Dear JTS Community
A letter from JTS Chancellor Arnold Eisen
April 27, 2009
Dear JTS Community,
As everyone knows, this past year has been an extremely difficult one for the economy of our country and indeed, for most of the world. Earlier this afternoon, I met with JTS faculty and staff to provide a progress report and update on our budget and I wanted to share this with you as well.
For-profit and nonprofit organizations alike have been severely impacted. You and I have received a stream of messages – from institutions of higher education on the one hand and Jewish organizations on the other – detailing the difficulties and budget cuts caused by the economic downturn. The Jewish Theological Seminary has not been spared such difficulties. The financial situation of JTS is directly affected by the current economic situation and we have had to make repeated adjustments over the course of the year to ensure our short and long-term health. In this letter, I will explain where things stand right now and our strategy for moving forward from both a budgetary and organizational standpoint.
Our revenue comes from three primary sources:
- Fund-raising and foundation support
- Investment income from the endowment
- Student tuition and fees
The 2008-2009 annual fund-raising campaign is unlikely to meet its targets. Our donors remain committed to us, but now their portfolios are worth less money.
The value of our endowment has significantly decreased. As a result, it is providing us much less investment income this year.
Enrollment has remained fairly stable at JTS, but approximately half of the funds from student tuition that are received by JTS are in any case given back to our students in the form of scholarships.
These three factors, plus several others, have resulted in a projected deficit for this year and next. At this point, given the uncertain state of the economy, we must assume that this reduced revenue projection will remain consistent for the next two years at least. I will say more about that in a moment.
Like every other nonprofit we know, JTS has had to make difficult decisions about how we can decrease our expenses. I have worked with our Board of Trustees, senior administration, department heads, and the internal budget-review committee for the past several months to review all our expenses, line by line.
The internal budget-review committee, comprising faculty, deans, and administrators, began meeting in the fall and continued over the course of the year. In February, the formal budget process began. Deans and department heads submitted proposals with the understanding to anticipate decreased budgets, no COLA (Cost-of-Living Adjustments), no merit salary increases, and no new positions. Over the next two months, they worked with the finance department to identify opportunities for cost savings. Simultaneously, the internal budget-review committee made recommendations to the senior administration. At the end of this period, a large deficit still remained, and the Chancellor’s Cabinet began working more deeply with department heads while the provost worked with the deans and Faculty Executive on these matters. The budget committee of the Board of Trustees has met frequently with senior administration over the past several months to help advise and guide this process.
Two overriding realities have guided our thinking in this critical period. First, we have had to reckon with the fact that financial resources are scarce and are likely to remain so. As proud as we are of the value that JTS delivers daily, business as usual cannot continue. It is more essential than ever that each dollar we spend serve our core mission and that we carry out that mission in the leanest, most cost-effective way possible. We must emerge from the current economic downturn as strong as before – if not stronger.
Second, we must never lose sight of just how fine this institution is, how committed our staff and supporters, how extraordinary our faculty and students, and how bright our future will be once we get past the current downturn. We must continue to challenge our students, expand their minds, help them ignite new ideas, and provide them with a quality of education that is unavailable anywhere else. We must continue to attract and support faculty who are leaders in their fields and whose insight and ideas provide direction and leadership to Jews worldwide. We must carefully safeguard the immense treasure that is The Library of The Jewish Theological Seminary – one of the very finest Jewish libraries in the world. We cannot give up JTS’s intellectual and spiritual role in the Conservative Movement or the Jewish community as a whole.
It is not simple or easy to strike this balance between making necessary cuts and preserving or even enhancing that which is crucial to our mission. It takes painstaking examination of every single thing we do and what it costs to do it. I have not communicated to you until now in this degree of detail because the process just described was underway. While it will continue in the months to come, I understand that you need to know what is in store, and that the end of the academic year is fast approaching. I want to share with you the decisions that we have reached and our progress thus far.
Decisions To Date:
Let me say once more that every single one of the decisions we have made was challenging and painful. JTS has never operated extravagantly. We have always been careful when it came to our spending. Therefore, we did not have any “fat” to trim this year. This made the reductions forced upon us extremely difficult.
Approximately 30 percent of our budget is made up of infrastructure and program-based costs and 70 percent is personnel-based costs. All departmental and project-based budgets, administrative and academic, have been reduced. We’ve also looked carefully at our personnel costs. The following reductions are being made:
- All full-time, non-tenure-track faculty whose contracts expire on June 30, 2009 will not be rehired, and all faculty who are retiring or otherwise voluntarily departing will not be replaced, totaling ten faculty members.
- There will be no COLA (Cost-of-Living Adjustment) or merit salary increases for any employee in 2009-2010.
- Unfilled positions that fell within the hiring-freeze parameters of last year have been eliminated.
- The 403b matching program for all employees will be suspended as of May 1, 2009.
- The employee and faculty vision benefit will be terminated as of June 30, 2009.
- As of July 1, 2009, faculty and staff salaries at $60,000 or above will be reduced by a percentage that is yet to be determined. Salaries below $60,000 will not be affected.
We have restructured and/or eliminated various roles throughout the institution, affecting sixteen staff jobs. Sadly, this will mean that members of our community – some of whom have been a part of JTS for many years – will lose their jobs. I realize that this not only impacts the individuals whose positions are being eliminated, but their families as well. That makes these decisions all the more difficult and their impact more far reaching. I extend my appreciation and gratitude for their years of service to the employees affected and to their families on behalf of JTS. I offer my wish that they are able to find other employment soon. Our Human Resources staff will work closely with them on this front – as it will advise everyone at JTS about the implications of the steps we have taken.
In that connection, I also want to take this opportunity, in advance, to thank everyone at JTS and their families for making do with less in the months to come. The present moment is a challenging and difficult time for all of us.
I wish I could report that we have reached our goal of a balanced budget. We have not, despite the steps just announced. The trustees and administration are wrestling with a gap of approximately $5.5 million in the budget for 2009-2010 between our projected revenue for next year and our anticipated expenses, after the cuts outlined previously have been made. This gap has to be closed. The Board of Trustees has made it clear that we must come as close to the goal of a balanced budget as humanly possible. Our well-being as an institution depends on it. We have several ideas for how to do this, but our work is not yet complete. I will be announcing further reductions before the end of the fiscal year. I pledge to you that we will take these measures as carefully as we can, always making sure that we cleave to JTS’s core mission and core values.
On that score, let me stress that JTS will not respond to the current crisis by simply cutting spending. The present crisis demands new thinking about what we do and how we do it. We have already revamped and redoubled our development efforts. We are seeking foundation assistance more aggressively than ever. We are actively investigating partnerships with other institutions.
Most important of all, we have launched a strategic planning process to help us determine what activities are crucial to JTS’s mission and growth and which can be reduced or eliminated. I will soon be announcing the appointment of a new director for the strategic planning process and the steps that will be taken in the weeks to come to make sure that everything we do at JTS is examined by fresh eyes. The members of the strategic planning team will consult widely with every one of our constituencies to make sure that all voices are heard. They will also take a fresh and probing look at every JTS activity and program to make sure that it accords with the mission and priorities of the institution and that JTS can maintain these efforts in a way that is fiscally sound.
I am proud that JTS remains a vibrant institution on which many Jews in North America depend for leadership, ideas, and inspiration. We will not let them down. We will respond to the current crisis with innovation, creativity, and boldness, even as we preserve the tradition of excellence that has distinguished JTS for more than a century.
I will be reporting back to you before the end of June about our continuing efforts to balance the budget and the impact of those efforts for faculty, staff, and students. I am confident that JTS will emerge from this experience strong. We will approach our future with newly defined priorities, a new cost structure, and the resilience that comes with having weathered this difficult period. In the meantime, I want to thank you for your ongoing commitment to JTS during these challenging times.
Chancellor, The Jewish Theological Seminary