New York University announced a plan last Friday to save $25 through an administrative hiring freeze and restructuring. While the school announced the plan in the name of efficiency and passing the savings onto the students, a memo from NYU President John Sexton placed the blame squarely on NYU's "high ratio of dreams to resources," also calling out "a world where financial markets are in turmoil, the US economy and currency are weakening, and our elected officials are raising serious questions about higher education." Not to mention that today's generation of high school students has never even heard of Felicity, and the Olsens have been gone for years. Details of the hiring freeze at NYUNews, Sexton's full memo after the jump.

From: NYU President John Sexton
Date: February 27, 2008 4:47:07 PM EST
Subject: Administrative Efficiencies and University Resources

New York University is a remarkable institution with accomplishments over the
past twenty-five years that are unrivaled among universities. A key reason for
this is our willingness to take prudent risks, and a second reason is our
constant drive for improvement, knowing that we can do better as individuals
and as a community. Many of these initiatives involve starting innovative
programs, hiring and retaining excellent faculty, building new facilities, and
recruiting outstanding students. Dedicated administrators who often face an
amazingly complex environment provide the support to allow our academic efforts
to flourish.

Despite these impressive accomplishments, NYU continues to have a high ratio of
dreams to resources. In a world where financial markets are in turmoil, the US
economy and currency are weakening, and our elected officials are raising
serious questions about higher education, we need to examine continuously how
our University functions and be sure that we are using our resources as
optimally as possible. In our current environment, this will require finding
new ways of supporting our academic enterprise.

Each year Deans, the Senate Financial Affairs Committee, the Board of
Trustees, a group of financial analysts, and the University leadership develop
the budget for NYU. It is a daunting task to set priorities recognizing the
diverse interests of students, faculty and administrators; the high costs in
New York City; the need to keep NYU on solid financial footing; and most
importantly, the amazing dreams of our students, faculty and schools. I
believe we have achieved an excellent balance in recent years attaining many of
our goals while stabilizing and enhancing our fiscal position. For example,
the Partners Plan has been very successful in expanding the size and quality of
our faculty at the University's Arts and Sciences core with linkages throughout
all of NYU; we have made a substantial investment in student well-being through
our residence and health programs, an investment which has helped to increase
student retention and graduation rates significantly; and we have invested more
than one billion dollars since 2002 in new and improved facilities that have
enhanced all schools at NYU.

Even though NYU's budget and long-term financial plan are stronger than in many
years, looking forward, the tools that have served us well for the past half-
dozen years are no longer sufficient to ensure that the University can continue
on a trajectory to improvement without adaptation to new realities. Most would
agree that the country is facing serious economic and financial challenges, and
federal and many state governments have reacted by reducing support for
research and higher education. This will have an impact on NYU's financial
situation even as NYU and each of its schools have identified numerous capital
projects that will require many billions of dollars to complete in the coming
years.

In response to these challenges, the University Administration has decided to
achieve new and greater efficiencies in administration through a fundamental
restructuring of the way we look at operations and how they are funded. To be
sure, positioning the University for success now, as well as in the future,
will require an enormous commitment from all sectors in our community. I write
to you today to explain what we have done so far, and what we intend to do in
the coming years.

Beginning several years ago, NYU switched to a long-term budget approach that
includes ten-year projections to give us a better financial understanding of
our academic decisions. We launched what has become the most successful
capital campaign in the history of the University. We also initiated the
creation of a safety net against the possibility of major unforeseen financial
problems in the future by building a "Contingency Reserve Fund." This fund will
be developed by administrative savings and also by significant contributions
from each of the schools at NYU. Within about 7 years, this fund will equal 10
percent of our operating budget, and will provide a needed hedge against
economic downturns or other challenges that may arise in the future. We
created the NYU Sustainability Task Force, which will not only make the planet
a bit better, but will conserve financial resources that can be redeployed to
our academic programs. Finally, this past year we launched both NYU Plans
Space 2031 and the NYU Framework 2031 to engage the NYU community in serious
deliberations about NYU's development.

As significant as these efforts may be, they are not enough. To continue to
improve, therefore, we must engage in a multi-year restructuring of the
University's administration. This restructuring will be undertaken with the
proviso that it must not affect our academic trajectory. Said another way, we
seek an approach to administration that norms all expenditures to the following
criteria:

a. Does the expenditure contribute efficiently to the recruitment,
retention, and enhancement of our students?
b. Does the expenditure contribute efficiently to the recruitment,
retention and enhancement of our faculty?
c. Does the expenditure contribute efficiently to the educational vision,
research capacity and clinical capabilities of our schools?
d. Is it required by law, regulatory, safety or accounting standards?

The initial discussions with the University Leadership Team has produced
positive reactions, and a preliminary discussion with the Senate Financial
Affairs Committee has begun. However, there is a natural tendency to say
that, "Achieving better efficiency as we meet the above norms is a worthy
goal
. as long as it doesn't affect my school or my area." To be sure, we all
work very hard, and that hard work is responsible for achieving the stature NYU
now enjoys. However, sometimes our administrative operations are outmoded and
inefficient. Sometimes process (yes, I'll say it: "bureaucracy") gets in the
way of our purposes. Sometimes the administrative units grow too large. And
sometimes organizations outside of the University have better approaches and
can provide better efficiencies.

NYU's administrators provide the infrastructure that enable scholars to carry
on their research and teaching and learning to take place. Their role is
important, and they undertake their duties conscientiously. However, it can be
difficult in the midst of carrying out one's responsibilities to evaluate
whether they are being conducted as efficiently as possible.

So I have asked Executive Vice President Mike Alfano, to direct a University-
wide effort to develop a more efficient, less expensive University
administration. Mike has experience in restructuring efforts in both the
academic and corporate world. He will look to the University Core leadership
for policy guidance, and he will organize, utilize and value the kind of broad
input from the University constituent groups that has enabled NYU to achieve
change and improvements in such areas as sustainability, university benefits,
and space planning. Mike is engaged in meeting with various constituent groups
now, and will be announcing the approaches we will use to gain these
administrative efficiencies in the next few weeks. I ask you to join me in
working with Mike to help NYU achieve a more efficient administration that will
ensure that we meet our goals, now and in the future.

In closing, let me again emphasize two things. First, what we will be doing is
finding better and more effective ways to administer the University, and the
changes will not involve decreases in faculty or reduction in student
services. Second, the purpose of these changes will be to provide additional
capacity to advance our academic enterprise. It is that enterprise, after all,
that is the core of what we do.

I thank you in advance for your assistance.

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