Boston University President Robert Brown imposed a hiring freeze Wednesday in an effort to defend the university’s operating budget and endowment against a flailing economy.
BU’s $1.2 billion endowment is not large enough to cover unexpected costs that university executives anticipate could hit in the upcoming weeks and months if the economy does not bounce back, administrators said.
‘If we had 10 times the endowment that we have, we’d be less susceptible to the vagaries of the economy,’ Executive Vice President Joe Mercurio said. ‘But as a practical matter, the size of our endowment is such that even though in absolute dollars, it’s a big dollar amount, $1.2 billion, given the size of the university in total . . . is a very small portion.’
The maneuver signals a reaction to the deadlock in Washington as lawmakers and the White House deal with the economic crisis. It comes shortly after stocks plunged following the House’s rejection of a $700 billion bailout for banking giants.
BU officials said they are acting out of interest for students and parents who are borrowing money to afford tuition, which nears $50,000 a year at BU. Salaries account for more than half of BU’s budget.
Administrators assured that ongoing searches to replace open slots for professors will still continue, and the freeze will not reach work-study students, who earn wages from federal financial aid funds.
Administrators did not point to a time frame for when the freeze could be lifted, and will still fill police, residence security positions and other positions deemed ‘mission-critical’ by the president and provosts, Mercurio said. Positions funded by research grants are also safe.
About 200 to 250 positions, out of all 8,000 full-time employees, are vacant and unlikely to be filled during the freeze, Mercurio said.
Brown said in an interview with the Daily Free Press that BU will have a better understanding of how the economy could affect its finances in ‘a few months.’ The freeze will not deter his plan for hiring 150 new professors.
‘Whenever you make a plan, you have to always be flexible to modify the rate at which you implement it and how you implement it,’ he said.
The financial strategy of halting non-vital expenditures is common for large institutions during tough economic times, American Council on Education Center for Effective Leadership Programs and Initiatives Director Peter Eckel said. BU could risk raising tuition even more on its students without implementing a freeze.
‘Obviously the big question is: How long does the hiring freeze last? Is it a semester or four years?’ Eckel said.
BU could be seriously affected by a long freeze that does not allow for professors to be hired for years, Eckel said.
‘It’s one thing if it’s a small window,’ he said. ‘It’s another thing if it’s a long window.’
As the entire country grapples with the crisis stemming from Wall Street, BU’s strategy represents a stronger response from institutions of higher learning. While it is not the first university to bar new hires, schools with bigger endowments are more able to adapt, Eckel said.
‘A higher endowment provides more of a cushion against swings, if you’re willing to dip into your endowment when things go bad,’ economics department chairman Kevin Lang said.
The College of Arts and Sciences still plans on hiring more than 20 new professors by the end of the year, pending the provost’s approval, but not administrative members.
‘A slowdown means we can’t move as quickly as we might want to,’ CAS Dean Virginia Sapiro said. ‘Like everybody else, we have positions that come open all the time, and also, as we’re trying to improve the campus as a whole and the college in particular, we need staff members to serve a variety of purposes.’
If the freeze is quick, it will not be bad, Sapiro said, but a longer halt on new hires, perhaps for a couple months, could slow productivity.
‘If the economy is bad enough that institutions like ours really have to do that substantial belt-tightening, then we’ll be hurt by the economic difficult times,’ she said. ‘Can the current state of the economy hurt us? If over the next few months, I would think so.’
Brown also called for a halt of construction projects that have not yet broken ground, putting in limbo millions of dollars in renovation projects and new buildings, like a possible addition to the School of Law and a new East Campus dining hall and student services center.
Projects already underway are still scheduled to be completed regardless of the freeze.