Cost-containment strategy saves Penn $59 million

Penn’s cost-containment strategy has saved $59 million in the past year — already surpassing the orginal $58 million goal that was set for June 30, 2010, according to Executive Vice President Craig Carnaroli.

The containment period has been extended until June 2011, increasing the target to $100 million in “cost avoidance,” Carnaroli said.

Cost-containment initiatives include salary adjustments, the delay or cancellation of certain capital projects and the reduction of “discretionary expenses” such as travel and entertainment budgets.

Delayed capital projects include the Walnut Street Gateway — a development of retail and office spaces, Carnaroli explained.

Parts of the Penn Connects plan — a 30-year vision that includes Penn Park — are also being delayed, according to Provost Vincent Price.

Contract renegotiations and reduced information-technology and energy-consumption costs are also underway, a Dec. 16 University-wide e-mail update from President Amy Gutmann explained.

Additionally, each of Penn’s 12 schools has implemented its own cost-containment strategy.

Price emphasized that cost-containment has no effect on curriculum. Contrary to rumors, there is no official faculty hiring freeze in any of Penn’s twelve schools.

“We’re not cutting back on our core mission: research and teaching. Those are things that we preserve at all costs,” he said.

Price went on to explain that while faculty travel, which he said was very important for faculty development, has not been eliminated, it has been cut back.

He also said that a “tightening” of faculty hiring at Penn has presented some opportunities, turning the search for new faculty into a “buyer’s market.”

While some schools, such as the School of Veterinary Medicine, are not in active hiring mode and have had no salary increase, there is no official salary freeze, Carnaroli noted.

Peer institutions have reported similar — or even larger — cost containment strategies.

Duke University confirmed the need to cut $125 million over the next three years, according to the Duke Chronicle.

Similarly, Brown University reported cutting $30 million, at three different times, from the annual general budget by July 2010 for a total savings of $90 million, according to the Brown Daily Herald.

Princeton University has also reported a plan to save $170 million over the next two years, according to the Daily Princetonian.

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