Cornell Bans Hiring as Financial Crisis Hits Schools

By Julie Ziegler and Alex Nussbaum

Oct. 31 (Bloomberg) -- The worst financial crisis since the Great Depression is beginning to shake up the budgets and planning on U.S. college campuses, even in the elite Ivy League.
Cornell University, one of eight Ivy League institutions, yesterday became the latest school to react to the declining economy. The school will suspend hiring of non-faculty staff from outside the university through March 31, Cornell President David Skorton said. Construction won't begin for any new projects on Cornell's Ithaca, New York, and New York City campuses for at least 90 days.

Publicly supported schools, which educate about 80 percent of U.S. undergraduates, can expect shortfalls for at least the next two academic years, given state projections of continuing deficits, said Donald Heller, director of the Center for the Study of Higher Education, at Penn State University. Cornell's move may be matched at other colleges, he said.

``This is a harbinger of things to come in the coming years,'' Heller said in a telephone interview from State College, Pennsylvania.

The result will be more cutbacks, rising tuition and a migration of students to cheaper community and two-year colleges, he said.

Cornell's measures address anticipated budget cuts from the state of New York, contractions in the school's $6 billion endowment, and a potential decline in donations, Skorton said in a telephone interview. Cornell, a private university, receives about $170 million from the state because of research grants and through its status as a land-grant school. The state has already cut as much $3 million this year from the funding, and new cuts may be three times as large, Skorton said.

Seeking Efficiencies

``Like the state of New York and like the country in general, we have to grow our way out of this,'' Skorton said. The university will use the next three to five months to see how tough it will need to be with other measures should the economic slowdowns in the U.S. and New York be prolonged.

``Cornell may end up even stronger because it will force us to look more carefully at our efficiencies,'' Skorton said.

Cornell, which has a combined budget of $2.8 billion a year for its Ithaca campus and its medical school in New York City, will probably impose tuition increases next year, he said.

``I'm sure we will raise tuition,'' Skorton said. ``We will give very careful consideration to do it as moderately as possible.''

Hiring of faculty and internal filling of staff positions will continue during the freeze, as will construction projects already under way, the university said.

Michigan State

Mary Corbett Broad, president of the Washington-based American Council on Education, whose 1,600 university members include Princeton University in New Jersey and the University of Wisconsin in Madison, yesterday said budget cuts in at least 17 states will most likely point to tuition increases next year.

Michigan State University, in East Lansing, said in a statement Oct. 24 that a 1.2 percent tuition increase would take effect during the semester that begins in January, though the university would offset the cost until July.

The University of Georgia in Athens announced a series of moves this month, including a hiring freeze, shorter hours at a student learning center, reductions in campus police overtime and the cancellation of one of every five library subscriptions, after state officials cut $30 million from the school's budget.

``If the economy shifts, as I hope and believe it will, we will be in better stead,'' said Michael Adams, president, in remarks on the university's Web site.

Boston University

Private schools with endowments may also be affected by declines in the stock market. The Standard & Poor's 500 Index has fallen 35 percent this year and 18 percent in October, which is poised to become the worst-performing month for the index since 1987.

Boston University President Robert Brown announced a freeze on ``non-critical'' jobs this month, citing the ``worldwide financial crises'' as well as rising fuel and food costs. New construction may also be banned, though existing projects, including a $150 million dormitory already under way, will continue. The private school is struggling with budgetary pressures as it anticipates rising demands for financial aid from its 33,000 students, Brown said in an Oct. 16 letter to students and staff.

Cornell, founded in 1865, is a land-grant institution, so named for 19th-century U.S. laws promoting agricultural and technical education.

The Ivy League comprises eight universities and colleges in the U.S. northeast: Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton, the University of Pennsylvania, and Yale.

To contact the reporters on this story: Julie Ziegler in Boston atjziegler@bloomberg.net; Alex Nussbaum in New York anussbaum1@bloomberg.net.
Last Updated: October 31, 2008 14:30 EDT