While Princeton remains fully committed to its financial aid program and other high-priority initiatives, the current economic downturn has reduced the value of the University’s endowment and has led officials to adjust future spending projections, President Tilghman told members of the campus community in a recent letter.

Tilghman noted that, through Oct. 31, the University’s endowment had declined by 11 percent during this fiscal year and that officials are planning for the possibility of a 25 percent decline by the conclusion of the fiscal year on June 30. In her Jan. 8 letter, she detailed projections for how the economic turbulence will affect the University’s operating budget, faculty and staff recruitment and compensation, and capital planning.

Tilghman stressed that Princeton remains committed to meeting the full financial need of students who qualify for aid. She said that the Priorities Committee will recommend the lowest percentage increase since 1966 in undergraduate tuition and fees for 2009-10 — 2.9 percent — in recognition of the impact of the financial downturn on tuition-paying families. The committee will also recommend a 3 percent increase in graduate student stipends and that the largest percentage increases in faculty and staff salaries for next year should be directed to the University’s lowest-paid employees.

“Fortunately, Princeton planned conservatively during the good years, knowing full well that markets go down as well as up. Though this year’s downturn is deeper than what anyone could have imagined, Princeton will be able to protect its key assets. Foremost among these is our human capital — the students, faculty and staff who are the vital heart of a great scholarly enterprise,” Tilghman wrote.

To read the full text of the letter, see page 3.