Series

Sweep

This the fourth in a series of four posts that give you all you need to know about the financial state of play at Princeton today.

The first post is “McGwire” (80% of the interests that comprise the endowment (use of the term “investments” would be erroneous) are unmarketable).

The second is “Blue” (the university again has raised tuition and other charges on undergraduates, with minimal change in net revenue, but continued predation and redistribution of the assets of undergraduate families that do not qualify for financial aid).

The third is “Uncle Dave” (the university is continuing its uncontrolled spending binge, and the ballyhooed “reduction” has disappeared with only one raspberry, mine).

And this is the fourth in the series. Princeton’s expense budget for the 2008-09 year was $831,000,000 [fn[1]]. Two years later (for the 2010-11 year) the expense budget is $888,000,000 [fn[2]], an increase of $57,000,000. The two-year increase in expenditures for “Academic Departments & Programs” (to wit, faculty compensation) was $45,000,000 (79% of the entire increase). The increase for all other expenditures combined was $12.000,000 (the remaining 21%), including $1,000,000 reductions each for the library and athletics. Obviously (and unfortunately) Princeton is in the midst of a mammoth faculty enrichment project, and that project is the primary, if not the only, reason that the university is unable to control its spending. “Unable to control” is an understatement. The truth is that they are bouncing them in the dirt in front of the plate, behind the batters, and in the on-deck circles. Check your cups.

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[1] Priorities Report 2008-2009, p.23. I have treated the expense item “Other Student Aid and Miscellaneous Fellowships” as a subtraction from the income item “Student Fees”, and it therefore is not included in the $831,000,000 expenditure total. Also excluded are: (i) the expense for “Plasma Physics Laboratory”, which I understand to be a research project financed entirely by the U.S. Department of Energy, having no relationship to undergraduate education at Princeton, and (ii) the expense for debt service, which is another of the university’s financial oddities, having nothing to do with undergraduate education.

[2] Priorities Report 2010-2011, p23. I have made the same adjustments as per the preceding footnote.

Uncle Dave

Aunt Shirley

“‘The Reds didn’t win the Series,’ Uncle Dave said. ‘The Sox gave it to them.’
I found myself suddenly on my feet. ‘That’s a lie!” I shouted. ‘That’s a dirty lie!’”

Almost a year later Jim received a long letter from Uncle Dave.

“He had gone through the complete records of the 1919 World Series. By making his own deductions from figures I didn’t wholly understand, he contrived to demonstrate to me that,...‘The Reds would have won anyway.’...My Uncle Dave was an able man with percentages, and I have never seen any reason to question his interpretation of those he sent me. As a result, I suppose I am one of the few baseball fans in the country who are still convinced that the Reds were the real champions in 1919.” [fn [1]]

Aunt Shirley, is an able lady with percentages, but I have reason to question her interpretation of the word “reduce”, as used in the following sentence: “In April [2009], facing the prospect that the value of the endowment would decrease by as much as 30% by June 30, the University embarked on a two-year plan to reduce its operating budget by a total of $170 million...” [emphasis added; fn [2]] To me, the word “reduce”, in the context of an “operating budget”, would mean “to spend less.” However, Aunt Shirley apparently sees it differently. The operating budget for 2008-09 called for total expenditures of $991,000,000. [fn [3]] That budget year ended on June 30, 2009, shortly after the university claims to have embarked on its plan to reduce spending. The operating expense budget for the following year, 2009-10, should have been lower, obviously. It was, instead, $1,066,000,000 [fn [4]], which is $75,000,000 higher, not lower. Now we were really in a hole. Bring me my dictionary, provost! Bring me my dictionary. Half the game was over, and we had to cut $245,000,000 from the next budget, in order to reach the targeted $170,000,000 reduction by July 1, 2011. A few weeks ago the university released its budget for that do-or-die year. It fell short of the $245,000,000 sign on the outfield wall. Way short. It landed on the screen behind the plate. The operating expense budget for 2010-2011 is $1,078,000,000, an increase of $12,000,000. [fn [5]] Final score: increases--$87,000,000; reductions--$0 (or is that, more accurately, a negative reduction? Pardon my redundancy; pardon my redundancy). [fn [6]]

Sorry, uncles and aunts, I’m not convinced that the Reds were the real champs in 1919 or that “reduce” means increase. [fn [7]]

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[1] From James A. Maxwell, Shine Ball, New Yorker, October 7, 1950.

[2] Letter to the commune, 9-29-09. The provost, Christopher Eisgruber, states that this “reduction” is to be accomplished “...by the beginning of FY2011.” That would be July 1, 2011, the day following the end of the 2010-11 budget year. Report of the Priorities Committee to the President (“Priorities Report”); Recommendations Concerning the Operating Budget for 2010 – 2011, p.3.

[3] Priorities Report 2008-2009, p.23. I have treated the expense item “Other Student Aid and Miscellaneous Fellowships” as a subtraction from the income item “Student Fees”, and it therefore is not included in the $991,000,000 expenditure total. Also not included is the expense item “Plasma Physics Laboratory”, which I understand to be a research project financed entirely by the U.S. Department of Energy, having no relationship to undergraduate education at Princeton.

[4] Priorities Report 2009-2010, p.26. I have made the same exclusions for this year (see preceding footnote).
[5] Priorities Report 2010-2011, p.23. I have made the same exclusions for this year (see preceding footnotes).

[6] “Countess: I am the Countess DePuizzi.”
Professor McGargle (the inimitable W.C. Fields): “The Countess De Pussy?”
Countess: [tittering] “Monsieur, no. DePuizzi—La Comtesse DePuizzi!”
Professor: “Oh, quite so, quite so! Pardon my redundancy, pardon my redundancy.”
Poppy (1936).

[7] In Cincinnati, that is. The reds in Russia had a better year.