Stanford Graduate School of Business (GSB), and indeed business schools everywhere, are facing extreme challenges amid the current economic crisis. Responding to decreased endowment revenue, a projected drop in executive education revenue and expected falloff in the level of alumni giving, Stanford GSB last month announced comprehensive budget cuts.
According to an official release from the school, declining revenue sources have created a $15 million (10 percent) shortfall in the current year budget. And the endowment payout will decline even further over the next two years as the decline in asset values is reflected there.
“We’re essentially looking at an endowment revenue decline for three years,” Dan Rudolph, senior associate dean for operations, said in a statement.
And so Stanford GSB has begun the difficult task of trimming its budget.
The good news is that academic priorities were in large part protected, including student programs, the new MBA curriculum introduced in 2007, financial aid, the Sloan Master’s Program, faculty research and the school’s PhD program, according to the school’s release.
But as part of the plan to reduce expenses, staff reductions have proven necessary. Approximately 12 percent of staff members – 49 in total – were laid off. Another eight were put on a reduced schedule, and 12 contractor or fixed-term positions were eliminated. Cuts were also made in the areas of travel, food, library services, marketing activities and printing, among other things.
“This was the most painful decision I have had to make in my nearly 10 years as dean,” Robert L. Joss, dean of the GSB, said in a statement. “We regret the need to lay off staff members who have been dedicated to the school and its educational mission, but by cutting expenses now we can ensure our long-term financial health.”
According to estimates from Provost John Etchemendy, Stanford University endowment results overall are expected to be down between 20 and 30 percent this year. That’s significantly greater than during the 2001-03 downturn, when the endowment was down about 5 percent over two years. Because a larger proportion of its revenue comes from the endowment and alumni giving than in some other areas of the university, the GSB has been especially hard hit.
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