In my first report to the community, I described the plan for successive reductions in the operating budget deficit to bring that budget into balance in 1997-98, the first balanced budget in seven years of planned deficits. I am pleased to report that we have made it, and I believe it is important to pause now and recognize that Yale has succeeded in making substantial progress on many fronts even as we have balanced the books. In this report, I will describe this progress and then look to the future, and to some of the opportunities and choices before us.
In broad terms, the operating revenues of the University are directed toward three major areas of investment: strengthening academic programs; ensuring that financial support for undergraduates, graduate and professional students continues to make Yale affordable and competitive; and enhancing the experience of living, learning, and working at Yale. Thanks to the performance of the endowment and the extraordinary generosity of donors, our income has shown healthy growth, and so it has been possible to continue to make major investments in the future of the University while at the same time working to eliminate the University's deficit.
As Provost, I have come to appreciate the breadth and complexity of investments needed to maintain and strengthen our academic programs. These needs encompass compensating faculty at a level that enables us to recruit and retain the very best; enhancing the strength of that faculty; providing laboratories, offices, library and museum collections, and the panoply of new technologies, so as to house and support the academic activities of faculty and students; and providing competitive compensation and training for the staff of the University who work in a vast array of supporting functions.
We have made real headway with respect to all these elements over the past few years. Benchmark comparisons indicate that the compensation of faculty and staff at Yale has kept pace with even the most competitive of our peer institutions. The past two years have also seen exceptionally successful recruitment of senior faculty across the University as a whole. These appointments have perhaps had the greatest concentrated impact in Divinity, Nursing, and Law among the professional schools, and in the Humanities and the Physical Sciences within the Faculty of Arts and Sciences (FAS). I am hopeful that further recruitments and promotions in the works this spring will expand the number of FAS departments, programs, and schools that have made important new appointments.
Gifts from donors and additional debt taken on by the University, in addition to larger direct allocations from the operating budget, are enabling us to move from several years of intense planning for the renewal or replacement of many of our facilities to implementing those plans. In particular, the past year has been one of major progress in the renovation of Sterling Library, where the main Reading Room is magnificently restored, the stacks have been equipped with climate control systems to safeguard the books and documents housed there, and the new Music Library is soaring into being. The English Department faculty members will move back from their high-rise to an entirely renovated Linsly-Chittenden, and faculty from many departments will benefit from the state-of-the-art classrooms that will reopen there in the autumn. More modest but much-needed refurbishment has also been undertaken of the buildings that house the Departments of Statistics and Political Science. On Science Hill, Kline Biology Tower has been stabilized (and its elevators speeded up!); the floor-by-floor renovation of Kline Chemistry Laboratory progresses; and the design of the new Environmental Science Facility is moving ahead apace, with Bingham Laboratory scheduled for demolition next January. New quarters for the School of Art have been acquired on Chapel Street and are undergoing extensive refurbishment. The Law School has been part school and part construction site throughout the year, as its High Street wing and library undergo major reconstruction. Now in its second year of occupancy, the School of Nursing has settled into its new home on Church Street South.
The combination of new gifts, debt, and allocations from the operating budget have likewise made it possible to complete the computer network infrastructure on campus, and to take steps toward a wider deployment of the information technologies that play an increasingly important role in teaching and research. With the goal of replacing the University's current antiquated business systems before the year 2000, Project X represents a major investment in Yale's capacity to provide efficient and effective administrative support for the core activities of the University going into the next century.
In this brief survey of the University landscape, let me not overlook the exceptional collections of contemporary art that have come to the Yale Art Gallery in the last two years. These collections are of interest to the community, to be sure, but above all they represent major resources for the teaching and research activities of faculty and students.
Much is made in the media of the public perception that higher education is too expensive. Equally or more important is our own assessment of whether Yale continues to honor its long-standing commitment that no applicant should have to decline an offer of admission to Yale College for financial reasons. For the last four years, the rate of increase in the Yale College term bill has been reduced, and this spring we announced the lowest percentage increase in the term bill in thirty years. For next year we will also provide additional financial aid targeted particularly toward middle-income families, relief for students receiving financial aid who want to pursue summer academic or internship programs, and new funds to support undergraduates coming to Yale from other countries. At the same time, additional investments in the Graduate School, combined with a modest reduction in the total size of the class admitted each year, have made it possible both to replace diminished external sources of fellowship support for graduate students and to offer competitive funding for almost all entering students. Attention to the financial needs of students has likewise been a high priority in the budget allocations of the professional schools. Yale is not simply a place in which to work and learn; it is also a community in which almost all students and many faculty and staff live and engage in all kinds of nonacademic activities that contribute to the experience of life here. Recent investments in this domain are most dramatic, perhaps, in the renovation of the Old Campus and renovation and impending extension of Payne Whitney Gymnasium, and in the new swing-dorm rising up in anticipation of the major renovations of the residential colleges. This same belief in the importance of community is manifested in the splendid new spaces of the McDougal Center, and in the human as well as financial investments in New Haven that we have made, leveraged, or shared with the city and the state. These range from improved security on the streets of the campus to improvements in the Broadway area and the Homebuyers Program. Yale is contributing to New Haven's economic revitalization by undertakings as diverse as the four new bio-tech start-ups launched this year and support for the annual International Festival of Arts and Ideas. Much less evident but perhaps as important to the general well-being of the community is the unsung transformation of such basic systems as those delivering steam, chilled water, and electricity throughout the campus. My point is that every one of these investments enhances the lives of those already here; and they have also had a measurable impact on our ability to attract new members to this community, whether faculty, students or staff.
If I dwell at length on all these things it is because I think that in our aspirations for tomorrow we sometimes overlook the real achievements of today. But we are also right to keep our aspirations high and our eyes on the future. Let us now turn to that future.
As of this writing, I anticipate that beginning in 2000 the University should begin to have resources to allocate to new endeavors, barring significant internal or external changes. The last phrase is an important qualifier. First, since these funds will be mostly generated by the performance of the endowment, they depend on a continuation of that performance. Second, there are already considerable pressures on the expense side of the budget, represented by initiatives underway. External changes may increase these pressures. For example, changes in the financing of health care threaten support for medical education everywhere. With its distinguished faculty and leadership, the Yale School of Medicine is well positioned to respond to these challenges, but their magnitude is not to be underestimated. In sum, our planning needs to be flexible, and to have short- as well as long-term components. We must also continue to evaluate the importance of current programs and activities and remain open to the possibility of reallocating support.
It is right for decisions about the way we allocate funds to be based partly on prudence, reallocations "on the margins," and the need for year-to-year corrections. But we must also reflect in large, bold terms about how to direct our resources, in the full knowledge that our aspirations on all fronts will always, should always, exceed our means.
As they become available from the operating budget or additional gifts, the number and range of potential uses for new funds are considerable. Faculty development is clearly a high priority. Over the past few years, we have focused on normal faculty replacements and on rebuilding the faculty in departments and programs weakened through departures or retirements. These activities must continue.
Today, however, we are in a position to give renewed attention to enhancing the size and quality of programs in the Arts and Sciences and the professional schools, as new and important subjects of inquiry and education emerge and opportunities for strategic improvement open up. For example, we have resolved to enable the School of Management to grow and take its place alongside Yale's other great professional schools, using long-standing reserves designated for the School in this effort even as fundraising is underway to expand its endowment sufficiently to support this growth. We must also be ready to ensure that across the University the cycle of renewal represented by the recruitment of junior faculty remains unbroken in an era when faculty remain active for longer than in the past. Achieving greater diversity of the faculty remains a serious goal, and additional funds will be needed here as well, if we are to bring about significant change.
Other kinds of investment in our academic programs absolutely demand attention too. The state of some of our facilities, especially the laboratories so crucial to the academic vitality of the sciences and engineering, makes acceleration of the rebuilding of Yale not only desirable but urgent. We need to increase the ambitiousness of our efforts to seize the educational and research opportunities opened up by the new technologies. Their scope and possibilities are huge, as evidenced by the emerging importance of the Digital Media Center for the Arts, the Foreign Language Instruction Center, the Center for Earth Observation, and the several other computer labs developing across the sciences and engineering.
Every week, at least one exciting proposal for new activity reaches my desk. This is welcome, and a sign of Yale's health. Indeed, it would be dismaying if the creativity and energy of this community did not have the capacity to outstrip any realistic funding base. Living, like you, in the midst of the remarkable vitality of this community, I believe we have both a responsibility and an opportunity. As we invest in the future of this institution in ways ambitious for our academic life and yet prudent in our financial planning, our decisions must, at heart, be guided by a passionate concern to keep this University great and make it greater still.
April 21, 1998
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