial problem is large: a $20 million to $25 million annual deficit for the Danforth Campus alone in FY11. Currently, the School of Medicine is not experiencing the same fiscal strains because medicine is less dependent on endowment and tuition. Fortunately, both clinical revenue and research revenue, the two largest sources of revenue for medicine, are strong. However, in medicine, we know that the federal stimulus package is only for two years, and clinical revenue is likely to be more constrained in the near future. Thus, we must also plan for financial strains in medicine.
The financial consequences of our depressed endowment will be felt in FY10 and will be even greater in FY11 unless a significant turnaround occurs. The reduction in spendable income from the endowment is likely to be at least $20 million for FY11 compared to the current year.
The need for greater financial aid commitments, the rise in benefits costs, the diminished prospects for philanthropic support and the likelihood that tuition increases will be smaller in the future bring us to an estimate of an operating loss for the Danforth Campus in FY11 of about $20 million to $25 million. We must plan now to take the steps necessary to address this financial shortfall and the future challenges we anticipate for medicine.
We have time to address the challenges associated with FY11 because we have already addressed FY10 problems with prudent measures of constraint. Our operating budget for the year ahead is about “break even,” through difficult tactics to reduce the growth in expenses. Compensation across the entire University has been held nearly flat, with no “merit” increase for most faculty and staff.
We estimate that we have saved about $20 million by not having a significant increase in compensation in the coming year. In addition to holding down compensation expenses, areas in the Central Fiscal Unit have reduced non-compensation expenses by 2 percent to 5 percent, saving another $2 million.
We have also truncated the South 40 redevelopment project and have postponed indefinitely the renovation of Mallinckrodt Center. The seven schools of the University have also implemented cost-saving measures that have contributed to our ability to have a break-even budget for FY10. I am grateful to all who have been involved in the planning process and for the understanding and collegiality that has prevailed as constraints have been introduced this year and for the year ahead.
What can you do to help? There are several important things we can all do. Every member of our community has an opportunity to assist in this time of constraint by thinking about how to reduce costs or how to build revenue. We will value suggestions from anyone with ideas about where we can realize savings or where we can realize gains in revenue.
It is important to note that an annual savings of $25,000 is equivalent to a new endowment of $500,000. Savings, large and small, can make a meaningful difference, and I invite your suggestions on both efficiency improvements and revenue enhancements. We will soon announce a program to reward individuals who have cost-saving ideas that are actually implemented.
For example, opportunity for cost savings comes in the area of energy conservation, and a task force is to be appointed to focus on this area. Such an effort will save money and reduce our environmental impact. Another area of savings is possible by limiting mailings to our external community and taking advantage of electronic communications instead.
While cost savings through efficiency improvements will be important, this may not be enough to place us in a strong operating position. Accordingly, we also invite suggestions for revenue-generating ideas. An opportunity in this regard is to make better use of our campus in the summer. A task force will evaluate the opportunities for an expanded set of summer programs to better utilize the campus facilities. More efficient use of our capital assets is a good idea at any time, but especially at a time when we are income-constrained.
There are two other ways you may be able to help. First, if you are able, continue to support the University with gifts. Consider, especially, support for scholarships at a time when many of our University families are experiencing difficult financial times. The precious resources donated to the University represent a very important source of revenue. Every gift matters, and do encourage others to support us as well! Second, while we have a focus on the well-being of employees at the University, many of our current students and alumni are seeking new jobs. Consider assisting in networking to help our students and alumni, and please make known new positions to our Career Center, led by Mark W. Smith, assistant vice chancellor, at msmith@wustl.edu.
As always, I am available to receive your advice as we work together to build a brighter future for the University.
In closing, let me reiterate that our goal must be to preserve our principles of providing an excellent education for our students, to be world class in our research, to serve St. Louis and the broader society and to support the people who make our outstanding education and research programs possible.
It is my aspiration that we all apply creative effort to sustaining our progress as one of the most outstanding research universities in the world. I look forward to our work together to Enhance Our Global Leadership Today to Benefit the World Tomorrow.
Sincerely yours,
Mark S. Wrighton