Feb. 24 (Bloomberg) -- Yale University, facing endowment losses, is postponing $2 billion of construction, reducing budgets and curtailing raises for employees who make more than $75,000 annually.

In a letter to faculty and staff today, President Richard C. Levin said $2 billion in building projects over five years will be delayed at the New Haven, Connecticut, school until “conditions in credit markets improve or until gift funding is received.” Yale continues to project a 25 percent endowment loss for the year ending June 30, Levin said.

The school also will cut its fiscal 2010 budgets for non- faculty staff pay and benefits by 7.5 percent, up from 5 percent announced in December, and layoffs are possible. Yale in addition will reduce non-salary expenditures by 7.5 percent. The moves trim $37 million from the budget that begins on July 1, said Tom Conroy, a school spokesman.

“The mounting evidence suggesting a prolonged recession has caused us to recognize that we need to take a more aggressive approach to budget reductions for the coming fiscal year,” Levin said in the letter.

Levin said “it will likely be some time” before Yale’s endowment resumes its normal growth. The endowment returned 4.5 percent in fiscal 2008 and totaled $22.9 billion on June 30, before falling to $17 billion in December. Levin said the fund has declined “only slightly since mid-December.” It supports 44 percent of the annual operating expenses of the school.

More Cuts Possible

Yale will finish construction projects that already are under way, Levin said.

“Of course, if external conditions deteriorate significantly, we may be required to take further action next year,” Levin said. “It is my hope that the steps we are announcing today will make the need for subsequent reductions less likely.”

The school also said it will continue to provide financial aid to students. Yale said last year it would spend $80 million on aid, allowing families earning less than $60,000 not to pay any costs.

Harvard University, in Cambridge, Massachusetts, said on Dec. 2 it had losses of at least 22 percent, or $8 billion, since June 30 when its endowment was valued at $36.9 billion. Harvard said last week it would reconsider the scope and timing of a planned expansion into Boston’s Allston neighborhood. The school is offering buyouts to about 1,600 non-faculty employees.

The Massachusetts Institute of Technology in Cambridge said last week it will freeze executive salary increases and slow hiring to help trim $50 million from its budget after the endowment fell as much as 25 percent.

To contact the reporter on this story: Janet Frankston Lorin in New York jlorin@bloomberg.net.

Last Updated: February 24, 2009 14:44 EST