Provost explains University finances

Duke has reduced its spending by approximately $60 million this year, Provost Peter Lange said in a presentation to student leaders Wednesday. The administration still seeks approximately $40 million in reductions, though this number may change depending on economic conditions in the near future. 

Through his slideshow, “Financial Challenges and Academic Opportunities,” Lange noted that the University is fortunate to have two more years in its three-year cost cutting plan because the remaining cuts will be increasingly difficult. He made the presentation to approximately 15 undergraduates, including several reporters from The Chronicle.

Lange said earlier this month that he would be making presentations on the financial cuts in closed meetings to allow for frank dialogue among the faculty. Lange said Wednesday, however, that he had received “a little flack” for the closed sessions and decided to share the plan with students.

The 45-minute overview contained the same slides that he showed to the University’s individual schools, Lange said. He did not include the school-specific slides that he adds to the presentation based on the group he is addressing. He focused on the challenges that Duke has faced as a result of the economic downturn and the administration’s proposed solutions.

Lange noted that the University is making efforts to support workers at the lower end of the payscale. The presentation noted that one-time payments of $1,000 issued this year to employees earning $80,000 or less affect almost 100 percent of biweekly staff, or 4,626 workers; 80 percent of monthly staff, or 5,612 employees and 36 percent of the faculty, or 858 professors. 

The one-time payments, combined with a 2.2 percent increase in total compensation due to the increased cost of fringe benefits, will cost the University $37 million. Compared to a 3 percent increase in the University’s salary pool, however, this will save Duke $22 million.

In the midst of the recession, administrative costs have also been examined. Academic and administrative support costs, known as allocated costs, are passed on to the schools within the University. According to the presentation, in the 2009-2010 fiscal year these costs totaled $119 million. Of those expenses, $76 million were shared across all units and the remainder attributed to the schools to which particular services were provided.

In the 2009-2010 fiscal year, there was no increase in the costs passed on to the schools from the previous year. Lange said the provost’s academic support units, such as Duke University Libraries, absorbed $4.7 million in expenses that normally would have been covered by the schools.