State of the University’s Budget in the Current Financial Crisis
January 27, 2009 Message sent by President Simmons
The staff and Corporation committee overseeing our investments have advised us to use a working assumption of a total endowment of $2 billion at the end of the 2009 fiscal year, meaning a reduction in revenue from the endowment of more than $40 million and a simultaneous reduction of $40 million from our operating budget.
In addition, we are down approximately 4% behind the previous year in unrestricted dollars raised for the Brown Annual Fund. Any reduction in the Fund total by fiscal year end will mean a dollar-for-dollar reduction in our operating budget.
The Campaign for Academic Enrichment achieved $1.317 billion to date. Within that total, we have raised $604 million in new gifts, including $251 million for financial aid. However, given the depth of the recession and its impact we must assume that it is likely to affect all categories of giving. Fundraising for FY09/10 will be up to 10% less than in FY08 and gifts to endowment and capital projects will be down significantly as well.
Even with these reductions in revenue, our commitment to meet the need of our financial aid students, scholarship expenditures have increased. Scholarship expenditures are expected to be almost $1 million more than planned. In addition, credit remains extremely tight. As a result, we are not expecting to increase our borrowing markedly over the next year or two. This will result in less flexibility in beginning capital projects that are debt-funded.
The following are reduction recommendations made by the URC that were submitted to the Corporation: a tuition increase below that previously projected; no salary increases for all faculty and staff (except for promotions, pre-existing contracts, or when required by market pressures); an administration budget reduction of $4.5M (reducing headcount and operating expenses); a reduction in the planned increase in the size of the faculty; and a postponement in the planned growth of the Graduate School.
Beyond these recommendations, additional expenditure reduction options include:
Deferral of all discretionary capital projects until all funding has been raised; additional spending reductions in administrative and support areas of at least $12M (through the measures of the VRC and ORC as well as Department Chairs and Senior Administration); more modest increases in compensation in future years; smaller increases in the number of faculty positions over the next 3-5 years; and no growth of matriculating doctoral students.