Research funding and rising cost of higher education among challenges for new president

As Christopher Eisgruber ’83 settles into his new role as University president, he will confront a host of challenges related to funding for academic research and the rising cost of higher education.

In his nine years as provost, Eisgruber worked closely with outgoing President Shirley Tilghman and Executive Vice President Mark Burstein to manage the decline in the University’s endowment value during the 2008 financial crisis, earning wide praise from administrators and faculty alike. He currently chairs the Priorities Committee and the Academic Planning Group and meets periodically with the Faculty Advisory Committee on Appointments and Advancements, the Faculty Advisory Committee on Policy, the Faculty Committee on the Library and Computing and the University Research Board.

Administrators, alumni, faculty and students have praised the provost’s cost-reduction measures after the recession and expressed confidence in his capacity to promote the University’s fiscal health.

Dealing with diminished federal funding

One of the most pressing financial challenges that the president-elect will face is diminished annual federal funding for academic research as a result of the sequester, or the set of automatic spending cuts to the federal budget that took effect on March 1, 2013 after President Obama and congressional Republicans failed to reach a compromise to avert it. In a March 1 article in The Daily Princetonian, outgoing Dean of Research A.J. Stewart Smith said that as a result of the sequester, the University could lose $10 to $15 million of the roughly $200 million in federal funding it receives annually.

The sequester could also directly affect University-affiliated operations that receive federal funding and indirectly affect the endowment by provoking a recession that could diminish the value of its investments. According to prospective figures in the federal budget released April 10, the Princeton Plasma Physics Lab faces a $6 million decrease in funding, which represents about 7 percent of its 2012 $82 million operating budget for the 2014 fiscal year. No congressional legislation has yet been passed to reverse the effects of sequestration.

The new president of the University will need to consider how to mitigate the impact of sequestration on federally-funded research, according to Aspire Campaign Executive Committee co-chair Robert Murley ’72, who served on the presidential search committees for both Tilghman and Eisgruber.

“Sponsored research has been ... under some pressure, and trying to navigate our way through that process is important,” he said, alluding to the sequester.

Vice President for Finance and Treasurer Carolyn Ainslie confirmed that University officials were concerned by the diminished federal funding for academic research. Ainslie agreed that one of the new president’s greatest challenges would be to manage the impact of the sequester.

“I would say one of the areas that we’re paying a lot of attention to is just the whole funding of research, and that’s really at the federal level,” Ainslie said. “Research is very important to the University, and it’s something that I think we’ll be watching.”

The “delicate dance” of the rising costs of higher education

Another challenge facing the new president is the rising cost of higher education, which has resulted in rising tuition rates at colleges and universities across the country. Princeton’s endowment value rebounded to $17.1 billion in 2012, after dropping in value from $16 billion to $12 billion in the wake of the 2008 financial crisis. The Priorities Committee recently projected a University budget deficit of $2 to $6 million for fiscal years 2015 through 2017.

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According to a report released by the Committee in January, the University’s operating budget for the 2013 fiscal year will include a 3.8 percent increase in the undergraduate fee package, which is the product of increases in room, board and tuition fees. In the 2012 fiscal year, the undergraduate fee package rose by 4.5 percent and exceeded $50,000 for the first time ever.

In an interview conducted at the time, Eisgruber explained that the University would compensate for the increase in the undergraduate fee package by increasing the total amount of money allocated for financial aid.

However, Murley said that the new president would need to focus on continuing to make Princeton affordable for students by doing what it could to prevent tuition from rising and to offer students financial aid options.

“Every university in this country — and Princeton is not immune to this — is dealing with the issues of cost and access,” Murley said. “You know, trying to keep tuitions as low as possible; at the same time, to be financially responsible and … to provide the financial aid support, maintain our need-blind admissions policy and our no-loan policy — that’s one challenge.”

Shelby Davis ’58, a frequent donor to the University whose gifts have included funding for the Davis United World College Scholars program and a $5 million gift to the University’s International Center in 2007 also said the new president would need to be cognizant of the rising costs of higher education, particularly with regard to financial aid awards.

“There’s a lot of public challenges today about the cost of higher education, and there’s going to be a delicate trade-off, a delicate dance. It’s a delicate situation that has to be handled with knowledge and wisdom, because the advantages of the University are great, and we don't want to waste them,” Davis said.

“On the other hand, there is the concern about the cost of higher education, especially you know, in the Ivy League,” Davis added. “So yes, even though there are a lot more scholarships being given, it’s also a fact that there’s more public concern about the cost of higher education than there used to be.”

Ainslie also said that combating the rising cost of higher education would be among Eisgruber’s priorities.

While the financial crisis and the sequester had negatively impacted the University’s endowment and funding for research, Eisgruber said in a Sunday interview with The Daily Princetonian that the University had emerged successfully from the recession in good financial health.

He added, however, that the University could no longer expect returns on its endowment as high as they were in the past, when the University regularly saw returns of 15.5 percent over a 25-30 year period. Eisgruber emphasized that annual returns of 10 percent would be a more realistic target. He mentioned that this “above-expectations growth” affected other universities in higher education as well.

“I do think we’re going to have to think more creatively and strategically about how we grow under circumstances where we should be very happy if we once again see those kinds of returns, but where we can’t make the mistake of thinking that we’re entitled to them,” he said.

The “uncharted waters” of online education

Murley added that the new president would need to consider the impact that Massive Open Online Courses, known as MOOCs, could have on Princeton’s competitiveness.

In recent years, online educational options have emerged as one way to counteract the rising costs of higher education. In a book entitled “Higher Education in the Digital Age” published this month, University President Emeritus William Bowen GS ’58 argued that online courses could help to relieve the upward pressure on tuition, which he said is caused by inefficient academic structures and competition from wealthier universities.

However, Murley said that he did not think online educational options would pose a threat to the University, as there will always be a high demand for the exceptional residential educational experience Princeton provides. He said that the new president ought to consider how the University could use online learning to enhance the opportunities it already provides to its students.

“I have great confidence that Chris has the experience to navigate his way through these uncharted waters,” Murley said of the University’s need to investigate how it could benefit from MOOCs.

The University currently partners with the online course producer Coursera to offer seven educational courses that are free and open to the public. Eisgruber is a member of Coursera’s academic advisory board and a member of Educational Testing Service’s board of trustees. In addition, he serves as the vice chair of the board of trustees of Princeton University Press and chair of its executive committee.

Managing the University’s finances “in the best of times and the worst of times”

All sources interviewed by The Daily Princetonian expressed confidence in president-elect Eisgruber’s capacity to be a good steward of the University’s financial health.

Murley said that Eisgruber has “helped to manage the University in the best of times and the worst of times,” explaining that Eisgruber was crucial to the University’s financial management during the period of the economic downturn. Despite the $170 million in cuts that were needed, Eisgruber helped prevent the University budget from running an operating deficit.

He explained that Eisgruber’s financial responsibility in both good and bad times as provost and chief budgetary officer boded well for the University and said that one of the president-elect’s best qualities was his capacity to make difficult decisions in the University’s interest.

“He knows how to make hard decisions. He knows how to implement those decisions and to do it in a way that really preserves the culture and preserves the human capital of the University,” Murley said.

Willa Chen ’13, who is an undergraduate member of the Priorities Committee, said that she “100 percent approve[d]” of Eisgruber’s appointment and thought that Eisgruber embodied a compromise between business experience and familiarity with the University.

“I think Provost Eisgruber brings together the best of both worlds, being familiar with the business of running Princeton, and that’s really valuable for a leader,” she said.

Chen is a cartoonist for The Daily Princetonian.

When asked on Sunday whether he intended to undertake a funding campaign on the scale of the recently successful Aspire, Eisgruber said that he expected to embark on a fundraising campaign to support important University initiatives but that it was too early to do so now.

“At this point, we are celebrating the success of the Aspire campaign and thanking our alumni for their loyalty, so fortunately this is a time for all of us to breathe,” Eisgruber said. “You know, there are a number of initiatives right now that this University is pursuing very aggressively, including the arts neighborhood, the internationalization, and we will continue to seek funding for those.”

Davis expressed a similar sentiment and said he thought Eisgruber would likely consider the University’s new priorities and their attendant funding needs for some time before initiating a new fundraising campaign.

“I’ve never seen a university that about every 10 years doesn’t embark on a new campaign, always with, you know, the needs that they constantly discover they have,” Davis said, laughing. “So yes, I’m sure there’ll be a new campaign in due course, but I think there will be an appropriate waiting period before that is undertaken.”

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