Tufts Lays off Some Workers, Freezes Salaries

– Allison Goldsberry

Despite an endowment that is roughly twice what it was six years ago, a declining economy has forced Tufts University to lay off a small number of employees and freeze salaries.

According to an email written to the Tufts community by President Larry Bacow, salaries have been frozen for employees earning more than $50,000 per year and a “small number” of staff in some of the schools and the central administration have been laid off.  Bacow said those earning less than $50,000 will see a “very modest” raise next year.  A few more positions could be eliminated as Tufts “selectively downsizes” specific programs, but no large-scale layoffs are anticipated unless the economy gets significantly worse, Bacow said.

Tufts has seen its endowment decline 30%, sliding from $1.6 billion to $1.1 billion.  Interest off the endowment is one of the school’s major sources of income, along with tuition, which covers less than 50% of the operating budget, gifts and donations, government research funding, and revenue from from below-market patient services delivered at the university’s medical, dental, and veterinary schools.

In addition, Tufts lost $20 million in an alleged Ponzi scheme organized by disgraced Wall Street financier Bernard Madoff.

Bacow said Tufts anticipates a decline in its income sources and has been forced to adjust its budget accordingly.  A tuition increase of 3.5% is planned for the next year, the smallest increase in 45 years.  Financial aid has been increased 12%, as more students need more aid.  According to Bacow, no students have been forced to drop out of Tufts due to financial reasons and the school is working with students and their families to keep them in school.

“We expect that our returning students will need more financial aid because of the economy. To ensure that we can continue to meet their full demonstrated need, we have increased the financial aid budget by 12 percent. This is the only expense in next year’s budget that will increase as a matter of policy. To our knowledge, no undergraduate has had to withdraw from Tufts due to financial distress. We have been able to work with every family to keep students in school, even when both parents have lost their jobs. . . I promised you in my earlier messages that we would put students first, and we have,” wrote Bacow in the email.

Bacow said Tufts is “faring reasonably well” despite the current economic climate and will have a balanced budget for fiscal year 2010. However, some schools have budget deficits and it’s unclear if additional layoffs or cuts are needed to balance those budgets.

Bacow thanked alumni for continuing to “generously support” the school and said that some donors have increased their financial support. The school is nearing the end of a $1.2 billion fundraising campaign, of which $950 million has already been raised.

Beyond 2010, Bacow said if the economy get worse, Tufts will have to “look for additional savings,” while if the economy improves, the school should recover “much faster” than its peers since the school has taken into account the full impact of the decline of its endowment and has adjusted its expenses accordingly.

“Unless the economy continues to decline, there is no other shoe to drop at Tufts,” said Bacow.