Actions of the Corporation Regarding the Economic Crisis - February 24, 2009
I am writing today to follow-up on President Simmons' recent message to the community regarding the results of the Corporation meeting that concluded this past Saturday, February 21 http://brown.edu/president/022109. As noted in that communication, the Corporation advised that, in light of the ongoing economic crisis in the nation and the world, we must be prepared to achieve greater levels of budget reductions than previously anticipated in order to achieve our overall goals. The proposed financial plan that we shared with you last month included an Education and General (E&G) budget reduction target of $60 million and a reduction target of $10 million for the Division of Biology and Medicine to be achieved by Fiscal Year 2014. These reduction targets were relative to the five-year budget plans we presented to the Corporation last May when we were expecting to grow the E&G budget from the FY09 amount of $543 million to $695 million by FY14. Our plan at the end of January had been to reduce the projected FY14 budget by $60 million, to $635 million. Over the weekend, the Corporation concluded that our underlying assumptions about the potential for the endowment's recovery over the next several years were too optimistic. As a result, they advised us to increase the E&G reduction target to be achieved by the end of FY14 from $60 million to between $80 and $90 million. This means we should plan on an E&G budget of $610 million in FY14. Reductions will also need to be made at a somewhat greater level than the original assumption in the Biology and Medicine portion of the University budget.
While this is a daunting goal, we have already identified a number of steps that will enable us to achieve close to $30 million of the targeted savings by FY10. These steps were described in the President's January message http://brown.edu/president/budget and include a freeze on salaries for next year, reductions or deferrals of capital projects, a number of budget reallocations, and a reduction of $4.5 million in the overall E&G budget for administration. The Division was, at the same time, seeking to achieve savings of $800 thousand. In light of the increased reduction targets announced over the weekend, we now must achieve a total of $6 million in E&G reductions in FY10 (up from the $4.5 million originally forecast) and $1.1 million of reductions in the Division (up from $800 thousand).
Salaries and benefits account for about half of the University's budget. Therefore, given our commitments to financial aid, to maintaining academic excellence, and to preserving our core mission, it is not possible to achieve these reduction targets without affecting staff positions. We plan to achieve this new goal for FY10 in large part through 60 to 70 targeted staff position eliminations over the next three months. We will eliminate vacant positions to the maximum extent feasible; hopefully, we can eliminate between 30 and 35 positions via this approach. Unfortunately, we believe that we will also need to eliminate at least 30 filled administrative and staff positions during this period to reach our savings target. There are currently over 3,000 non-faculty employees at Brown.
We are committed to managing this difficult process in a careful and sensitive manner. The Office of Human Resources will oversee the provision of severance, outplacement services, and other transitional assistance to all affected employees. Karen Davis, Vice President for Human Resources, will work with senior officers to develop a plan for each unit affected as quickly as possible. In the meantime, she and her staff are available to answer questions and provide consultation on individual issues, so please do not hesitate to contact her via email Karen_Davis@Brown.edu or phone 863-3377.
At the same time that we are undertaking these actions for FY10, we will begin planning for FY11 and beyond. Our plans for the out years will need to be even more aggressive than for FY10 in order to meet our increased budget reduction targets. We do not yet know exactly how we will meet these targets, but we know that we will need to plan very carefully in order to ensure that we achieve these savings while protecting Brown's educational and research mission.
Members of the Organizational Review Committee (ORC) have met with a number of standing committees and community groups to solicit ideas about opportunities for organizational change that will allow us to provide quality services at lower costs. These conversations have been very helpful, and the ORC is now ready to prepare a more detailed set of proposals for review by the President, Provost, and various standing committees over the next month or so. Once the proposals have been endorsed, we will begin to work with the community to identify budget reduction and administrative reorganization opportunities. The goal will be to have a second round of proposed reductions identified by the end of the fall semester.
We need to involve the community more than ever if we are to be successful in achieving the aggressive financial targets described above. The existing governance committees, such as the University Resources Committee, Academic Priorities Committee, Campus Life Advisory Board, Human Resources Advisory Board, etc., will play a primary role in the work relevant to their charge and area of responsibility. Where necessary chairs of committees and senior officers who work with them may include additional individuals or create ad hoc groups to assist with this important work. I welcome your ideas and suggestions about how best to provide increased opportunity for community input on these serious matters.
My colleagues in the senior administration and I recognize how unsettling these times are for all members of the Brown community. I met with a large group of managers from across the University this morning about this topic, and asked them to be informed and available to respond to questions, concerns, and suggestions from staff in their areas. In addition, further information about Brown and the economy, including support services and other programs for staff, is available on-line at: http://www.brown.edu/web/economy/ and: http://brown.edu/Administration/Savings_Suggestions/. Finally, we intend to hold open forums over the next months to which all will be invited.