The Johns Hopkins University, the state's largest private employer, said yesterday that it will freeze hiring and salaries, eliminate overtime and lay off some workers in response to a revenue shortfall estimated at $100 million by the summer of 2011.
Top Hopkins administrators will also take a 5 percent salary cut, with the savings going into financial aid as the university tries to protect its students from the recession that is taking a steep toll in higher education. The carnage in the financial markets has reduced Hopkins' endowment by 20 percent. It now stands at $2.4 billion.
The cost-cutting measures will have a ripple effect on the region's economy, affecting not just Hopkins employees but vendors and others who rely on the university to make a living. In total, the Johns Hopkins Institutions employ 38,200. The cuts affect only the university, which employs about 20,000.
"This is unambiguously bad news," said Richard Clinch, an economist at the University of Baltimore who studies local economies. "It will impact everybody from low-wage workers in support jobs to high-wage workers who spend their money in the city going out to dinner."
He said a $100 million revenue loss equates to a $200 million hit to the local economy because of multiplier effects - how a single dollar is passed down the line and spent numerous times.
The measures were announced yesterday in a university-wide e-mail from Hopkins President William R. Brody. They apply to the entire university, including the medical school, but not to the hospital nor to the Applied Physics Laboratory in Laurel.
"There are no two ways about it: The years ahead are likely to be difficult," wrote Brody, who is stepping down as president in two weeks. "We believe that the measures we have chosen to take will, in fact, help us preserve jobs and keep valuable employees on the payroll."
Hopkins officials said they are sensitive to their impact on the local economy but that cuts had to be made to protect academic quality as well as preserve financial aid for students, whose families are also being hit.
"Our payroll is going to shrink, there's no question," said James McGill, the university's senior vice president for finance and administration. He said Hopkins will cut back on nonpayroll costs, as well, including travel, computers and supplies. Vendors will be asked to trim their prices, and the university will review its charitable contributions.
