Dartblog

As this column and its informing multitudes take in President Jim Kim’s address to faculty today, we hear from the dusked coast that “smooth” budget cuts is no longer the prescription at Stanford:

Oct. 26 (Bloomberg) — John L. Hennessy, president of Stanford University, is drawing on his 32 years of experience in Silicon Valley to speed up budget cuts, ditching a formula universities use to soften the impact of endowment losses.

Stanford’s endowment fell 27 percent to $12.6 billion in the fiscal year that ended Aug. 31. Hennessy has suspended the school’s so-called smoothing formula, which spreads losses over five years. The university, located near Palo Alto, California, said it dismissed 412, or 3.2 percent, of its non-faculty workers, in the first eight months of 2009, postponed $1.1 billion in construction and will close its 58,500-volume physics library.

Certainly there are cuts that Dartmouth cannot emulate—the library has been emasculated enough, one should think—but there are those that it can. And then there is the question of endowment strategy. Palo Alto is dealing with its lumps thusly:

Stanford will now reduce the amount it withdraws from the endowment over two years, leading to deep cuts designed to speed the university’s financial recovery, Hennessey said in an interview. Stanford, which has the U.S.’s third-largest university endowment, relied on the fund for 29 percent of its operating budget in fiscal 2009, the school said. As a result, Stanford will recover faster and gain efficiency, he said.

Dartmouth, meanwhile, is increasing the draw on its endowment to critical levels, a folly this space hopes to cover in greater detail soon. It is another throe in the boom-bust cycle of ancient institutions caught up, tragically, in the snare of people who graduated from them in the late 1970s and went straight into high finance.