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UM Addresses The Impact of Econ Crisis

Nothing is immune to the economic crisis, not even the palm tree'd oasis in Coral Gables known as the University of Miami. After many alumnus expressed their concern, president Donna Shalala sent out a letter to all alum today addressing the impact on UM.

Here's the highlights:

  • UM has made a lot of aggressive investments in the past few years. They're confidant they'll play out in the long run, but in the meantime are slowing growth and narrowing focus. That means the previously reported hiring freeze, salary freeze, and delaying almost all current construction plans.
  • Tuition? It's still being increased by 3.89 percent, which is actually a small increase for UM, though Shalala hopes the stimulus bill will increase the College Work Study program.
  • The endowment is down by over 25%, but that only translates to a $3 to $4million dollar cut to next years budget.
  • Alumni giving is slightly up actually from last year, but *hint* *hint* give more.

The full letter is after the cut, if you're interested in that type of thing.


Dear

University of Miami Alumni:

The

economic crisis impacting our nation and the world has implications for

all of us--including the University of Miami. I appreciate that many

of our alumni have taken the time to express their concerns, and I am

grateful for your suggestions.

I want

to assure you that our top priority continues to be ensuring that all of

our students succeed academically and that we maintain the high quality

of our core teaching, research, and clinical care programs.

The

following Q&A addresses the most common questions I have received

about how the economic downturn is affecting the University. You'll

see that your University is being proactive in how it responds to the

crisis.

Overall,

how is the University addressing the crisis?

In recent years, the University has been in a strong investment mode, and

while our strategic investments will more than pay off in the long run,

for now we are slowing our growth and narrowing our focus. Declines in

the stock market, coupled with a drop in philanthropy, have negatively

impacted our cash position at a time when there is limited access to

credit. So we need to take some time to strengthen our balance

sheet--hold onto our cash and minimize additional debt--while

ensuring that costs and revenue are in line with our current operating

environment. The steps we are taking include:

  • Instituting a hiring freeze and

    reducing expenditures for travel, supplies, and other miscellaneous

    expenses; only positions meeting crucial University needs are being

    filled;

  • Freezing employee salaries for the

    next academic year;

  • Delaying almost all construction

    projects except for those that are well under way, including the

    Robert and Judi Prokop Newman Alumni Center.

How

are you reaching out to current students and their families who might be

affected by the crisis?

We have been working with students who need help to complete their

studies at the University and graduate on time, and will continue to do

so. Students and families with financial concerns have been told to contact

our Office of Financial Assistance Services and utilize the resources of

our counseling center staff and University ombudspersons. In addition,

students and alumni can use career counseling services available at the

Toppel Career Center as well as other college- and school-based

resources.

Will

tuition be increased?

Undergraduate tuition for the academic year 2009-2010 will increase 3.89

percent, which represents the smallest increase in 15 years. In addition,

the College Work Study program may be increased as a result of the

recently passed federal stimulus legislation. 

How

is the downturn impacting the University's endowment, fundraising,

and sponsored research?

Like most major universities, our endowment has lost more than a quarter

of its value due to market declines and spending distributions.

Fortunately, endowment income represents less than 2 percent of our

operating budget--far less than many of our peer institutions. As a

result, the impact to next year's budget will be a relatively

modest $3 to $4 million.

In

times of crisis, history has shown that communities rally together to

provide assistance and support. We have experienced the same. At

mid-year, Alumni Annual Fund giving in dollars is slightly up from last

year, with a 38 percent increase in the number of Web-based gifts through

the alumni giving site www.miami.edu/alumni/giving. Parent giving has

increased significantly as well. In these difficult times, we are

thankful that our alumni and parents are continuing to support the

University and its students. So far this year, overall University

fundraising has declined by 6 percent. In this economy raising dollars to

support critical needs is a challenge, thus giving from alumni, parents,

and friends of the University is needed more than ever. Our history of

fundraising success reinforces our belief that in the long term the

University will continue to enjoy broad philanthropic support.

Sponsored

research at the University faces major challenges from federal, state,

and private funding sources. For example, the National Institutes of

Health has funded the current year at 90 percent of the awarded amount

due to the absence of a new federal budget, and state budget problems

have caused cuts in existing research grants from the Florida Department

of Health. On the other hand, we are preparing to take advantage of $10

billion in new National Institutes of Health funds earmarked for higher

education and infrastructure in the federal stimulus bill. Additional

funds also are available from the National Science Foundation. 

What's

the outlook for the University's future?

We are fortunate--education and health care are generally good

businesses to be in during difficult economic times. No one knows

precisely how the economic crisis will play out, so we are building plans

that are conservative and that have the flexibility needed to respond to

a rapidly changing environment.

Over

the last 83 years, the University has made great strides in becoming a

world-class teaching and research institution--while repeatedly

weathering adversity--and in the past seven years it has risen

dramatically in the national rankings. We will not lose the momentum we

have built or step back from the significant gains we have made, but we

must use all our creativity and discipline to meet today's

challenges. . 

As

University alumni, you are an integral part of the UM family, and I look

forward to hearing more of your suggestions, questions, and concerns. You

can e-mail me at dshalala@miami.edu.

As always, I extend my deepest thanks for your support and trust in our

University.

Sincerely,

Donna

E. Shalala


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