Howard University may be building two big new dorms at a cost of $107 million, but don’t take that to mean that the school is flush with cash.

According to an internal Howard staff memo from Jan. 31, the university is making a few cuts to help tackle a “significant budget challenge.” The memo, signed by Howard President Sidney Ribeau, cites “a significant decrease in student enrollment in the fall semester, along with other revenue shortfalls and an anticipated reduction in Howard’s federal appropriation due to sequestration.” About 400 students, the memo says, did not return to the university in fall 2012, with most of them citing financial challenges.

“It became clear that in spite of the contingency funding, we will not be able to balance the operational budget without implementing major cost saving initiatives over the final two quarters of the fiscal year (January to June 30, 2013),” Ribeau wrote in the memo.

The memo lays out four steps the university is taking to cut costs:

  1. Reduction in operating costs through a limited closure of the University during spring break (March 11-15, 2013).
  2. Reduction of salaries for senior level administrators of 5% for the duration of the fiscal year.
  3. Temporary suspension of the University’s contributions to the 403(b) Savings Plan for all employees for the duration of the 2013 fiscal year (March 1 – June 30, 2013).
  4. Restructuring and modification of the University’s healthcare benefits programs which will continue to provide a comprehensive benefits program as a critical investment in employees and retirees of the University and Howard University Hospital, while identifying efficiencies and cost savings where appropriate. Revisions will be effective April of 2013.

Howard spokeswoman Kerry-Ann Hamilton says these changes shouldn’t be taken to mean that Howard is on poor financial footing. “Howard’s finances are stable, its endowment is secure, and its budget and cash flow are actively managed,” she says, though she declined to provide financial figures. “However, the national recession is requiring Howard and most colleges and universities to be much more efficient, either through operational reductions and or a leaner infrastructure.”

According to Hamilton, “applying new managerial approaches and modifications to our business model will result in approximately $10 million per year of annual savings.”

Hamilton says the dorm construction and the operational budget have separate funding streams, with the former coming from bonds, so the cuts won’t affect the construction plans. The dorms, she says, are a necessary investment in the university’s future, given that the last residence hall on campus was completed in 1994.

Clearly, the dorms are a necessary upgrade and should help attract and retain students. But with the current financial crunch, turning university land over to private developers in exchange for cash, a la Howard Town Center, must seem like a pretty good alternative right about now.

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