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Duke Expects to Meet Budget Goals Through Attrition, Non-personnel Cuts

Top officials caution faculty that the remaining $40 million in budget cuts will be difficult and will require continued work on part of the Duke community.

Duke University still has hard work ahead in cutting $100 million from its budget, but the last $40 million should be trimmed on schedule and through attrition and non-personnel cuts, top administrators told faculty members Thursday.

Speaking in a filled Westbrook Building lecture hall at the school year's first meeting of the Academic Council, Provost Peter Lange and Executive Vice President Tallman Trask outlined for faculty members how Duke has reduced its annual budget by $60 million and where remaining cuts might be found.

The budget cutting has been based on the principle of sustaining investment in faculty resources, momentum in strategic areas and the quality of the student experience.

"We've made a lot of progress thanks to efforts of the whole Duke community," Lange said. "All these cuts, all these places in schools where sacrifices were made were the function of many, many choices made by administrators and faculty. If we keep up same approach, I think we're confident we can reach our goal by the end of the three-year timeline [in 2011-12]."

But both Lange and Trask cautioned that the remaining $40 million in cuts will be difficult and will require continued work on part of the community. "My one concern is we have gotten this far without significant pain, and people might think this didn't hurt so bad so we can let up. We can't do that," Trask said.

The presentation followed a financial update sent by President Richard H. Brodhead to members of the Duke community Wednesday and a presentation on the Arts and Sciences budget by Arts and Sciences Dean Al Crumbliss this past week. In his emailed message, Brodhead noted that "the good work to date permits us to make plans for a modest salary increase in the next fiscal year."

Lange touched on that Thursday, saying, "We are planning for a modest salary increase ... and that is indeed good news."

Lange and Trask provided additional detail about the academic budget.

School budgets will remain tight for some time, Lange said. Endowment payout will be flat in the near future. Growth in private donations is uncertain, and federal funding, once the stimulus funds end, will be pinched by political stalemate and rising federal deficits.

Each school faces different challenges, Lange added. For example, schools heavily dependent upon tuition have a more stable source of income than those where federal funding is more significant.

Several have acted to increase revenues through new programs, but the ability to do so varies across the university.

"News of improvement in one school doesn't necessarily mean improvement in another school," noted council chair Craig Henriquez, professor of biomedical engineering and computer science.

The initial $60 million of cuts, Lange and Trask said, were based on a philosophy of shared sacrifice and a targeted approach to cost reductions.

Some $30 million came from staff reductions of around 400 people, many of which came through early retirement. The additional $30 million came from non-personnel reductions, such as eliminating unused phone lines, saving on travel and entertainment, and converting phone service to Voice over Internet Protocol (VOIP), Trask said.

The next $40 million is expected to come from a combination of reduction of positions from attrition and from non-personnel sources, Trask added. He listed several projects coming out of DART, a process to review university spending.

For example, a new e-timecard program will move Duke toward a paperless payroll. Bigger savings are hoped for in a planned e-procurement effort designed to use the power of Duke's purchasing power to reduce costs.

"E-procurement consolidates the way we buy things, automates it and gets the best Duke price," Trask said. "Think of magnitude that is involved here. Duke buys $650 million of stuff every year. If we can get prices down by 5 percent, we save $30 million."

Trask said Duke will roll out pilot efforts in January and hope to make it available campuswide in 2011.

During the question period, James B. Duke Professor of English Karla Holloway expressed concern that budget cuts were eliminating support for diversity in faculty hiring, much of which comes from strategic funds provided by the provost.

Lange noted that while strategic funds have been diminished, money for diversity hiring has not been disproportionately affected.

"As a percent of total amount of faculty spending from central funds, we have sustained percentage [directed toward diversity]," Lange said. "Diversity hasn't taken a bigger cut than any other priority. In addition, it matters that we have done something for 17 years. Doing the work on diversity for that long changes the culture."

Trask added that his office had tracked early retirements and found that African Americans and other minorities were not disproportionately affected by the program.