Princeton Coffers Take 11 Percent Hit

Princeton’s endowment has declined 11 percent from July 1 to the end of October, President Shirley M. Tilghman announced in a university-wide letter last Thursday.

Tilghman wrote that it was “prudent” to anticipate a decline of possibly 25 percent for the year, from a June 30 value of $16.3 billion.

Over the same period, Harvard’s endowment fell by a similar proportion: 22 percent from a June 30 value of $36.9 billion. Yale University also reported losing one quarter of its endowment, projecting a decrease from $22 billion to $17 billion by year’s end.

Unlike the Faculty of Arts and Sciences, which Harvard Magazine has noted is comparable in size to Princeton as a whole, Princeton has not announced a hiring freeze.

“We should not put at risk the foundations we have so recently laid,” Tilghman wrote of staff recruiting.

Princeton will continue searches for new faculty already authorized. Any requests to conduct new faculty searches or resume old searches, however, will be reviewed by Dean of the Faculty David P. Dobkin.

A review committee will also review all searches for term, temporary, and regular employment.

Princeton relies more heavily on its endowment for operating budgets than Harvard does. On average, the endowment contributed 34 percent of the operating budget of each of Harvard University’s schools in fiscal year 2008.

In comparison, 45 percent of Princeton’s projected operating budget for 2008-2009—or $534.6 million—relies on the endowment, said Emily R. Aronson, a media officer in Princeton’s Office of Communications, in an e-mail.

Behind the 34 percent average, Harvard’s schools vary in their dependence on endowment funds for operations.

Hardest hit have been the Radcliffe Institute of Advanced Study and the Divinity School, both of which utilize the endowment for over 70 percent of their operating budgets.

Tilghman said several construction projects already under way at Princeton will continue. She did add, however, that all new projects will be reviewed on a case-by-case basis.

According to Tilghman, the new allocations will still be higher than they were four years ago, before several years of major increases.

The blow to Princeton’s endowment will not have significant impacts on students, at least for now.

“I’ve told [Financial Aid Director] Robin Moscato to meet every single request and to make sure there is not a single student who leaves because he or she can’t meet the financial obligation to the University,” Tilghman told Princeton University’s news office in November.

Students not on financial aid will likely see a 2.9 percent increase in tuition, Tilghman wrote in the letter. This figure represents the smallest percentage increase since 1966.

This increase, recommended by Princeton’s Priorities Committee, will pay for tuition, room, and board, Aronson said. The recommendation must be approved by Princeton’s Board of Trustees, who are responsible for fee packages.

The biggest losers within Princeton will be tenured faculty and higher-level administrators, for whom salary increases will be capped at $2,000.

Princeton’s scholarship budget is expected to rise 13 percent from $92 million to $104 million, Aronson said.

This figure includes increases in scholarship amounts already awarded this year to families affected by the financial crisis, as well as a projected 56 to 58 percent increase in students requiring financial aid.

In her letter, Tilghman concluded with a cautionary note, warning that future fiscal finagling may become necessary.

“It is likely that this year’s downturn will require creative planning for not only the upcoming budget year but later ones,” she wrote.

­—Staff writer Alexander R. Konrad can be reached at akonrad@fas.harvard.edu.