Oct. 17, 2008
Skorton pledges not to retreat from commitment to need-based student aid despite souring economy
In a State of the University address largely devoted to a report on Cornell's financial stability and the need to preserve and protect the university's future, President David Skorton pledged that Cornell "cannot and will not retreat from our long-standing commitment to need-based student financial aid."
Delivering the speech during the annual Cornell Trustee/Council Weekend in Statler Auditorium today, Oct. 17, he committed to raising an additional $125 million for undergraduate financial aid, and he asked for the support of alumni. "By increasing our campaign goal for undergraduate scholarships from $225 million to $350 million, we can ensure that students have the freedom to pursue their academics dreams," he said. "I realize that this is one of several priorities in the Far Above campaign, but it is the one that, with your help, I intend to make a hallmark of my presidency."
Skorton also made two major announcements: the naming of W. Kent Fuchs, dean of the College of Engineering, as Cornell's 15th provost; and the gift of $50 million from the Tata Education and Development Trust, a philanthropic entity of India's Tata Group. Ratan Tata '62, one of Cornell's most eminent alumni, is chairman of Tata Sons, the holding company of the Tata Group.
Following the speech, Skorton, for the first time at a State of the University address, took questions from the audience. Using his well-known self-deprecating humor he answered questions on topics ranging from the impact of electoral politics on higher education to free speech and race prejudice on campus to the amount of time faculty spend in the classroom.
Skorton devoted much of his speech to the university's fiscal health, boldly stating that Cornell "is not in a financial crisis." But, he cautioned, "the rapidly changing financial environment requires us to plan differently for the longer term" because the university is not immune to the economic turmoil sweeping the globe. The good news is that careful management and diversification of the university's investment portfolio have minimized the impact of the Wall Street crisis, said Skorton. "Nonetheless, our long-term investment pool has recently shrunk due to market conditions," he added, and the timing of a return to growth is uncertain.
"I want to stress that the Cornell we have come to respect and love ... will be here, at least as strong as we are now, as far into the future as we can foresee," he said. At the same time, he cautioned, "there are serious stresses and strains that deserve our serious attention." Among the possible remedies: postponing capital projects with no dedicated funding sources and making some operational adjustments and workforce changes.
Regarding the last of these remedies, he commented, "The bulk of our budget -- as much as two-thirds -- is personnel. Therefore, any serious attempt at cost containment will necessarily include adjustments to staffing, which may include how operations are organized and how work is carried out and may mean ending some work." He added, "Unfortunately layoffs have already occurred where funding has been lost, and future budget cuts may necessitate additional changes."
While the Far Above campaign raised $617 million in cash and pledges during the past fiscal year, "we anticipate that the current economic conditions will substantially affect the income that people can devote to even their most deeply loved organizations and causes," the president said.
Tuition is a stable source of income, he said, but "it likely will not be possible to sustain the rate of rise of tuition in future decades that we deployed in past decades." While Cornell remains highly competitive in receiving federal grants and contracts for research, "the overall pie is not growing and likely will not grow in the near future."
Skorton noted that he appreciates the state's long-term support of Cornell, but "the state is having its own very substantial and undeniable revenue problems, and we must support our state's elected leaders in their attempts to prudently balance the state budget."
However, he emphasized, "Despite the tradition of decentralization, we will not leave the contract colleges to deal with the difficult state funding situation on their own." He said he recently appointed an ad hoc committee to look for ways to ameliorate revenue shortfalls without undermining such university priorities as excellence in teaching, research and public service, and student access to Cornell regardless of financial need.
The committee is looking at ways to enhance revenue in areas like tuition, endowment and entrepreneurial activity, and is re-evaluating the university's debt capacity, said Skorton. At the same time, it is considering cost savings in all areas, including payroll.
In concluding his remarks, Skorton reminded his audience, "Universities, at their core, are institutions based on hope and institutions which must be led with hope. Now, when so much has been accomplished, but so much more is at stake, I hope you will join us -- not simply to meet the challenges of the immediate crisis, but to safeguard and extend Cornell's excellence far into the future."
The president plans to deliver a report on the ad hoc committee's progress in mid-November.
Claudia Wheatley is a writer for the Office of Publications and Marketing.