<p>The Corporation of Brown University has approved a consolidated operating budget of $758.7 million for the 2010 fiscal year, an increase of less than 1 percent over the fiscal 2009 budget. The total charge for undergraduate tuition and fees will rise 2.9 percent to $49,128 for the 2009-10 academic year, the lowest annual percentage increase since the early 1960s. The Corporation also authorized construction or architect selection for several projects and officially accepted a number of gifts to the University. (Also see President Simmons’ <a href="http://www.brown.edu/Administration/President/letters/2008-2009/2009-corporation.html">letter to the community.</a>)</p>

PROVIDENCE, R.I. [Brown University] — At its regular winter meeting today (Saturday, Feb. 21, 2009), the Corporation of Brown University approved an overall operating budget of $758.7 million for the 2009-10 academic year. That budget, representing an increase of less than 1 percent over the budget approved for the current year, anticipates lower than expected revenue across nearly all of the University's revenue sources and will begin a series of budget cuts that will achieve a reduction of $80 million to $90 million by fiscal year 2014.

Implementation of that budget will mean a reduction of administrative and staff positions within the next several months. Efforts to identify further reductions through vacancy and organizational reviews will continue.

“The University’s financial planners have done their work against a backdrop economic convulsions and market upheavals around the world,” said Brown Chancellor Thomas J. Tisch. “The budget approved by the Corporation today requires reductions and difficult decisions, but it will safeguard the academic core, including programs of need-blind admission and enhanced financial aid. It will also allow the University to undertake several well-chosen and carefully planned capital projects and academic initiatives, and it will prepare the University to operate in a period of great economic uncertainty.”

In approving the budget, the Corporation also set tuition and fees for 2009-10. Tuition will rise 3 percent to $38,048, and the overall undergraduate charge, including standard room and board, health and other fees, will rise 2.9 percent to $49,128. That is the smallest annual increase since the early 1960s. Tuition for graduate and medical students will also rise by 3 percent.

“As we continue during a period of considerable economic upheaval, it is essential that the University preserve the momentum and hard-won gains of its Plan for Academic Enrichment,” said Brown President Ruth J. Simmons. “The Corporation has approved a budget that will allow the University to make new investments in the excellence of its academic core even as it pursues reductions and efficiencies throughout its operation. This is a difficult but essential equilibrium to maintain.”

The budget recommendations for fiscal year 2010 were developed by the University Resources Committee (URC), a 17-member planning body of faculty, students, staff and senior officers that meets year-round. The URC meets with each senior officer to review the budget challenges of various offices, departments and divisions and holds periodic open meetings for the entire Brown community. Chaired by Provost David I. Kertzer, the URC submits its recommendation to the president for her review. The president then presents her final budget recommendation to the University’s Corporation for its consideration and a vote.

The full URC report for fiscal year 2010 is available on the Web (pdf).

Revenue

As recently as May 2008, the University’s financial planners assumed an average 5-percent annual growth in revenue for the next five years. The new financial realities have driven those revenue assumptions down, requiring a reduction of $80 million to $90 million in the projected budget by fiscal year 2014.

Tuition and fees account for the largest portion of the University’s annual revenue. In developing its budget recommendations for fiscal 2010, the URC realized that a lower increase in tuition and fees would be necessary given the serious financial pressures afflicting students and families even though it would mean less revenue for the University.

The University’s endowment has earned exceptional double-digit returns in five of the last six fiscal years. Those returns, plus new gifts, allowed the University to undertake ambitious new efforts, including significant enhancements to its financial aid policy, which took effect last fall. Endowment revenue provided nearly $23 million in additional revenue to the budget approved last year. This year, following sharp declines in the financial markets and falling endowment values across the country, revenue from the endowment will decrease by 1 percent, providing a total of $111.4 million to the Education and General (E&G) budget, which will represent slightly less than 20 percent of the total revenue for E&G. In its report, the URC cautioned that the University might need to restrict endowment payout further in the next few fiscal years in order to preserve endowment value.

The University is reimbursed for some of the overhead costs — space, lab maintenance, utilities, administration — involved in conducting research, according to a federally negotiated rate. Slower growth in federal research funding and changes in grant-making practices have slowed the growth rate of funded research at the University during the last two years. Because it is too early to make reliable projections about research funding after the change of administration in Washington, the URC report planned for a modest 1.3-percent growth in indirect funding to $32.9 million.

Gifts to the Brown Annual Fund are a major source of unrestricted funds and have been growing at a record-setting pace, more than doubling since 2001. While the current financial crisis will slow that rate of growth, Brown’s alumni, parents and friends continue their strong support for the University. The URC anticipates annual giving to the Brown Annual Fund, the Brown Sports Foundation and undergraduate financial aid will continue at about $37.9 million.

Expenditures

Lower revenue projections and the need to reduce projected annual expenditures by $80 million to $90 million by fiscal 2014 will require several measures already announced to the campus community in a January 27 letter from President Simmons, including:

  • a continuing pause in staff hiring;
  • no salary increases for faculty and staff, except for certain promotions and existing contracts;
  • reductions in the number of positions in most units and reductions in operating expenses in almost all units;
  • a slower growth in the size of the faculty than anticipated in the Plan for Academic Enrichment;
  • consolidation, reduction or elimination of certain services to achieve greater efficiency across the University;
  • postponement in the planned growth of the Graduate School with no increase in the number of matriculating Ph.D. candidates on the University budget.

Those savings and spending cuts, coupled with $7.1 million in reallocations of funds among existing budgets, will allow the University to undertake $19.6 million in new spending — $16.1 million to begin funding for commitments already made and $3.5 million in critical new initiatives. Areas in which the University will increase spending include funding for:

  • a 10.9-percent increase ($7.5 million) in the undergraduate financial aid budget;
  • newly created faculty positions, part of the continued growth called for by the Plan for Academic Enrichment;
  • inflationary costs in computing hardware and software and in library acquisitions;
  • support for new and renovated academic facilities, including the undergraduate Science Resource Center, due to open in the Sciences Library during the next academic year;
  • transportation, including the SafeRide shuttle and subsidized RIPTA program.

“Members of the URC believe that the FY10 Brown University budget ... preserves what is essential in the University’s program and invests anew where it is most vital to invest,” the URC wrote in its report. “... While it is impossible to predict when markets will turn up and the economy will resume growing, the URC is confident that the University has the financial resources, the administrative acumen and the clarity of purpose to weather this difficult period and come out the other end stronger than ever before.”

Other Actions of the Corporation

The Budget and Finance Committee of the Corporation has authorized the University to move ahead with construction of two major capital projects: the new Creative Arts Center, adjacent to the Brown Office Building on Angell Street, and the renovation of Faunce House as the Stephen Robert ’62 Campus Center.

That authorization follows the University’s comprehensive review of all planned capital projects, which began last fall in view of the worsening recession. The Corporation had encouraged University planners to consider ways of meeting academic space and facility needs without significant new debt financing. The University has, in fact, retrofitted and repurposed several academic buildings in recent years:

  • J. Walter Wilson Hall, a former life sciences laboratory building now dedicated to student services;
  • Mencoff Hall, a historic building once known as the Cabinet Building, now houses the Population Studies and Training Center;
  • Smith Buonanno Hall, a former gymnasium renovated for classroom space and academic use;
  • Pembroke Hall, now home to the Cogut Center for the Humanities and the Pembroke Center for Teaching and Research on Women;
  • Rhode Island Hall, being renovated to house the Joukowsky Institute for Archaeology and the Ancient World.

The Budget and Finance Committee also authorized the University to begin selecting architectural firms that will work on development of a medical education building for the Alpert Medical School and on a new aquatics center for the athletic complex. Architects already selected for the Mind Brain Behavior Building will continue their work, exploring renovation of an existing building to meet the academic needs of a rapidly growing area.

“In her reports to the faculty and her letters to the community, President Simmons has pointed out that even while it identifies ways to cut costs and consolidate operations, the University will continue to move ahead with certain projects in support of academic excellence,” said Richard Spies, executive vice president for planning. “These projects are important investments in the University’s academic life. Their construction will also provide employment and support the local economy at a historically difficult time.”

Appointments to Endowed Chairs

The Corporation appointed four faculty members to endowed professorships:

  • Pradeep Guduru as James R. Rice Associate Professor of Engineering, for a two-and-a-half-year term Jan. 1, 2009, to June 30, 2011;
  • Robert Klein as Sylvia Kay Hassenfeld Professor of Pediatrics;
  • Frank W. Sellke as Karlson Professor of Cardiothoracic Surgery;
  • Joanna M. Cain as Chace Joukowsky Professor of Obstetrics and Gynecology.

Acceptance of Gifts

University policy requires formal acceptance by the Corporation of all gifts to the University of $1 million or more. At its Saturday morning meeting, the Corporation formally accepted gifts and recognized gifts accepted by its Advisory and Executive Committee totaling more than $35 million, including:

  • from the estate of Raymond L. Moran, Class of 1941, a bequest of $14.75 million for the new aquatics center;
  • a gift of $10 million for the Mind Brain Behavior Building;
  • a gift of $5 million for the Stephen Robert ’62 Campus Center;
  • gifts totaling $3.125 million for undergraduate scholarships;
  • a gift of $1.5 million to complete funding for an endowed professorship in the humanities;
  • a gift of $1 million for the Greater China Endowment Fund.