In February 2009 it was announced that as a result of the economic recession, University leadership would take a voluntary five percent pay-cut and a hiring freeze would become effective from February 2009 until June 30, 2010.
“The recent recessionacut university revenues and expenditures also had to be cut in order for the schools and divisions to balance their budgets,” University spokesman Dennis O’Shea wrote in an email to The News-Letter. “We did balance the university’s budget, but just barely . . . the surplus made was very small, probably only about two percent of revenues . . . from a budget of over $4 billion.”
The hiring freeze for faculty and staff ended for this school year, and there are currently 29 new faculty and staff members in the Krieger School of Arts and Sciences.
This figure also includes Katherine Newman, the new Dean of the Krieger School, as she is considered a staff member.
O’Shea wrote that the efficacy of the hiring freeze is not yet fully known.
“We don’t have a specific number on (the amount of money saved),” O’Shea wrote. “The schools and divisions were, in Fiscal Year 2010, as they always are, responsible for making their own budgets balance.
“The hiring and salary freezes would have been taken into account at the divisional level among the many actions the divisions took to get their divisional budgets to balance.”
O’Shea wrote that though it is not known how much was saved as a result of the hiring freeze for the fiscal year of 2009, departments within the University were able to come up with a balanced budget, though money was tight.
“They (other departments) took other measures well, such as cutting operating budgets, postponing capital projects, etc,” O’Shea wrote. “It is the bottom line that gets reported up to the university level, not the details of how the divisions get to the bottom line.
“So while I can tell you that the university did, in fact, balance its budget in Fiscal Year 2010 and did, in fact, run an overall very small surplus, I can’t tell you precisely how much the hiring freeze contributed to that result, because each division of the university got to ‘balanced’ by its own path.”
O’Shea said that the imposition of the hiring freeze was a part of a series of financial decisions made by former President Brody before he left and handed over the presidency to current president Ron Daniels.
“The decision to impose a freeze in Fiscal Year 2010 was a joint decision of then-President Brody and the senior leadership of the university, including the deans,” O’Shea wrote. “As to how hiring is done, hiring for faculty and staff are done differently.
“For staff, the hiring decision is made in the office or department in which the person will work, with the help of Human Resources and under the rules that Human Resources sets forth.
“Faculty hires are made by the academic departments in consultation with the deans and the academic councils of the schools; if a grant of tenure is involved, then the trustees also must approve.”
Where the endowment is concerned, O’Shea wrote that it is not a free-for-all and that they money within the endowment is made up of collection individual funds.
“The endowment is not one big pot of money,” O’Shea wrote. “It is made up of thousands of individual funds, each of which is restricted by the donor as to how it can be used.
“Some of those endowment funds do generate income that is used to pay salaries — salaries of, for instance, professors who hold endowed professorships. But other endowment funds pay for financial aid or research or other kinds of expenses.”
To pay professors, endowment funds cannot be used indiscriminately, O’Shea wrote.
“We can’t use an endowment fund that is restricted to financial aid to pay for salaries or research, and vice versa,” O’Shea wrote. “And not all salaries are paid with endowment income.
“Many, many salaries are paid out of the university’s current income — that is, income that does not come from endowment investments. The sources of current income include tuition, research grants, and philanthropic gifts intended for immediate use.”
O’Shea also said there is a direct correlation between cutbacks at the University and the size of the endowment.
“The endowment was smaller than it had been, because the stock market tanked, so the endowment did not produce as much income as expected, and we could not spend as much as planned,” he wrote. “Hiring and salaries were frozen as one response to that fact. But there were other sources of income — not just endowment income — that came up short during the recession, and there were other measures taken by the university to meet the budget shortfall.”
“In other words, the university’s budget is very, very complicated, with lots of kinds of revenue and lots of kinds of expenditures. It has to be looked at as a whole. Endowment income is only one kind of revenue source, and salaries are only one kind of expenditure. The big picture is much more complicated than just those two factors.”
According to a review from 2008-2009 on the Consumerist, of the top 25 highest tuitions for colleges, Hopkins ranks seventh.
This tuition, which hits at least $50,000 a year, will only be increasing in upcoming years.
As many students know, tuition money is used to maintain and operate facilities on and around campus, to fund research opportunities, to pay and provide campus security, to salary professors and in a number of other areas.
However, when the economy took a turn for the worst in the last quarter of 2007, every person and institution domestically was affected, including Hopkins.
In February of 2009, then-school President William R. Brody announced via email a fiscal approach for Hopkins in addressing these challenges that would entail making a number of sacrifices to meet such needs.
Now, almost two and a half years later, we look to examine how these “challenges” have improved, if at all.
As part of President Brody’s blueprint, a number of alterations were to be implemented and become active as of July 1,2009.
First off, there would be a freeze on hiring “both faculty and staff positions” through June 30th of this year.
Second, no faculty or staff member could receive a salary increase unless they were obligated to receive based on the terms of their respective contracts.
Finally, there would no longer be overtime for faculty unless they received the proper approval. Based on Brody’s email, most other things were to remain in status-quo.
Though the economy is still going through a recession, the university has seen improvement from the original situation it faced this past February.
As is evident across campus, the university has renovated Gilman Hall and is currently in the midst of constructing an extension to the library and completing renovations on the exterior of Shriver Hall.
“Economic conditions seem to be improving and the endowment has recovered to some extent,” O’Shea said.
“We’re continuing very strict budget discipline . . . We seem to be over the worst of it, and so we have relaxed the toughest budgetary measures that were imposed last year.
