As concerns about a potential upcoming recession grow, Duke has contingency plans to combat the effects of a potential economic downturn on the University.
Fears of an impending economic drawback have grown in recent years, with 82 percent of surveyed U.S. chief financial officers indicating they expected a recession to occur by the end of 2020, according to a recent Duke survey.
So how is the University preparing for a potential pullback?
Duke University Management Company—which oversees the Duke Endowment—has been preparing for a recession and developed a strategy to alter its portfolio in case of economic woes, explained Tim Walsh, Duke's vice president of finance. A recession would also increase the demand for financial aid and limit Duke's ability to create new programs.
“Regardless of families’ ability to pay, Duke will find ways to pay for it,” Walsh said. “If there are more families who need financial aid, Duke will just need to take more of its other money to pay for it.”
If there is an economic downturn, the University would also likely receive less revenue from philanthropy, Walsh added. Although a tightened budget will limit investments in new initiatives, he said that Duke’s current programs would remain unaffected.
“We have a strong financial base for existing programs, which are very stably positioned,” Walsh said.
Amidst the 2008 recession, the University responded by aggressively reigning in spending. In February 2009, Duke created the Duke Administrative Reform Team program to decrease the University's budget. DART mandated the switch to online pay statements, curtailed external hires and instituted a staff retirement incentive plan.
The three-year process of implementing the reforms aimed to cut Duke's operating budget by $125 million, according to Duke Today. The program ended up cutting around $100 million from the University's annual budget, said Patricia Morton—Trinity '77 and Board of Trustees member—at the Board's recent open forum.
The Board discussed employing "aggressive oversight" when crafting the University budget "to ensure that excessive expenditure growth is not pursued," according to the November meeting summary.
In the event of a recession, there would be a greater challenge searching for jobs and internships in the midst of a recession, said William Wright-Swadel, the Fannie Mitchell executive director of the Duke Career Center and assistant vice president of student affairs.
“Unlike the last [recession], the market will first be affected in the internship pool,” Wright-Swadel said. “Students’ ability to get experience will be challenged.”
Get The Chronicle straight to your inbox
Signup for our editorially curated, weekly newsletter. Cancel at any time.
He advised students to take advantage of programs such as DukeEngage and DukeImmerse.
“The University has created a significant number of programs in the last eight or 10 years for students to get practical experience, which should help our students be prepared for potential downturns in our markets,” Wright-Swadel said.
In the anticipation of a recession, many students may consider enrolling in graduate school rather than entering the workforce upon graduation, but he reminded students that graduate school is not an automatic solution.
“If a student is going to graduate school because of a recession, they need to be really strategic about what experience it’s going to add and in what ways it’s going to enhance their story, while not pricing themselves out of a market that they want to be in,” Wright-Swadel said.
The Duke Career Center has begun implementing preventative measures to soften a recession’s blow to students, such as diversifying their portfolio of employers, he added. This will "increase the range of employers that students engage with.”
Wright-Swadel said that since the 2008 recession, the undergraduate Career Center has also strengthened its partnership with career centers across all schools within the University, thus providing undergraduates with a wider support network.
“Nothing will completely insulate our students, but I think we got a lot as an institution and a Career Center to make our response to a downturn agile,” he said.