Recommendations Concerning
the Operating Budget
for Fiscal Year 2002-2003

 January 17, 2002

President Shirley M. Tilghman
One Nassau Hall
Princeton University
Princeton, NJ 08544

Dear President Tilghman:

The accompanying annual report of the Priorities Committee presents our recommendations for the University's operating budget for fiscal year 2002-2003. In accordance with its charge and commitment to you and to the Board of Trustees, the Committee is proposing a balanced operating budget projected for the coming fiscal year.

This year the Committee reluctantly recommends that tuition and fees be increased 3.94%. The Committee believes that this rate of increase is necessary to ensure that the budget remains in balance and that the University is able to fund the most important priorities that were presented to the Committee. Our recommendations are explained in detail in the report, but they can be summarized as constraining the growth of total fees while providing a range of services that are primarily directed towards enhancing the campus experience of students, faculty, and staff. We believe that the implementation of these recommendations will enhance the quality of life for Princeton's faculty, students, and staff.

The Committee is aware that while the budget for the coming fiscal year is balanced, the longer-term projections indicate potential deficits over the next several years. Unless University income streams develop more robustly than is currently expected, reductions in expenses or further increases in the rate of growth of tuition may be necessary. Despite the economic pressures that the University faces, it remains in a very strong financial position. 

The Committee is grateful to the presenters and to all who assisted in and contributed to its work, particularly Christopher McCrudden and Steven Gill, whose knowledge of the intricacies of the University's budgets and whose willingness to share their expertise with the Committee were invaluable.

For the Committee,

Amy Gutmann, Provost

Joann Mitchell, Vice Provost for Administration  

Report of the Priorities Committee
to the President

Introduction

The Priorities Committee, which was established in 1969, is a charter committee of the Council of the Princeton University Community. For more than three decades, the Priorities Committee has served as the mechanism by which recommendations for the operating budget for the succeeding fiscal year are brought to the President of the University and to the Board of Trustees. The Committee is chaired by the Provost and is composed of tenured and non-tenured faculty, graduate and undergraduate students and staff.

The Committee brings together constituencies with a variety of administrative and academic experiences and perspectives to recommend fiscal and programmatic priorities for the University. In creating this Committee, Princeton introduced a model of shared responsibility for review of the operating budget that remains relatively uncommon among colleges and universities. In fulfilling its charge, the Committee evaluates requests for changes in existing programs or new initiatives from senior officers of the University who oversee academic programs and large administrative units. This process serves the University well by allowing for frank discussions of current and future directions of the University as a basis for setting its operating budget. The major stakeholders of the University can evaluate specific requests in light of competing needs and available resources. 

 
II. The Fiscal Context

This year the Priorities Committee began its deliberations in a context of an operating budget for the preceding fiscal year that had been balanced, but only by utilizing significant sums from the energy reserve pool and by being able to draw upon an Annual Giving success several million dollars above the amount that had been anticipated. The budget variances that caused the budget for fiscal year 2000-01 to be out of balance were principally the result of much higher than anticipated costs for energy, faculty recruitment and retention, and the net cost of the undergraduate financial aid program. With regard to the increased number of students who received financial aid and our efforts to recruit and retain faculty members, the University takes pride in the success of these very important initiatives. Two sources of funds were relied upon heavily in order to balance the budget. To pay for the unanticipated increase in the cost of energy, one-half of the energy reserve, which had been built up over the past 30 years, was expended. To pay for the other additional costs, the University benefited from the generosity of our alumni to Annual Giving and to other unrestricted gifts and flexible funds.

The Priorities Committee also learned early in the year that deficits were being projected for the current fiscal year 2001-02 and the next several years. To avoid these deficits, the University had to take additional action to close expected gaps between income and expenses. Given the unlikelihood of sustaining Annual Giving at previous levels in the current financial climate and the deep erosion of the energy reserves, current plans had to be reevaluated to ensure that the University's operating budget remained in balance.

The Provost and Treasurer provided a preliminary budget update to the Priorities Committee in November, but indicated that consultation with the President and the Finance Committee of the Board of Trustees was necessary before a more complete update could be provided. In late November, after appropriate consultation, they reported that it would be possible to make adjustments in the debt payment schedule and other areas that would infuse sufficient resources into the budget to ensure that it would be in balance for fiscal year 2001-02. To balance the budget projections for fiscal year 2002-03 -- the year for which the Priorities Committee would make its recommendations -- the rate of increase in tuition and fees was marginally increased and the rate of increase in salary pools was marginally decreased compared to fiscal year 2001-02. The budget was also able to be balanced because of the additional funds that the Trustees made available as a result of an increase in the Endowment Spending Rule last year. Nevertheless, all these adjustments that enable the University to balance its budget will result in reduced flexibility if further unexpected expenditures become necessary. After all of the above adjustments had been made, the amount available to the Priorities Committee for allocation in 2002-03 was approximately $1.6 million. This gave the Committee the ability to approve approximately one-third of the dollar value of the new initiatives proposed to it and still succeed in proposing an overall balanced budget to the President and Trustees.

The Committee believes that the overall package recommended in this report represents an appropriate balance of investments in the University's future, taking account of the need to continue building an ever more excellent educational program on a very strong base. The Committee recommends added investments in our faculty, students and staff, our facilities, and our broad range of curricular and extracurricular programs. 

 
III. Procedures of the Committee

This year, as in the recent past, the Priorities Committee's work was structured into three parts: a set of orientation meetings, a series of presentations from deans, vice presidents and other senior officers, and deliberative meetings. During the orientation sessions, new members of the Committee were acquainted with the University's budgeting processes and major factors affecting the operating budgets of the current and upcoming fiscal years.

Following the orientation meetings, senior officers with responsibility for major budgetary units make presentations to the Committee to supplement the written reports that they had previously submitted (copies of these reports are available on the Princeton Shelf in Firestone Library and on the Provost's Office website). Most presenters requested allocations that would permit them to undertake new initiatives or to expand existing ones. In addition, all presenters provided information about current and future challenges that they believe will affect the areas for which they have responsibility. These presentations and the subsequent discussions focus on desirable changes that are feasible in the foreseeable future, and are not intended to constitute comprehensive reviews of each area.

The Committee held an open meeting on November 14 to invite all interested members of the University community to comment on the requests and to bring to the Committee's attention the broadest range of their views on the University's most pressing priorities.

After all of the presentations had been made, the Committee held a series of deliberative meetings to discuss the comparative merits of the different requests. The Committee also received updated information regarding budgetary projections for fiscal year 2002-03. The Committee then formulated tentative recommendations that were discussed with the Finance Committee of the Board of Trustees and with the Council of the Princeton University Community in December. Based upon the comments and advice received during those consultations, the Committee then reconvened in early January to finalize its recommendations. During its deliberations the Committee established two guidelines. First, given the current financial uncertainties and volatility of the markets, the Committee decided not to approve requests that would require significant additional resources in future years. Second, the Committee decided that requests for additional staff would be granted only in the most compelling cases to allow the Task Forces appointed by President Tilghman to complete their reviews of the resources that would be needed, including additional staff, to accommodate the addition of 500 undergraduates to the student body. The Committee's final recommendations are now being submitted to the President for her review, approval, and transmittal to the Board of Trustees. Those recommendations are discussed in detail in the next section of this report.

In addition to its specific recommendations, the Committee urges the University to continue its leadership role in assuring the affordability of higher education by both maintaining the best financial aid program possible and also by constraining tuition increases to the extent possible so as to ensure the overall affordability of a Princeton education.

 
IV. Presentations and Recommendations 

Tuition and Fees

One of the most important recommendations that the Priorities Committee is responsible for making is the level of tuition and other student charges for the coming academic year. For more than a decade, the Trustees and President of the University have been committed to reducing the rate of increase in tuition and fees in an attempt to align those increases with the rate of growth in median family income. Last year's Priorities Committee recommended an increase in total fees of 3.0% -- the lowest rate of increase since the mid-1960's. This rate of increase was considerably lower than the recommended increase in the salary pools for faculty and staff for the 5^th consecutive year. Previous Committees recognized that it was extremely difficult, perhaps even financially impossible, to continue to reduce tuition growth -- one of Princeton's primary sources of income -- below the rate of growth of salaries, Princeton's primary expense item. Previous Committees therefore foreshadowed that a reversal of this trend was imminent.

In response to requests made by the Committees on Undergraduate Financial Aid and CIT, last year's Priorities Committee urged the administration to consider including the cost of Dormnet, the service that permits students living in dormitories to access the University's computer network (including the Library) and the Internet, in the charge for total fees. In April of 2001, the decision was made to include the charge assessed for this service -- which is used by 95% of undergraduates and the majority of graduate students in residence -- in the total fees assessed for all undergraduates. However, since some fraction of the University's graduate housing has not yet been wired for Dormnet, the charge would only be incorporated into the charges for the Graduate College and other units that had been wired for the service. Thus, the total charge for tuition and fees for AY01-02 was actually $33,743 rather than the $33,613 that was recommended in the January 2001 report by the Priorities Committee.

The considerable enhancements made in recent years in the undergraduate financial aid package have ensured that prospective students and their families are more able than ever before to afford a Princeton education. In light of these important changes, and the budget deficits projected for fiscal year 2002-03 and beyond, the Committee is recommending an increase in overall tuition and fees of 3.94% next year. This rate of increase is relatively modest &emdash; although it is the largest in six years. The Committee recommends it reluctantly because it is necessary to fund a number of compelling educational initiatives. The Committee's recommendation provides for a total charge for undergraduate tuition, room and board of $35,072: tuition of $27,230 (an increase of 4.09%), room charges of $3,912 (an increase of 5.0%), and board charges of $3,930 (an increase of 1.89%).   The Committee recommends that graduate tuition also increase by 4.09% to $27, 230. The room and board charges for individual graduate students will vary, depending upon the choices they make for housing and dining, but those charges will increase at rates similar to those for undergraduates.

The Committee believes that this increase in tuition and fees will provide valuable resources that will fund important budgetary items such as competitive salaries and initiatives to strengthen the academic program and enhance the quality of life of Princeton's students. The rate of increase being recommended for this year of approximately 3.94%, while higher than the rates of increase recommended over the past several years, is significantly lower than the expected rates of increase of public and private institutions nationally, and is expected to allow the University to retain its competitive position relative to its peers. 

Undergraduate Financial Aid

The Priorities Committee is proud of our financial aid program, which ensures the affordability of a Princeton education to everyone who qualifies for admission on a need-blind basis. Recent enhancements in undergraduate financial aid adopted during the past three years have made our financial aid program a model for others to emulate. The elimination of the loan requirement and the reduction in the expected summer earnings for undergraduates, which resulted from the Trustees' increase of the Endowment Spending Rule last spring, have been very well received both on campus and elsewhere. These important steps represent significant improvements to Princeton's aid program and demonstrate the University's unwavering commitment to the fundamental principles of need-blind admission and need-blind scholarships, which meet the full financial need of all admitted students. As anticipated, some of Princeton's peers have also improved their financial aid programs. However, none has quite matched the program offered by the University. The Faculty and Student Committees on Financial Aid report that Princeton's financial aid program is perhaps the best aid program offered by any U.S. college or university. The Priorities Committee agrees and stands firmly behind our ongoing efforts to retain the very best financial aid program for Princeton students.

The Committees on Financial Aid renewed its request from last year to add the cost of a second round-trip home during the academic year to the annual budget for international students on financial aid. Two years ago, the Priorities Committee recommended the approval of a request from the Financial Aid Committees for the addition of an annual trip home for international students on financial aid. The request was approved. The additional request brought forward by the Financial Aid Committees this year would be the final step in bringing the financial aid program for international students into parity with that afforded to U.S. and Canadian citizens. The Financial Aid Committees indicated that this final step was extremely desirable since, while some international students stay with friends or relatives over the break, others remain in the dormitories. In order to eliminate this disparity in the treatment of travel budgets, the Committees asked that this request be granted at a cost of $152,000.

The Priorities Committee was persuaded that this change in University policy would further strengthen Princeton's already superb financial aid program. However, given the limited resources at the Committee's disposal and the very substantial improvements that have been approved during the past several years, the Priorities Committee decided not to recommend funding the proposed change at this time. The Committee did signal its desire to see the request funded in the future, when more discretionary resources are at the University's disposal. 

Faculty Staffing

The Dean of the Faculty presented an overview of Princeton's teaching budget, which includes both faculty appointments and assistants in instruction (or AIs) budgeted as full-time equivalents (or FTEs). The success of the recently completed Anniversary Campaign has provided much needed resources for new academic initiatives -- including the enhancement of the Writing Program and the establishment of the Society of Fellows in the Liberal Arts -- and has allowed the University to continue to strengthen its already outstanding faculty.

The Dean, in collaboration with the Academic Planning Group chaired by the Provost, has begun planning for the addition of 500 undergraduates to the student body, which will begin in academic year 2004-05. The Dean did not request any additional FTEs for fiscal year 2002-03, but he indicated the likelihood during the next several years of needing additional instructional staff to provide the expanded student body with the high quality educational experience enjoyed by current undergraduates. 

Graduate Student Support

The Graduate School recently completed a yearlong celebration of its centennial, showcasing many of the monumental accomplishments of Princeton's graduate students over the century. The time was therefore particularly propitious for the Trustees to have announced that the increase in the spending rule would be of particular benefit to graduate students, providing all fellowships for first year doctoral students in the sciences and summer support for all doctoral students in the humanities and social sciences. These increases in financial support for Princeton's graduate students greatly enhanced the University's capacity to attract top students.

The Dean made two requests for additional resources. The first request was for funding to support a Summer Minority Research Program. One of the primary objectives of the initiative was to encourage talented minority students to consider pursuing the Ph.D. degree &emdash; with the hope that some of those who participate in the program will apply to Princeton. Previously, foundation support had been available to fund the initiative, which brought 15-25 students of color to campus for 10 weeks to work on a research project with a member of Princeton's faculty. After foundation support for the program ended, the Graduate School utilized funding from the Leadership Alliance and term funding made available by the University to resume the program in the summer of 2000. The Graduate School requested $160,000 to regularize funding for this initiative. The Committee strongly supports the Graduate School's objective of undertaking proactive initiatives to ensure that we are able to identify and recruit minority students as effectively as possible. The Committee decided that, given its limited resources, it did not seem appropriate to incorporate funding for this initiative into the operating budget at this time. However, the Committee expressed its desire that term funding could be made available for an outreach and recruitment initiative that would encourage students of color to consider doctoral education and possibly applying to Princeton.

The Graduate School also requested that $50,000 be added to its base budget in each of the next four years to provide financial incentives for graduate students to seek external fellowships. Several prestigious fellowships offer support for students that is very close to or below that offered by Princeton. To provide an incentive for graduate students to apply for external funding in relief of University funds, the Graduate School requested resources that would allow it to "top-up" awards that provided at least 75% of the student's tuition and stipend for a period of at least three years. While the Committee supports the goal of encouraging graduate students to seek external fellowships, it decided not to fund this initiative and instead requested that alternative methods of achieving this objective be explored further, which should on balance not be costly to the University. 

Administrative and Support Services

The Vice President for Finance and Administration is responsible for bringing forward requests from a wide array of administrative units and academic support services. This year the Vice President brought forward two requests from the Dean of the College. The Dean of the College sought additional staffing for the Office of Career Services. In each of the last two years, in response to presentations by the Dean of the College and the Director of Career Services, the Committee recommended the addition to the staff of the Office of Career Services: three in fiscal year 2000-01 and an additional staff member in fiscal year 2001-02. This increase in staffing represented a major step toward ensuring that the office had the appropriate staffing level to achieve its mission, albeit less than had been requested. This year the Office of Career Services requested $103,000 to add two staff members (a professional counselor and a support staff person) and to increase the duty time of its systems professional. The Committee applauds the impressive set of improvements made by the office under the leadership of its current director. In view of the limited funding available, however, the Committee decided that additional staff positions should not be funded for Career Services this year.

The Deans of the College and Admission sought resources to support targeted recruitment initiatives that had been piloted in the past several years using term funds. They also requested a staff person who would be charged with, among other things, administering these special efforts. One of the initiatives that would be supported by these funds is the Humanities Symposium, which brings to campus selected high school seniors with particular expertise and interest in the humanities. These students spend a long weekend engaging in a series of discussions with Princeton faculty members and others about the humanities. Another new initiative enlisted alumni in the Washington, D.C. vicinity to host a series of events for African-American high school students to introduce them to Princeton. University administrators and faculty members also attended these gatherings and assisted local alumni in conveying the educational excellence and affordability of a Princeton degree. The Deans hope to expand this pilot program this year. Likely additional sites include Atlanta and Chicago. The Priorities Committee was enthusiastic about these efforts, and expressed their view that they should be supported by term funds for another year since they still are in a developmental stage. President Tilghman and Provost Gutmann have agreed to identify resources to allow these two important pilot programs to be continued next year. 

Information Technology

Betty Leydon joined the University last summer as Princeton's new Vice President for Information Technology and Chief Information Officer. She outlined changes that had been instituted since her appointment, including the incorporation of the Educational Technologies Center and Partnership 2000 into her Office. She provided an informative overview of efforts that were underway or being planned, and described her goals for the near term. One of her highest priorities is a renewed focus on customer service. The office has been renamed the Office of Information Technology (OIT). Vice President Leydon also indicated that she plans to form an advisory council to work with her to enhance the organization's service orientation.

OIT made several requests, including a renewal of its request for funding to support the Student Computing Initiative that had been started four years ago. The Student Computing Initiative provides a one-time subsidy for undergraduates and doctoral candidates who wish to purchase a computer that meets prescribed University hardware and software standards. This subsidy is provided in addition to a substantial discount that is made available as a result of negotiations between OIT and various hardware and software vendors. Since its inception, the primary source of support for the initiative has been the University's record-breaking Annual Giving efforts. The initiative has received an overwhelmingly positive reception from the students who have participated in it. Now that the majority of students have standardized hardware and software, OIT has been able to provide improved technical support. OIT requested that $250,000 be allocated in order to cover the costs of this program over and above the $115,000 that it plans to provide from its existing resources for the program. The Committee asked that term funding be found to support the program for at least one more year, and that OIT look for ways to reduce the burden that funding the program would place on the operating budget. With the Committee's concurrence, the Provost agreed to work with the President to identify term funds to support this initiative for at least another year. The Provost later reported that term funds had been identified for this initiative for 2002-03.

The Language Resource Center fulfills an important role in language instruction as well as in the delivery of audio and video materials for non-language courses. The Vice President stated that the Language Resource Center has only one staff member. Staffing limits its hours of operation and places undue constraints on access to the materials available through the Center. Last year term funds were found to add a staff member for a one-year term. However, since no funding is available to support this change in the coming years, the Vice President requested $50,000 to allow for the addition of a second staff member to the Center to enhance its capacity to serve the faculty and students who rely on this resource to support their teaching and learning. The Committee was convinced that adding a staff member to the Language Resource Center was essential to deliver the level of needed service and recommends that this request be funded in its entirety.

OIT has responsibility for protecting the integrity and security of the University's networks. In the face of increasing attempts to intrude into networks and secured databases, the Vice President emphasized the importance of strengthening Princeton's efforts to safeguard its research and administrative databases and to have a proactive coordinated strategy for warding off such attempts. While some departments at the University have taken steps to protect their hardware and software from intruders, a university-wide effort is needed to ensure that the entire campus develops a coordinated proactive approach to securing and protecting the University's networks. OIT requested $110,000 to hire a safety and security officer and to provide a modest budget for virus-protection software. The Committee concurs that efforts to secure the University's networks must be stepped-up and recommends that $100,000 be added to enable OIT to hire a security officer. The Committee trusts that OIT can find resources within its current operating budget for the needed virus-protection software.

A number of departments across the University have purchased licenses for the same academic software. The unit cost for these individual licenses is relatively high and usage is generally limited to specific machines or to a certain number of users having access to the software simultaneously. OIT has worked with many departments to aid in leveraging the expenses associated with site licenses. The process, however, is inefficient. OIT requested $50,000 so that it could purchase additional site licenses for software needed by faculty and students. The Committee agrees that economies could be achieved by using a central process to purchase software that is needed by multiple users in different departments. However, given the limited resources available to the Committee and the possibility of users' contributions to this effort, it decided not to fund this initiative at this time. The Committee urges OIT to continue working with departments who can contribute to buying site licenses since they will achieve economies from so doing.

A streaming media initiative was started at Princeton in 1998. Since then the demand for streaming video services has grown dramatically as has the quality of the broadcasts and the resulting archival footage. At present Media Services covers an average of three events per week, and, during peak periods, such as Commencement, it may provide simulcast broadcast for as many as 15 events per week. OIT currently has four staff members dedicated to this project (generally it takes at least two people to handle an event &emdash; one to operate the camera and one the audio system). Even so, OIT is unable to handle all of the requests for service that it receives. OIT requested $55,000 to allow for: the amortization of equipment, the purchase of two video cameras, the cost of one terabyte of networked storage, the purchase of four additional encoding servers and other equipment, and the purchase of remote switching equipment and a video indexing/archiving server. In addition, OIT requested $50,000 for another camera operator. OIT's accomplishments in this area have made University convocations, lectures, and other events accessible to many more people than can be accommodated in the venues where the events take place. Preserving video records of many important events in the life of the University is also desirable. Given the limited resources available to the Committee, it was unable to fund this worthy request at this time. 

Library

The University Librarian provided an illuminating report on the challenges facing Princeton's Library and indeed all major research libraries. The costs of serials, books, and electronic materials are rapidly escalating, and the demand continues to grow as well. The Library was helped significantly by the Trustee's decision to increase the Endowment Spending Rule. Nevertheless, the Library continues to lack much needed resources. The Librarian requested a $250,000 increase in the Library's acquisitions budget in each of the next three fiscal years (for a cumulative increase of $750,000 over and above inflation) to help keep pace with exponential increases in the costs of serials and other materials. The Committee was very concerned about the declining purchasing power that has resulted from rapidly escalating costs. The Committee therefore recommends that $250,000 be added to the acquisitions budget for fiscal year 2002-03. However, given fiscal uncertainties and constraints on the operating budget, the Committee thinks it is unwise to make commitments that decrease the ability of future Priorities Committees to set priorities with full information of competing requests in those years.

The Librarian also described the changes that are occurring within the profession and indicated that the Library does not have the resources to ensure that the professional librarians are able to attend conferences and meetings to learn about new trends and research tools. She requested $30,000 that would increase professional development funds available for the professional librarians. The Committee is pleased to recommend that this request be funded in its entirety. 

Faculty and Staff Salaries

Princeton's ability to recruit and retain its extraordinary faculty and staff is dependent, in no small part, upon its ability to provide excellent compensation and benefits programs. To maintain its excellent faculty and staff, the University must offer salaries and benefits that are competitive with those of its peers and the relevant labor markets. The University's compensation program also must be responsive to special circumstances and external market forces to ensure adequate flexibility for addressing particularly pressing needs in the salary pools.

Last spring, the Priorities Committee reconvened to address issues related to compensation, particularly the salaries of its lowest paid employees. The University affirmed its commitment to ensuring competitive wages at or above the relevant market rates for its biweekly staffs. Upon a recommendation from the Priorities Committee, former President Harold Shapiro agreed to use discretionary funding available to bring the salaries of the lowest paid workers who were below market approximately one-third of the way to the market rate that had been identified. During the summer, after consultation with the Trustees, President Tilghman authorized the expenditure of additional resources that would bring the wages of the lowest paid workers one-half of the way towards the identified target of 101% of the relevant market averages. To ensure that salaries reflect relevant market averages, the Office of Human Resources is working to update market data for administrative and support staff job groups. The University is committed to making necessary adjustments as quickly as possible. More recently, the President and Provost announced their commitment to ensuing that no regular University staff member earns less than $11.00 per hour.

The Dean of the Faculty provided detailed data regarding the salaries offered to Princeton faculty as well as the professional technical and research staffs and the professional librarians as compared to those offered by Princeton's peers. The Dean of the Faculty reviewed retrospective information available from surveys conducted by Columbia and MIT regarding salaries for faculty as well as the professional research, technical and library staffs. In general, Princeton's faculty salaries are competitive, but continued attention to this area will be required. Given current budgetary constraints, the Dean requested a somewhat smaller salary increase pool for the faculty and professional staff than had been requested last year. The Dean believes, and the Committee concurs, that it will be possible to reward excellent performance within the pool being recommended here.

The Vice President for Human Resources reviewed detailed market data regarding the compensation offered to the administrative and support staffs. Princeton salaries remain generally competitive within the relevant markets. Some further adjustments need to be made to close the gap between market rates and the salaries earned by some information technology professionals along with the salaries of the lowest-paid workers at the University. Systematic monitoring of market rates for all staff positions to ensure that compensation remains competitive will be necessary. Based on the available information, and taking into account significant budgetary constraints, the Vice President requested and the Committee recommends a slightly lower salary pool for administrative and support staff than last year. 

Campus Life

The Vice President for Campus Life provided an overview of the issues and challenges faced by the four major divisions within Campus Life: Athletics, Health Services, Religious Life and Undergraduate Students. She requested additional resources for each of the units reporting to her and in the budget for her office. First, the Athletics Department indicated that the Stephens Fitness Center currently has only two fitness supervisors, a staffing level that the Director of Athletics and Vice President described as inadequate. Therefore, the Vice President requested $26,250 to allow for the addition of an assistant coordinator of recreational fitness and wellness to ensure that adequate supervisory staff is available when Stephens is in operation. The Committee is pleased to be able to approve this request.

On behalf of the Department of Athletics, the Vice President also requested resources for a strength and conditioning coach. The Director of Athletics indicated that Princeton has two strength and conditioning coaching positions, both of which are partially supported by Friends Groups and one of which is supported on term funding. The Vice President requested $36,000 to support a strength and conditioning coach position. The Committee believes that an addition to staff would be desirable, but given the limited resources available for allocation this year and the compelling nature of several other sizable requests, it was not able to fund the strength and conditioning coach position at this time.

The Vice President for Campus Life also made a request on behalf of Health Services which would be implemented in two steps. The Director of Health Services requested that two ten-month athletic trainers be added to the staff of athletic medicine &emdash; one in fiscal year 2002-03 and a second in fiscal year 2003-04 &emdash; to ensure that students have access to the best possible health care and to alleviate the burdensome workload that its current staff experiences. The Committee was persuaded that another athletic trainer should be added to the staff in fiscal year 2002-03. However, it declined to make a commitment for yet another athletic trainer to be added in fiscal year 2003-04 given the budget constraints that exist and are projected into the future.

The Dean of Undergraduate Students made two requests for additional resources. First, she requested resources to hire a 10-month office assistant who would provide clerical support to the Women's and International Centers. In recent years, the two Centers have shared an administrative assistant who supports the directors of the two Centers. The position resulted from staffing cutbacks that were made to achieve administrative budget reductions five years ago. The dean indicated that the current level of activity was such that the second office support position was needed to ensure that adequate support was available for both Centers.

Second, the Dean requested that $10,000 be added to each to the operating budgets of the International, Third World, and Women's Centers to support the programmatic activities of these three units. Given the limited resources available to the Committee this year, it declined to fund them at this time.

The Frist Campus Center, which completed its first full year of operation last September, has already made an enormous impact on the life of the campus. In order to build on its successful opening and ensure that Frist continues to be a unifying force for students, faculty and staff, the Director and the Vice President requested additional resources (1) to underwrite its operating expenses, (2) to extend its hours of operation, and (3) to expand its programming activities. When the budget for Frist was originally planned, the University recognized that there was some uncertainty regarding what operating budget would be required to run such a facility successfully. The University had no prior experience in that regard. Therefore, a base budget of $900,000 was established for the Center and term funding was provided to supplement the base budget during Frist's first two years of operation. The Committee was persuaded of the necessity of providing adequate resources to enable the facility to fulfill its mission and recommends that $240,000 be added to Frist's base operating budget, which establishes the base budget at the level requested.

For each of its first two years of operation, Frist received $150,000 in term funding to support programming initiatives. An array of lectures, performances, and other special events established Frist as a vibrant hub of activity on campus. The Director requested a permanent programming budget of $320,000 to ensure its ongoing ability to present compelling programs with broad appeal. The Committee was impressed by Frist's diverse program offerings and encouraged the Director to build upon collaborative efforts by encouraging even more departments to hold events at Frist. In view of budgetary constraints, the Committee recommends that $150,000 be added to the Frist budget to facilitate its ability to host and co-sponsor programs and special events.

The Director of Frist also requested resources to allow for extended hours of operation during the summer months in response to strong expressions of interest from graduate students. Last summer, Frist closed at 5:00 p.m. and was closed on weekends. These limited hours of operation were of particular concern to graduate students, a significant fraction of whom are in residence during the summer months when there are very limited dining and entertainment options on campus. In order to expand Frist's hours of operation during the summer months, the Director requested $56,000 to be utilized primarily to support staff salaries. The Committee was enthusiastic about this proposal, but urged the Director and Vice President to seek means of bringing programs and activities to the Center during the summer months that would offset the expenses associated with expanded hours of operation. The Committee is pleased to be able to recommend that $28,000 be added to Frist's budget to support an expansion of its hours of operation during the summer months. 

Facilities

The Vice President for Facilities, who is responsible for the University's physical plant as well as auxiliary operations (such as Housing, Building Services, Dining Services and the Center for Visitor and Conference Services) presented a series of requests aimed at improving preventative maintenance and the quality of life for the campus community. First, the Vice President renewed a request for funding new needs in existing buildings. This request was the remainder of a larger request that was partially funded last year. These new needs arise from (1) new regulatory requirements for building maintenance and inspections, (2) the maintenance of new access, fire prevention and suppression systems, elevators or other equipment installed in recently renovated buildings, and (3) intensified use of public spaces. While inflationary adjustments to the Facilities budgets have taken into account the additions to the physical plant, few adjustments reflect the added complexity of the plant. New systems have been installed in existing and renovated spaces, and adjustments have been made to fulfill increased regulatory and compliance requirements. To date, Facilities has met these needs from within its existing resources. As a result of budgetary reductions in recent years, these needs have been met at the expense of less urgent (but nevertheless important) projects and services. The Vice President therefore requested an allocation of $590,000 to ensure that existing and newly renovated buildings are properly maintained. The Committee was persuaded that steps must be taken to provide the necessary funds to protect the University's physical resources. Given the limited resources available, the Committee recommends the allocation of $290, 000 for this purpose.

The dormitory renovation program that is underway includes the replacement of all dormitory furniture as those facilities are renovated. For the current fiscal year, Facilities received a one-time allocation of $1,000,000 to allow for the replacement of furniture in six dormitories that were outfitted with new sprinkler systems and were partially renovated. The Vice President requested $500,000 to replace the furnishings in dormitories scheduled to have sprinklers installed and modest renovations during fiscal years 2003-05. Thereafter, beginning in fiscal year 2008, Facilities proposes to use those resources to establish a 10-year replacement cycle for the replacement of dormitory furnishings. In light of other more pressing needs, the Committee declined to support this effort at this time.

The Vice President for Facilities indicated that a more proactive pest control strategy needed to be implemented both to prevent damage to buildings caused by termites, carpenter ants and other infestations and to improve the quality of life for members of the campus community. She requested that $150,000 be allocated for this purpose. She stated that such an initiative would be cost effective over the longer term by helping to preserve the investments being made in the University's physical plant. In addition, such an initiative could avoid inconveniences associated with redressing problems that could have been avoided. The Committee concurs with the Vice President that an effective proactive pest control program must be undertaken and recommends that $70,000 be allocated to address the most pressing problems.

The Vice President also requested $185,000 that would permit Facilities to wash the windows in all campus buildings every year. As a result of budget cuts that have been instituted since the early 1980's, Facilities has severely curtailed its effort to wash the windows of academic, administrative and residential facilities. In fiscal years 2000 and 2001, Facilities implemented a pilot program to wash the windows of campus buildings, and they received positive feedback regarding the improved appearance of these buildings. Facilities does not have the requisite resources to continue this program without an allocation of funds from the Priorities Committee. The Committee appreciates the desire to continue this initiative, but given the many other compelling needs before it, the Committee declined to devote additional resources towards this program at this time.

Princeton's campus now includes over seven million square feet of very diverse space. Moreover, a number of new structures, including a science library, a new dormitory and a residential college, are slated for construction over the next several years. In addition, several important facilities, such as East Pyne and Green Hall, are now undergoing major renovation. It has become increasingly important that accurate and up-to-date information be available regarding buildings on campus to ensure effective space planning and the most efficient use of the University's physical resources. In recent years, Facilities has used almost one million dollars of its operating funds to develop a space and property management system which allows various offices to obtain accurate information regarding the dimensions of rooms and buildings on campus, the location of utilities and network connections, and other important features of existing spaces on campus. The electronic database that the University relies upon for this extensive information is known as the Space and Property Management Information System (SPMIS). The Vice President was joined by the Vice Provost for Research and Physical Planning in requesting $150,000 in each of the next four years to complete the data gathering process for the system, and $180,000 per year to ensure the ongoing maintenance of SPMIS. The Committee believes that completion of the data gathering process and maintenance of this system is an essential project that will benefit the entire University. The Committee is pleased to be able to allocate $180,000 to Facilities to support SPMIS. The Provost and President have agreed to try to identify the additional $600,000 needed over the next four years to complete the data gathering process.

Lastly, the Vice President requested $15,000 to allow Dining Services to extend the late lunch program by 15 minutes to accommodate students whose class schedules make it difficult or impossible for them to participate in the program as currently structured. The Committee was persuaded that this initiative would significantly improve the quality of life for students. However, the Committee urged that the Vice Presidents for Administration and for Facilities work to identify the necessary funds from its current operating budget. The Vice Presidents for Facilities and for Finance and Administration agreed to work together to find resources to extend the late lunch period without any additional central funds from the University. 

All members of the Priorities Committee express their appreciation to all the presenters for their very informative accounts of the challenges and opportunities and that they face now and into the future. The written materials and lively discussions were extremely useful. They provided the Committee with a context for making the difficult decisions that formed the basis for these recommendations. Princeton is fortunate to have such strong leadership and prudent management of the University's resources.

The Committee is mindful of the fact that future Committees will need to make difficult decisions as the University seeks to build upon its already excellent educational and research programs while balancing its operating budget in difficult economic times. A variety of factors, including the most recent increase in the Endowment Spending Rule, have made these recommendations possible this year. Princeton is fortunate to have the resources to allow it to undertake new initiatives that strengthen its mission of teaching and research. We are also mindful of our responsibility to ensure that the financial and physical resources of the University are carefully stewarded. We will ensure that Princeton not only maintains, but builds upon its extraordinary record of excellence in research, scholarship and teaching.

We cannot anticipate such robust performance of the capital markets in the future as has been demonstrated over the last several years. The University remains strongly committed to the goal of holding down the rate of growth in tuition and fees. It will also have to continue to review expenses carefully in the future in order to ensure that its operating budget remains in balance. Indeed, even with the resources at the Committee's disposal this year, we were not able to recommend the funding of some very worthy requests. Future presenters and members of the Committee will need to be vigilant in identifying areas where close collaboration, new technologies, and administrative innovation can result in savings that will permit the University to pursue new initiatives.

 
IV. Outlook for the Future

At the end of the Committee meetings, the Committee reviews projections that extrapolate out an additional three years beyond the immediately upcoming budget year. While these projections are neither performed nor reviewed with the same precision and detail that characterize the deliberations concerning the budget year, they do help to ensure that the immediate budget decisions are considered in the context of longer-term trends rather than solely in the context of a particular set of factors affecting one year. These projections do not take into account changes in the operating budget that will result from the addition of 500 undergraduates to the student body. President Tilghman has established a task force that will conduct a separate budget planning process to review the financial implications of the increase in the student body.

The primary purpose of these projections is to provide a general indication of what the future financial situation is likely to be under a given set of assumptions. Projections can help the Committee detect in advance problems we might wish to avoid and also lead us to take different actions now either by altering budget recommendations or by recommending special studies or other extra preparation prior to next year's budget process. Projections also serve as a point of departure for discussions of the following year's Committee. Like any exercise in forecasting, such projections are always subject to a considerable degree of uncertainty, particularly because many of the items about which we make assumptions are not under the control of the University. Nevertheless, projections represent a valuable and necessary tool in our financial planning.

Each year, the projections tend to be a combination of mechanical extensions of current trends and policies as well as guesses about how the future might be different from what we are expecting for the upcoming year. The following assumptions are continuations of budget trends:

• Tuition and fees rising at 3.94%
• Salary increase pools comparable to those for fiscal year 2002-2003
• General inflation ranging in different areas from 2 to 5% (with general operating inflation being at the low end and with Library acquisitions being at the high end)
• Growth in Annual Giving revenues of approximately 3%
• Increases in a variety of central service-type income operations of 2% to 3%
• Sponsored Research growing at 5% in FY04 and beyond, a slightly lower rate of growth than the 6% assumed in the FY03 projections
• Percentages of students in entering classes on financial aid will continue at 46.5% -- a sharply higher percentage on aid than had been expected -- for the three succeeding entering classes
• Continued modest growth in the number of faculty, consistent with historical trends, with half of these coming in the form of endowed chairs
• Gifts of $6 million create new endowments each year in relief of general funds each year.

The operating budget also will need to pay for the large investment underway in new management information systems. For the period covered by these projections, nearly all of those costs will be offset through operating budget reductions.

In addition to these factors which extrapolate essentially linearly, a few factors do not. The rate for benefits will be higher in fiscal year 2003-04 after several years during which it has either declined or held steady. Estimated costs include plant operation and maintenance for several new buildings coming on line over the next three years. For the Lewis-Sigler Institute for Integrative Genomics, we also include an estimate of new sponsored research funding, growing incrementally over three years, that the new research groups occupying that space will generate. Finally, as described earlier in this report, the series of adjustments made to balance the operating budget for fiscal year 2001-02 result in less flexibility going forward.

The net result of applying these assumptions to our current budget model is a series of deficits increasing from about $2 million in fiscal year 2004 to roughly $4 million in fiscal year 2006 and remaining at that level for several years. After eight years, the projections return to a balance as several fixed term obligations come to an end. The largest single factor in the early years is the cost associated with annualizing financial aid based on this year's freshman class.

We clearly cannot accept a series of deficits of this magnitude, even though they are eliminated over the longer term. Given the current economic uncertainties, we have looked at two alternate scenarios that suggest how we might be able to achieve a balance under a continuing recessionary environment on the one hand, and a fairly quick recovery on the other.

In the recessionary case, it is reasonable to assume that inflationary pressures on salaries and operating expenses will continue to moderate. In particular, salary increases would not need to stay at the level recommended for next year to remain competitive. A further modest reduction in salary pools and a lowering of inflationary increases for operating expenses would result in essentially balanced budgets by the end of fiscal year 2007, even after allowing for a slightly lower rate of increase in the fee package. Short term deficits on the order of one million dollars in the intervening years can be managed without significantly affecting current budget priorities or our long-term financial health through selective deferral of some less time-sensitive capital projects, tighter control of vacancy savings, and the judicious use of reserve funds.

If we were more optimistic about the economy, one of the first projected improvements would be in the level of outside gifts, especially Annual Giving. Not only would it be reasonable to assume increases at a rate of 4-4.5% rather than 3%, but since our current budget target is somewhat below current annual targets, we could probably increase the fiscal year 2004 base by at least $1 million before applying the higher rates of growth. Improved markets also would likely result in higher corporate and foundation support for our core programs.

Taken together, either set of assumptions produces budgets that remain in balance over the longer term, although some of the non-linear factors may cause small deficits in the first few years. Sufficient flexibility exists in some internal financing decisions to mitigate these modest shortfalls should they indeed come to pass.

Every Priorities Committee's projections of the future are filled with uncertainty. Unfortunately, the events and volatility of the last year could be harbingers of continued strain on the national and global economy. While we are encouraged that our primary recommendations look sustainable in the long run, we also recognize that future Committees may have less flexibility than now exists.

The generosity of our alumni and friends coupled with and the careful management of endowment have provided Princeton with available resources with which to face the future. But the University also has ambitious plans to recruit and retain the best faculty and staff, to provide enhanced student aid, and to offer the highest quality educational and residential experience. The University is also contemplating extensive renovations and other new capital projects. This combination is sure to mean that, in the near term, funds will be available only for our highest priority goals.
 

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