Cohen guides school through tough economic times
In her five years here, Marcia Cohen has had the luxury of saying yes. But times have changed for the school's top finance official, whose mantra nowadays is more often no.
After years of flush budgets, Cohen now must make do with shrinking resources as she steers the school's finances in the midst of the country's worst economic crises in decades. It is an admittedly tough job, she said.
"When you have constrained resources, you have to be much more analytical and careful. It is," she searches for the right word, "challenging."
As the situation changes day by day, Cohen remains unflappable. She does not let things get her down, saying she still remains confident that the school will emerge in good shape in relatively short time.
"I've always been a fairly optimistic person, so I still feel quite positive that this financial crisis will be short-lived—that locally we'll be able to weather it, that we have a depth of resources to cover it," she said. "I'm just not at the point where I think things are so bad that I'm depressed about it."
As the crisis unfolds, she and her colleagues modify their projections now every month. The traditional budget cycle has been turned on its head, she said, with a budget for next fiscal year likely to be prepared much earlier and massaged more than usual.
She said the School of Medicine hasn't been quite as hard hit as the university at large, which recently announced a 15 percent budget cut. The medical school has more diverse income sources and doesn't depend to the same extent as other schools on funds from the endowment, which has declined between 25 and 30 percent.
Nonetheless, current projections show the medical school's revenue down by about 10 percent next fiscal year and 5 percent the following year as a result of several factors. Fortunately, clinical income is growing, and research funds remain stable for now. However, income from other, once-dependable sources is on the decline. In addition to reduced endowment funds, income from investments is down by $16 million, while indirect costs remain flat. Gifts to the school for faculty and programs have fallen off.
Cohen said the school can draw on some reserves to get by, but not so much so that it compromises its future. So how does she propose to fill the gap?
"It's a balance between what to cut, what to do without, what you can postpone and what you justify spending reserves for," she said.
Dean Philip Pizzo, MD, has relied on Cohen to steer the school through tough economic times. "True leadership occurs when resources are constrained and difficult choices need to be made, and at such times it's not only important to make decisions that are prudent but that also value and honor the individuals who are impacted by them," he said. "This is where Marcia Cohen shines. She has demonstrated outstanding analytic skills and judgment that have served us quite well. But even more significant, she has shown the sensitivity and compassion to make decisions in a fashion that respects individuals."
The school already has taken some steps to cut back on expenses, eliminating food at school functions, altering vacation policies, initiating a hiring freeze in the dean's office and delaying some basic science recruits. These initiatives will save $6 million, Cohen said. Some savings also have been achieved through delays in capital projects, such as the Foundations in Medicine Building 1.
But additional cuts will be needed next fiscal year, she said, emphasizing that a priority will be placed on minimizing job losses. As with the university at large, there will be no salary increases except for those related to promotions.
Cohen said she hit one of her "low moments" in trying to figure out a plan for how to make do with less next year.
"I was in the midst of deciding who bears what costs and how we are going to do it. But now I think we have a plan that works fairly," she said. "It's uncertainty that I think leads people to despair. Now that we have a certain course, I'm feeling more positive."
The school is asking the administrative units in the dean's office to trim their budgets by 10 percent. These groups account for nearly $300 million of the school's $1.1 billion operating budget. The school is also asking clinical and basic science departments to cut 7 percent from their operating budgets.
In the past, Cohen noted, the dean's office has served as a kind of safety net for the school, supporting recruitments, faculty start-up packages and bridge funds for faculty who haven't had their grants renewed, among other projects.
"What's tough now is that we can't say yes to all of those things," she said. "I don't like the feeling of saying no. I just hope people understand—if I could be generous, I would be."
Given the demands of her job, Cohen has little time to relax but says she makes sure she takes at least one day over the weekend to go on a hike in San Francisco, where she lives, or in Marin County. Even then, she is never far from her e-mail, so her real escape comes through travel. She and her husband, magazine publisher Jay Harris, lived in Hong Kong for five years in the late 1980s, where Cohen worked as a management consultant, traveling throughout Asia. She is hoping to return there on a family vacation this year, she said.
"I guess my way of relaxing is to get away completely," said Cohen, who came to Stanford from UCSF in 2003.
At the office, her way of working through problems is to talk to people as much as possible. "She'll put forth different proposals and invite feedback," said Cori Bossenberry, the school's director of human resources, who has worked closely with Cohen on budget issues. "She's very creative and calm. She doesn't get ruffled. And she's very strategic. She sees this as just a short blip on the radar screen, so her feeling is that we don't want to do things where two or three years from now, we're in better shape, and people will say, 'But look how you treated me.'"
Cohen said she hopes the new stimulus package will provide some temporary relief for the school budget. The school has formed a task force to support applications for stimulus-funded research and construction projects. Faculty have already identified five capital projects that may not otherwise be able to proceed in the near future. These include renovations to the research animal facility and additional funding for the Freidenrich Center for Translational Medicine at 800 Welch Road. The school is also looking to accelerate its hiring and review processes, such as Institutional Review Board and conflict-of-interest approvals, to rapidly accommodate new research projects under the stimulus program. "We don't usually do research projects this fast," she said, "so we are mobilizing our administrative team to be ready for the deluge of grant proposals, project set-ups, hiring and even purchasing."
Cohen said the school's budget situation, while painful, could be an opportunity to spur more collaboration among faculty as they work toward a common goal. "If this fiscal year has a silver lining, it's that it could encourage a more collaborative attitude," she said. "It's about helping other faculty and other departments, and contributing to shared solutions."