Headlines at Hopkins
News Release

Office of News and Information
Johns Hopkins University
901 South Bond Street, Suite 540
Baltimore, Maryland 21231
Phone: 443-287-9960 | Fax: 443-287-9920

February 13, 2009
CONTACT: Dennis O'Shea

A Message from President Brody
to the Johns Hopkins Community

President William R. Brody sent a broadcast e-mail message to Johns Hopkins University faculty, students and staff on Friday, Feb. 13, regarding actions being taken in response to the impact of the national economic situation on the university. Here is the text of that message.

Dear Faculty, Staff and Students:

I wrote you late last year about the state of the U.S. economy and the potential impact of deteriorating conditions on the university. The situation, obviously, is still very difficult, nationally and, in fact, internationally.

Businesses and banks have failed. GDP is down. Unemployment is up. Many of us have relatives or friends who have lost work. Given the performance of the stock market, almost all of us are concerned about our personal financial situations, at least in the near term.

Johns Hopkins has provided, thus far, an important counterbalance to the bad economic news. We remain the major private employer in Maryland and a significant economic force in the entire Baltimore-Washington area. We attract considerable federal research funding into the region, much of which works its way — through your paychecks and our vendors — into the local economy. With major projects well under way in East Baltimore and at Homewood, we help to insulate the area's construction industry from the worst effects of recession.

The recently completed Knowledge for the World campaign has greatly strengthened the university's ability to withstand these tough times. For instance, we have not had to impose major cutbacks in our construction and renovation program; many large, important projects have been completed and many that have not are largely supported by gifts to the campaign, not by the operating budget.

Likewise, the addition to endowment of support for 92 faculty chairs and 550 scholarships and fellowships has made us stronger in the face of financial adversity. These new endowments will put us in an even better position once the investment markets recover.

But we cannot pretend that the economic storm has bypassed the university. It most certainly has not.

For instance, our investments, like everyone's, have taken a significant hit. In the first six months of the current fiscal year, through Dec. 31, Johns Hopkins endowment investments lost about 20 percent of their market value. That is actually a pretty good performance, under the circumstances, certainly better than the benchmarks against which we measure our endowment performance. But such a loss does hurt. We now project that the amount of operating cash generated by the endowment will remain flat in fiscal year 2010 and will decrease in 2011 and 2012.

Some of the other problems we face: This year's Maryland state support for independent higher education has been cut; the state's budget will be very tight for at least the next two years. Federal research funding, especially in the life sciences, has been constrained for several years, as have the facilities and administrative overhead reimbursements that accompany that funding. Though our alumni and friends are loyal, committed and very generous — more than 250,000 of them contributed to Knowledge for the World — the immediate future of philanthropic support is uncertain.

Insurer reimbursements to the School of Medicine for patient care also are under pressure. And, university-wide, we must be even more sensitive than ever to the possibility that the financial circumstances of our students and their families will change during the course of their time at Johns Hopkins.

We have not been idle in addressing these challenges. Some divisions have postponed searches for faculty positions. Some are leaving staff positions unfilled. Some units have frozen or cut operating budgets. Some have adopted new money-saving energy conservation programs.

Recognizing, as we traditionally have done at Johns Hopkins, that each unit's situation is unique, the deans, directors and vice presidents have worked hard to cut expenses within their own areas of responsibility. This approach has served us well and has helped us reach most of the budget targets we need to reach in the current fiscal year, which lasts until June 30.

Looking ahead to fiscal 2010 and the years that follow, we will continue that approach to our problems to the extent that we can. Our decentralized governance is a great strength of our university.

But the problems are very large. We now project that university revenues during fiscal 2010 and fiscal 2011 will be a total of more than $100 million short of previous estimates. I believe it is now clear — much clearer than even a few months ago — that we will have to take some unified, across-the-university measures in response to those challenges. The deans and directors have been working with central administration to chart this common approach. Our priorities are to preserve the excellence of Johns Hopkins in teaching, research and patient care and to address, to the extent that resources allow, changing financial circumstances of returning students. We also hope very much to preserve, to the extent that resources allow, our most important resource: our employees, both faculty and staff. We believe that the measures we have chosen to take will, in fact, help us preserve jobs and keep valuable employees on the payroll.

I have been working closely with President-elect Ron Daniels on these issues. He has been an integral participant in our deliberations, supports the decisions we have made, and will be fully up to speed when he takes office.

Effective July 1, all members of the executive leadership — the president, the divisional deans and directors, and vice presidents — will voluntarily reduce their salaries by 5 percent. Savings will be used to fund divisional priorities, including student aid. Savings from central administration will be added to undergraduate financial aid budgets.

We are instituting the following three measures in university administration, the academic divisions and other non-APL areas of the university. (Because of its different business model, APL will operate under different constraints.)

> Starting immediately, and effective through June 30, 2010, we are freezing hiring for both faculty and staff positions. We are also freezing staff reclassifications. In both cases, rare and essential exceptions can be approved by the appropriate dean, director or vice president.

> There will be no salary increases, except those that are contractually obligated, in the fiscal year beginning July 1. Exceptions will be considered by deans and directors only if necessary to recruit or retain key talent, to reward faculty in the tenure and promotion process, or to compensate staff for assuming additional responsibilities as a result of more effective conduct of our business, or if the increase is directly related to new revenues such as research grants.

> Overtime is to be eliminated, except as approved by a dean or director to fulfill a unit's core mission. Similarly, there will be no use of temporary agency employees or independent contractors to cover unfilled positions, unless approved by a dean or director.

There are no two ways about it: The years ahead are likely to be difficult. But this university has endured heavy weather before. It has a history of facing challenges head-on, dealing with them, and emerging from troubled times ever stronger. I have no doubt that will happen again in this recession.

And while this is a time of serious challenges, it is also a time of important opportunities, opportunities that we should and will aggressively pursue. The stimulus package now close to final passage in Congress will include, for instance, significant funding that can both advance research on critical scientific and medical questions and support much-needed job growth.

There are other opportunities we should seize as well, including improvements to our business practices that increase efficiency and eliminate unnecessary expense. Many of you already are making excellent suggestions for such improvements. Thank you, and keep it up.

I am grateful to everyone at Johns Hopkins for your loyalty and service to the university, in good times and bad. We must be straightforward and direct in addressing our problems but we also must never lose sight of our strengths. And at Johns Hopkins, our greatest asset is you.

Bill Brody