11-11-09: Stanford: Overseas programs face fiscal uncertainty

Stanford’s overseas programs are facing a period of deep fiscal uncertainty expected to last for the next three to five years, and cuts have been made across the globe in an effort to ensure stability.

The Bing Overseas Studies Program (BOSP) has reduced its spending by approximately $1 million for this year, according to BOSP Director Norman Naimark. Naimark said the cuts have focused on the administrative end of the program.

“We have substantially reduced discretionary spending in the home office and abroad, including such things as travel, technology refresh and other non-academic office expenses,” Naimark wrote in an e-mail to The Daily.

Vice Provost for Undergraduate Education John Bravman said BOSP administration has been pared “to the bone” with the cuts. BOSP has also put a hold on its overseas seminars program, saving the program an expected half-million dollars, and the program did not replace one departed staff member.

Two Fiscal Challenges

Bravman cited two central challenges to BOSP’s fiscal health: crucial endowments that are “underwater” and therefore not paying out viable amounts of money, and potentially enormous fluctuations in the strength of the dollar.

“I personally anticipate three to five years of uncertainty here where we’re constantly monitoring this,” Bravman said. “It’s not a yearly thing; it’s a constant thing.”

The resources for individual overseas campuses comes from a collective pool, and with that in mind, Naimark stated that “the cuts were generally spread evenly over the overseas centers abroad, and the home office took a substantial cut as well.”

Overseas campuses are also sharing a concern of fluctuations in the strength of the dollar—the largest uncertainty and perhaps the greatest challenge for BOSP in upcoming years.

“No one knows what’s going to happen, but million-dollar-plus fluctuations in the dollar, meaning a million dollar hit on the BOSP budget, are possible,” Bravman said. “This year, it saved us about over a million dollars; the year before it cost us over a million. So, the swings as a function of our budget there are large, potentially, or have been, but no one knows where it’s going.”

The economic climate in the U.S. and the continued decline of the dollar are also sources of concern, in addition to the dollar’s worrying unpredictability.

“We cover our own currency costs, and the projected continuing weakening of the dollar versus almost all of the currencies abroad puts us in a very difficult position,” Naimark said.

“The fall of the dollar versus the euro is our biggest concern at the moment,” he added.

The dollar’s potential decline could also impact students’ personal budgets when abroad, another concern for program directors.

“If the dollar were to depreciate further against the euro, this would pose some problems both in terms of the program’s budget but also and most importantly, in terms of our students’ own personal budgets,” wrote Stanford in Florence Director Linda Campani in an e-mail to The Daily. “With a euro that is too strong, it might get very expensive for students to live in Europe.”

Changes in the European economy, in particular, which houses Oxford and Moscow in addition to its four campuses in countries that use the euro, are also a concern.

“If, for instance, right now, the European economy, which is also stumbling, if it was roaring along, I’m sure the dollar would be much weaker and we’d be in big trouble,” Bravman said.

Building Reserves

The depletion of BOSP resources as a result of underwater endowments, combined with the fiscal uncertainty, comes at a time when BOSP reserves are greatly diminished, in what Bravman calls a “perfect storm”—and one that will necessitate caution.

“We have to build our reserves back up,” Bravman said. “This is a cycle. This is going to happen again… suggests that there has to be some kind of reasonable reserve when the fluctuations are this large.”

After a period of expansion, including the recent additions of programs in Beijing, Australia, Madrid and Cape Town, Stanford’s overseas efforts also seem likely to turn away from adding the fixed costs associated with a new center. Bravman pointed to the possibility of developing a “significant international internship program” instead, which would avoid problems of fixed costs while continuing the University’s emphasis on internationalization.

Bravman emphasized that the long-term outlook for BOSP funding is sound. “Long term, there’s no question here at all,” he said. “This program has tremendous funding. But we need the endowment to grow again.”

Effects across the Globe

For now, despite medium-term concerns, overseas program directors are working within the reality of tighter administrative budgets. Directors reported, however, that for the most part, students have been shielded from the cuts.

“We in Santiago have indeed suffered some cuts, but fortunately they have been in the administrative rather than in the academic and cultural areas, which matter the most insofar as the students’ experience is concerned,” said Stanford in Santiago Program Director Ivan Jaksic in an e-mail to The Daily. “The good news is that we will be able to sustain all our Bing trips and cultural events for the year, though we will have to tighten our belts in just about everything related to the office’s management.”

Writing by e-mail, Stanford in Madrid Director Santiago Tejerina-Canal and Stanford in Florence Director Linda Campani said the impact on students at their programs was also minimal. Stanford in Moscow Director Alexander Abashkin was also optimistic about the impact on students, beyond a reduction in museum visits, saying the core academic experience was safe.

“The least affected part is our curriculum,” Abashkin wrote to The Daily by e-mail. “This year, we can offer our students the same academic courses by the same excellent faculty. The cuts mostly affected the administrative side of our operation.”

Stanford in Oxford Director Geoffrey Tyack added, in an e-mail to The Daily, that he believes the cuts haven’t “materially affected the students’ experiences, except perhaps by giving them shorter and less ambitious Bing trips.” Tyack said the program’s core relationships with colleges, access to facilities and course and tutorial offerings were not adversely affected.

Stanford’s new program in Cape Town also has to exercise caution.

“As we are a new program…it is hard to characterize limited funding as ‘cuts,’” wrote Stanford in Cape Town Director Timothy Stanton in an e-mail to The Daily. “Rather, in preparing the budget for the coming year, we have been mindful of reduced resources available to BOSP overall and have made a strong effort to plan for a program that is efficient and effective in meeting its goals.”

Overseas directors are united in concern for the future, but also accommodating to the cuts and upbeat about their programs.

“It’s a rough year, but I think it’s an exceptional one,” Jaksic said. “I have no concerns about the Santiago program’s future, though as an academic citizen, I must worry about the overall situation of the University and its international programs.”

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