Endowment Shrinkage Affects Johnson School Budget
By Kirtana Raja JGSM '11
Issue date: 10/1/09 Section: Johnson News
The market crash of 2008 and the subsequent Cornell endowment shrinkage-from $6 billion to $4.5 billion-propagated university-wide budget deficits to the tune of almost $215 million.
According to Associate Dean for Administration Sunny Donenfeld, Johnson's budget for fiscal year 2010 (FY10) is $64 million, which takes into account a University endowment payout reduction of 15% or about $1 million.
"We still don't know what the University budget actions will be in advance of fiscal year 2011, which begins July 1, 2010. However, we are hopeful that the Johnson School will not see significant new taxes, as we have demonstrated what it means to be responsible about our budget," said Dean Donenfeld.
The endowment payout was not the only source of revenue loss for the year. According to Dean Thomas, annual giving, which typically accounts for about 8 to 9% of Johnson's budget, declined by about $1 million this year, due to a noticeable decrease in new gifts from alumni.
The largest budget loss impact stems from an increase of $2.3 million in the Johnson School's annual tax payment to the University. The Johnson School is one of three self-financing Schools at Cornell called "Tubs," which pay an administrative tax to the University for central services such as grounds maintenance and data networks. As a Tub, the Johnson School has the incentive to plan prudently. Part of such planning includes setting aside funds annually in reserve accounts for expenses such as large facilities projects or managing unforeseen events.
According to Dean Donenfeld, "our planning has allowed for the Johnson School to minimize the impact of reduced revenues and increased expenses. In fact, the School has made additional investments this year in its valued academic programs."
In total, the Johnson School planned for a total shortage of about $4.3 million this year. However, Dean Thomas noted that increased enrollment in the EMBA programs in 2009, in addition to tuition increases and budget cuts in some administrative areas have helped to offset the budget deficit.
According to Associate Dean for Administration Sunny Donenfeld, Johnson's budget for fiscal year 2010 (FY10) is $64 million, which takes into account a University endowment payout reduction of 15% or about $1 million.
"We still don't know what the University budget actions will be in advance of fiscal year 2011, which begins July 1, 2010. However, we are hopeful that the Johnson School will not see significant new taxes, as we have demonstrated what it means to be responsible about our budget," said Dean Donenfeld.
The endowment payout was not the only source of revenue loss for the year. According to Dean Thomas, annual giving, which typically accounts for about 8 to 9% of Johnson's budget, declined by about $1 million this year, due to a noticeable decrease in new gifts from alumni.
The largest budget loss impact stems from an increase of $2.3 million in the Johnson School's annual tax payment to the University. The Johnson School is one of three self-financing Schools at Cornell called "Tubs," which pay an administrative tax to the University for central services such as grounds maintenance and data networks. As a Tub, the Johnson School has the incentive to plan prudently. Part of such planning includes setting aside funds annually in reserve accounts for expenses such as large facilities projects or managing unforeseen events.
According to Dean Donenfeld, "our planning has allowed for the Johnson School to minimize the impact of reduced revenues and increased expenses. In fact, the School has made additional investments this year in its valued academic programs."
In total, the Johnson School planned for a total shortage of about $4.3 million this year. However, Dean Thomas noted that increased enrollment in the EMBA programs in 2009, in addition to tuition increases and budget cuts in some administrative areas have helped to offset the budget deficit.
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posted 11/01/09 @ 9:05 AM EST
I think it is wonderful that in some administrative areas have helped to offset the budget deficit.
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