News Release: University News
Jan. 22, 2009
President's Letter: Opportunities and Challenges in the New Year
Letter from President Jim Wagner
January 22, 2009
2:00 PM ET
Dear Emory Community:
With classes underway and one of the most significant events of the year—the inauguration of President Obama—already in the history books, it may seem a bit late to offer wishes for a happy new year. Nevertheless, since 2009 is still quite new, I take this opportunity to share my earnest wish that the coming year will be for you and for our university community—alumni and parents and friends as well as all of us who live and work on the campus—a year of hope, strength, and renewed commitment to all that is good and excellent.
More on Emory and the Economy
Climate Change in the World of Higher Education / Emory Edge, Spring 2009
Between a Rock and a New Place / Emory Magazine, Winter 2009
2009 Employee Town Hall / Feb. 19, 2009 (ID and password required; RealPlayer video)
State of the Woodruff Health Sciences Center / Feb. 18, 2009 (RealPlayer video)
Emory Community Letter from Ways and Means Committee / Feb. 10, 2009 (PDF)
Emory, Oxford Colleges Restructure Budgets / Emory Report, Feb. 9, 2009
Wagner Addresses Financial Aid at Jan. 13 Board of Visitor's Meeting / Jan. 13, 2009 (iTunes)
Wagner Discusses Budget With College Faculty / Emory Report, Jan. 26, 2009
Budget Process Moves Forward / Emory Report, Dec. 15, 2008
The Economic Downturn: How Does It Affect Student Financial Aid? / Emory Financial Aid
Crisis Helps to Deepen Bonds / Emory Report, Nov. 17, 2008
Emory Manages Economic Decline / Emory Report, Nov. 3, 2008
Talks on Impact of Economy / Emory Report, Oct. 20, 2008
President's letter: Emory and the Economy / Oct. 8, 2008
This year greets us with both blessings and stark new challenges, from political and military conflicts to economic contraction. There is a powerful element of renewed optimism in our ability to face these challenges and prevail. Emory is no immune to the vulnerability that such challenges bring. But we can have optimism and confidence that our community has the courage and creativity to triumph in the face of these challenges and thus never to lose sight of our vision.
The difficulties of our time may be complex and bewildering, but they offer us clear choices in how we respond to them. Either we can choose simply to react as these challenges force themselves upon us, or we can view them as opportunities for creativity and leadership. The easier course is the first—to allow external events to shape us. But this can lead to insular and even selfish behavior driven by fear. The better course, the one we must choose, calls for commitment to higher ideals beyond our self interests.
Consider first the challenges that face our campus in reaction to new global conflicts. It is important to imagine a peace that is more than simply the imposed absence of violence. On our campus, specifically, let us not resort simply to huddling with others of like opinions, but instead find that our passionate communication, even our activism, is as much about gaining understanding as about being understood, more about the lasting value of engagement than the fleeting victory of insult. A university is the last place where we should feel content to act with tunnel vision upon dogma, whether scientific or political. Instead, we must exercise together the sort of courageous inquiry that leads to new possibilities. Universities like Emory are called to be the places where differences motivate us to genuine communication rather than to verbal or physical violence. It is hard work to listen respectfully and respond thoughtfully, but it can happen here.
On the economic front, the impact of the worldwide financial turmoil is becoming evident throughout higher education. Many of our peer institutions against which we benchmark our practices have announced steep budget cuts, hiring freezes, caps on salary increases, and other measures, including layoffs. For the first time in memory, the assessment of the financial outlook is negative for higher education by raters such as Moody’s.
Emory’s response to these economic challenges must be active rather than passive. In early October, I wrote to you outlining what must be the top priorities for the use of our financial resources. These included our priorities to reward, retain, and recruit the best faculty and staff; to recruit and retain top students; and to pursue the strategic plan toward our vision at the most expeditious pace permitted by our resource environment. Since then, the effects of the economy, still not fully known, are becoming increasingly apparent. Many of you have asked for more details as they become available, so I will devote the remainder of this message to updating you on Emory’s economic challenges and how we, together, are addressing them.
It is now abundantly clear that Emory must not merely prepare to “weather the storm” as some have called us to do. What the world is experiencing is no passing storm; it is an economic climate change. Volatile markets illustrate the serious structural nature of the challenges confronting us. But we are experiencing more than just a market-driven recession. It is a seismic shift in the entire economy affecting major industries, name-brand businesses, whole tiers of white-collar and blue-collar jobs, and accustomed ways of organizing our society and economy in many sectors, from banking to publishing. No one should expect higher education to be immune to potential fundamental threats and questions.
As of December 31, the value of Emory’s endowment and investment portfolio was down by more than 20 percent. Lost investment revenue means that we must adjust over time to a reduction of at least $60 million in annual revenue from these sources. We also must reduce expenditures from the strategic plan fund by at least $30 million and delay and stretch out our spending on the overall capital program. In addition, we know that our students and their families have suffered significant losses in personal investments and home equity, and the availability of educational loan sources has been diminished. All of this will lead to additional pressure to slow the rate of increase in tuition and fees, at the same time that we increase financial aid.
Thus, we cannot simply attempt to hold on to what we have; we must take account of these new economic realities and adjust accordingly in order to continue to pursue the leadership to which we are called as a top-tier research university. Adjusting to the new economic realities will require that we adhere to certain principles: fully funding essential positions and activities along with programs through which Emory leads; making certain that core programs are buttressed by only those that are truly excellent; achieving the optimally sized student body to ensure the very highest quality in students and the academic experience; assuring that our work force of faculty and staff members is appropriate for maintaining programs of the highest quality and maximum efficiency within available resources; and fostering financial sustainability of programs that support excellence in our essential mission. To do these things, we must implement efficiencies and eliminate activities that we simply will lack funding to support.
The particular significance of these principles to each of our units is becoming clearer as we move through the FY2010 budget preparation now in process. Still, at this point, I can share with you several illustrative examples of how various units are being affected in their budgeting. The University’s overall budget will grow by only about 1.6 percent next year, compared to 6-8 percent in recent years. On average, administrative units will see virtually no increase in their budgets, and several will be reduced. Therefore, most administrative units will have to reduce activity to achieve a balanced budget for FY10. For example, next year the marketing budget within the Marketing and Communications Division will absorb an 8 percent reduction. The Division of University Technology Services will remain flat, while at the same time it must pay for new responsibilities associated with PeopleSoft Financials and increased licensing fees to external vendors. The President’s Office will significantly reduce our own operating budget for the coming year. In fact, at this point only one administrative unit will grow more than 1.6 percent—the Development Office so crucial to the Emory Campaign, and necessary for us to acquire new resources to maintain our momentum. These strategic cuts and investments are being made in the spirit of progress, and not simply preservation. Each of these administrative units is showing creativity in freeing up funds to support core mission-based activities.
In summary, this new year greets us with great opportunities and with more than the usual number of challenges. Facing those challenges will, I believe, draw out our best as we answer the call to responsible stewardship of the legacy of excellence entrusted to us. Genuinely listening to all views and making difficult financial decisions will require an extra measure of wisdom and courage of the sort that Emory has drawn upon in the past and will rely on in the future. I can imagine no other community with whom I would rather share these times. Thank you for your support, your hard work, and your trust.