ITHACA, N.Y. -- Hard financial times have hit Cornell University where it hurts.

"Cornell's endowment, as the endowment for many other institutions, have suffered from the financial crisis on Wall Street very much in the same way that individuals have seen their 401Ks go down," said Cornell University Vice President of Communications, Thomas Bruce.

Cornell relies on earnings from the endowment to cover fourteen percent of its annual operating budget. With state budget cuts and lower donations this year, the school faces a ten percent budget deficit. The Board of Trustees approved a new plan to confront financial challenges.

"Our task is to deal with the financial implications of the recession and financial crisis, but at the same time, preserve Cornell's ability to pursue strategic goals and to position itself for success when the crisis passes," Bruce said.

That's why they're pulling $150 million from the University's reserves, reducing expenditures by five percent and putting a hold on hiring and campus construction. Faculty and some staff won't see raises this year and the university will pull $35 million from the endowment for financial aid for undergraduates. The plan does include a tuition increase, but it's just four percent, the lowest annual increase at Cornell since 1966.

"The fact of the matter is there are parents and families out there who are faced with their own financial difficulties and we want to be very sensitive to that fact," Bruce said.

For graduate students, however, the tuition increase will be close to seven percent, about the national average.