MBA News: Stanford GSB Announces Cutbacks

Last month, we posed the question, “Will shrinking endowments affect me?” Admittedly, we were a bit concerned that we would be seen as alarmists, as we speculated that “(endowment losses) could negatively affect the operating revenue generated…thereby resulting in a reduction in scholarships being offered, an inability to hire or retain top professors, potential increases in tuition and more.”

Well, today, the Stanford GSB announced that, because of a decline in its endowment of somewhere between 20% and 30%, the school is now facing a $15MM revenue shortfall and that this gap will likely increase throughout the recession.  Noting that “academic priorities were protected,” the GSB declared that it has taken measures to reduce costs:

  • Forty-nine staff members (12% of its workforce) have been laid off, eight employees have been placed on a reduced schedule and 12 contract positions have been eliminated.
  • Travel, food, library services, marketing activities and printing budgets have been cut.

Unfortunately, the reductions are not clearly perceptible to the outsider. Nonetheless, the cutbacks themselves are quite unprecedented, and we can’t help but wonder whether more schools will be following with their own announcements soon.

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