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As fiscal year closes, impact of downturn felt across campus

In response to a directive to adjust to a new baseline budget, Stanford schools and units have laid off 412 staff members and eliminated their positions over the last eight months, a decision spurred by a steep decline in the value of the university’s endowment.

Approximately 60 more people will lose their jobs by the end of the year; many of them have already been notified that their positions will be eliminated as part of the university’s budget reductions.

Between Dec. 18, 2008, and Aug. 14, 2009, Stanford also laid off 72 staff members whose positions were funded by sponsored research, said Diane Peck, vice president of Human Resources. These types of layoffs happen on a regular basis throughout the year as sponsored research projects come to an end.

A small number of the staff layoffs related to budget cuts were voluntary. Some employees decided to retire to take advantage of the university's enhanced severance package.

The value of Stanford's endowment is expected to plummet 30 percent in 2009 – the largest single year decline in the university's history. Valued at $17.2 billion in 2008, the endowment is expected to fall to $12 billion this year – the same level as 2005. The 30 percent drop is the result of declines in the value of investments and payout from the endowment that has been spent this year to maintain operations.

"Our goal is to absorb most of the impact of the endowment decline in two years, placing us in a better position for growth," Provost John Etchemendy, the university's chief academic and budgetary officer, wrote in the Stanford University Budget Plan 2009-10. "We must acknowledge and adjust to a new baseline in the university budget."

Stanford, which spent $933 million from the endowment in 2009, will reduce that spending to $829 million in 2010 and make further reductions in 2011.

Economic belt tightening across campus

In addition to laying off staff, the university froze 50 open faculty positions, implemented a campus-wide salary freeze, eliminated unfilled staff positions and suspended construction projects valued at $1.1 billion.

In addition, the university's schools and units cut spending on travel, food, marketing activities, computers and other equipment, professional services, conference fees and printing.

The budget plan, released last May, described other steps the schools took to reduce spending.

The School of Humanities and Sciences froze graduate aid funding in order to achieve a balanced budget. The Engineering School reduced teaching assistantships. The Education School eliminated two faculty billets, "abandoning plans to expand into critical new areas of research, such as cognitive neuroscience."

The university cancelled Community Day, a free "open house" for neighbors. The Office of Public Affairs eliminated the print edition of Stanford Report. Undergraduate Education trimmed $1.1 million from its undergraduate research program. Stanford Libraries announced plans to close the Physics Library, and to reduce spending on books, journals and online subscriptions.

Layoffs in the seven schools

The Graduate School of Business was the first school to trim its workforce; the school laid off 49 employees – about 12 percent of its staff – last January.

Over the next several months, the other six schools also trimmed their rosters through layoffs; all told, the seven schools have laid off about 140 people.

The schools and units across campus also reduced their staff count through attrition, by eliminating open positions, by reducing full-time jobs to part-time positions, by cutting out contractor and fixed-term jobs, and by requiring employees to use accrued vacation time.

Layoffs in six other academic units

Of the university's other six academic units, four – the Dean of Research, Undergraduate Education, the Hoover Institution and Stanford University Libraries – have laid off about 100 people.

Two academic units – SLAC National Accelerator Laboratory and the Office of the Vice Provost for Graduate Education – did not lay off employees.

SLAC gets most of its funding from the federal government, specifically the Office of Science in the U.S. Department of Energy. The Office of Science's budget soared 19 percent in fiscal year 2009 to $4.8 billion, compared with $4 billion in 2008. In addition, SLAC received $68.3 million last March in stimulus funding, under the American Recovery and Reinvestment Act of 2009. Still, the faculty and staff in the lab are sharing in the university's economic pain; like the rest of Stanford's workforce, they will not receive general salary increases in fiscal 2010.

The fledgling Office of the Vice Provost for Graduate Education, which opened in 2007, also did not lay off any employees. "We are a very small unit with everyone working to full capacity," Vice Provost Patricia Gumport said of the 10-member office, whose roster includes seven full-time and three part-time employees (two of whom are faculty members).

Layoffs in administrative units

The university has 10 administrative units, including Business Affairs; Lands, Buildings and Real Estate; and Undergraduate Admission and Financial Aid. Two major auxiliary units are also listed in the budget plan: Stanford Athletics and Residential and Dining Enterprises.

All told, the 12 units have laid off about 180 people.

Greg Boardman, vice provost for student affairs, summed up the feelings of many administrators last April when he described the emotional toll of layoffs: "Every reduction is meaningful to someone, and every cut painful. These reductions impact very loyal, hard-working employees."

Staff headcount is expected to be flat

In the budget plan, Etchemendy said Stanford expects employee headcount to remain flat in fiscal 2010, because layoffs linked to budget cuts will be offset by hiring in sponsored research projects. At the beginning of 2009, the non-teaching headcount was 11,267. (The number includes SLAC, but does not include students or employees working less than 50 percent time.)

In fiscal 2009, investment income – the endowment and other investments – accounted for 29 percent of revenue in the university's consolidated budget; sponsored research accounted for 28 percent. In fiscal 2010, investment income is expected to drop to second place, providing 24 percent of revenue and sponsored research is expected to claim top billing at 30 percent.

Etchemendy said a full recovery did not require a return to endowment levels of recent years.

"Make no mistake, the university will recover long before the endowment reaches last year's level," he wrote in the budget plan. "Indeed, this will be the case as soon as we get budget reductions behind us, as our continuing revenue streams again keep up with inflation, and as our entrepreneurial faculty begin launching new initiatives in partnership with many supporters. With strong action to stabilize the budget, we can achieve full recovery in two to three years."

In coming weeks, the university is expected to release the investment return for the endowment for the 12-month period ending June 30, 2009. Stanford will report financial results – including the value of the endowment – for fiscal year 2009, which ended Aug. 31, in December.