REVISED: Amy Gutmann, president of the University of Pennsylvania, Philadelphia's biggest private employer, in a note today told staff and students that Penn "closed the most recent fiscal year in sound financial condition" and is starting the new one "with a balanced budget." Excerpts:
- Cost cuts: "The University to date has avoided a mass reduction in workforce... We set an 18-month period to reach our University-wide targeted cost containment goals of $58 million; we have met over 75 percent of these goals in the first six months, with a year left to realize the balance. We have saved a total of $44.6 million through initiatives such as the delay or cancellation of $30 million in capital projects, $11 million through a variety of human resource actions" (70 of 22,000 jobs cut, hiring and travel slowdown, bonus freeze, etc.), "and $3.6 million in discretionary spending through reductions in travel and conference participation."
- Donations: While "the pace of new commitments may slow down," in the past year donors raised $440 million in cash, and pledged $398 million, for the "second best" year to date (vs $476M last year).
- Investments: "We expect the Penn endowment to report a loss of 15.7 percent for the fiscal year ending June 30, 2009." Bad, but less than the S&P 500's 26 percent fall, thanks to "a well-diversified portfolio with a core position in Treasuries, a focus on quality stocks with strong balance sheets, and a strong emphasis on risk management.
"Our endowment performance also reflects a decision in early 2008 to reduce equity exposure" as Chief Investment Officer Kristin Gilbertson and her team "took strategic actions to protect Penn leading up to the crisis, which both reduced our losses and improved the long-term prospects for the Penn endowment." No more pining after Harvard-style hedge funds and private equity.
- State aid: Gov. Rendell's new budget includes a 24% cut in Pennsylvania's subsidy to Penn's veterinary school, which relies on the state for about a third of its revenue. Cost cuts are planned, but Penn still hopes to get the state to pay more.
- Federal aid: Penn is "aggressively pursuing opportunities represented by the American Recovery and Reinvestment Act. Penn faculty have submitted approximately 850 grant applications and more than $550 million in requested funding to institutions such as the National Institutes of Health and the National Science Foundation. Penn researchers already have been awarded $30 million in funding, with the bulk of research awards yet to be announced."
- Student finanical aid: "We have increased our financial aid budget this year by $18.7 million, or 16.4 percent."
- Still building: "In the fall of 2009, we will cut the ribbon on the new Annenberg Public Policy Center and the new Roberts Proton Therapy Center. We will also break ground on Penn Park, the 24-acre signature project of our Penn Connects campus master plan. Penn Park, which extends from Franklin Field and the Palestra to the Schuylkill River... In spring of 2010, we will open the new Weiss Pavilion - fitness center and weight room - at Franklin Field and the newly renovated and expanded Music Building."