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


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


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


. 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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