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Targets announced for $43 million gap-closing program
STANFORD -- Stanford University officials have issued guidelines for each academic and administrative unit that should yield $26.4 million toward balancing the university budget, and have identified a group of central initiatives from which they expect to find an additional $16 million.
Another step in the effort to close a $43 million budget gap over the next two years, the plan calls for permanent expense reductions -- or offsetting income enhancements -- averaging 7.6 percent for six of the university's seven schools, 8.9 percent in four academic support units and 12.8 percent in the nine vice presidential areas.
Each school and vice presidential area will spend the next three months developing specific proposals to meet its reduction guideline, President Donald Kennedy and Provost James N. Rosse said Tuesday, Oct. 22, in a 12-page letter to the university community.
After wide consultation, the units will submit their recommendations to the Cabinet Committee on Budget and Strategic Planning by Jan. 17.
Meanwhile, the broad initiatives will be analyzed and finalized, with the entire package presented for trustee approval in April. About half the budget gap is to be closed in the fiscal year beginning Sept. 1, 1992, and the rest the following year.
The list of central initiatives includes substantial savings in the housing and food services budget, changes in financial aid qualifications, retrenchment in the campus building program and a moderate reduction in the overseas studies program. It also includes the option of modest tuition increases over the next several years.
Rosse and Kennedy said the goal of the university's self- examination is not just a balanced budget but "a renewed, better Stanford that has responded to a changing environment for higher education that demands more focus, selectivity and excellence in the activities of all universities."
Although the exact outcome will not be clear until later, the elimination of some programs and jobs is inevitable, officials said.
"We will not be able entirely to avoid layoffs of staff members, but we can work to minimize them," Kennedy and Rosse wrote. "The layoffs that do occur will be handled in an ethical and equitable way."
Employees will be retrained and placed in other positions where possible, they said.
In the case of faculty billets slated for elimination, "we expect these cases can be handled through retirements and normal attrition," they wrote. Rosse said there had been no discussion of faculty layoffs.
Kennedy and Rosse expressed special concern that planning efforts "pay attention to the development of current and future junior faculty; they are the resource that will guarantee Stanford's future success."
"At the core of our collective vision for Stanford lies an insistence that excellence continues to infuse everything it does, even if it means doing fewer things," Kennedy and Rosse wrote.
Both research and teaching excellence must be maintained, they said.
They described what they said makes Stanford "one of the best in the nation" for undergraduates: special learning opportunities both on and off campus, close contact with faculty, opportunities to work on research projects, generous financial aid, and a top residential education program. The program must remain sound in the face of significant budget reductions, they said.
In the letter, Kennedy and Rosse explained their preliminary ideas on a group of university-wide issues and programs, including:
Targets for individual units
Budget-cutting guidelines for the units show that administrative areas, for the most part, were given higher targets than schools and academic support units. The latter are "more central to Stanford's primary mission of teaching and research," Kennedy and Rosse wrote.
The budget letter presents the reduction target for each unit as a dollar figure and as percentages of general funds allocation and of the unit's operating budget. A unit's operating budget includes a general funds allocation and, in some cases, other revenue, such as gifts.
Excluded from each budget base are items that could not be cut, such as debt service, insurance, utilities and university- based graduate student aid.
Kennedy and Rosse set forth budget-cutting guidelines for six of Stanford's seven schools totaling $10.8 million, or 7.6 percent of the applicable operating budgets. When non-academic cuts made during the 1990 repositioning are taken into account, cumulative cuts total 8.9 percent.
(By separate arrangement, the Medical School has until 1995-96 to solve its $55 million budget problem. The school's operating budget reduction target of $5.1 million, or 12.7 percent, is not included in the $43 million university program.)
Among the six schools, the targets range from 8.6 percent of general funds for Humanities and Sciences to 11.6 percent for the Graduate School of Business. But because of income from other sources, the Business School's reduction as a percent of operating budget is the lowest of the group, 7.1 percent, while Education's is the highest, 8.8 percent.
Academic support units will see their cumulative budgets reduced by $3.15 million, or 8.9 percent. Including repositioning, the cuts total 17.5 percent.
Because of its relationship to the academic program, the library acquisitions and services component of the Vice President for Libraries and Information Resources has been shifted out of the administrative category. Its target as an academic support unit is 7.5 percent.
At the other end of the academic support unit scale, the $3.6 million general funds component of the Department of Athletics, Physical Education and Recreation will be cut 19.3 percent. The $700,000 reduction includes $300,000 provided by the university in recent years for intercollegiate sports, earmarked by the department for Varsity II "Ivy League" sports. An auxiliary enterprise, the department generates the remainder of its $24 million budget, which will not be affected by the process.
The Dean of Research, whose responsibilities include, among others, the Institute for International Studies, the Humanities Center and Hansen Laboratories, is slated for an 11.1 percent operating budget reduction.
The nine vice presidential units, which provide mostly administrative services, will be cut $12.45 million, or an average of 12.8 percent of their operating budgets. When repositioning is factored in, the total reaches an estimated 24.7 percent.
The greatest contrast is within the office of the Vice President and General Counsel. At 19.2 percent, the legal office is at the top of the list, while Public Safety, which is in the same vice presidential area, sits at the bottom with 2.5 percent.
Development will be reduced 10.1 percent, a figure that does not include downsizing planned earlier to coincide with the end of the Centennial Campaign. The target for Public Affairs is 16.4 percent, while Administrative Resources is 15.7 percent and Finance is 11.5 percent.
The facilities area of Planning and Management will be cut 17.6 percent and the rest of the unit 9.7 percent. Human Resources, hit hard during repositioning last year, is being asked to reduce itself by 10.9 percent.
Student resources will have its operating budget cut 12.6 percent, while the administrative and information services sections of Libraries and Information Resources will be cut 13.5 percent.
The guidelines, developed after several months of intensive planning and analysis by a variety of committees, were unanimously approved by the University Cabinet on Oct. 17.
Now that the budget-cutting guidelines have been set, responsibility for developing specific plans is shifting to the local units. Unit heads are to engage in extensive consultation with appropriate faculty, students, staff and clients from other units.
Deans, vice presidents and directors will be accountable for final recommendations in their areas, but Kennedy and Rosse wrote that they would reserve the right to "modify or reject any proposal that adversely affects the broader interests of the university."
Units should be "imaginative and creative in thinking about ways of restructuring," including "looking across organizational boundaries to consolidate and end duplication of similar activities," Kennedy and Rosse wrote.
Once the Board of Trustees takes action, scheduled for April, some of the cuts could begin immediately. Most, however, will take place in the 1992-93 and 1993-94 fiscal years.
In the meantime, the trustees will draw on as much as $100 million in reserves to cover deficits. About half of that is committed to the Medical School.
The $43 million objective takes into account the possible loss of tuition remission, the mechanism for charging the tuition of graduate students working on research projects to the staff benefits pool. Federal officials may revoke the practice as part of their revision of indirect cost policies.
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