PROVIDENCE, R.I. [Brown University] — At its regular winter meeting today (Saturday, Feb. 27, 2010), the Corporation of Brown University approved a consolidated operating budget of $786.6 million for the 2011 fiscal year, continuing a multiyear program of projected deficit reductions in the University’s Education and General budget. Those reductions — $35 million last year and $30 million in the budget approved today — will total approximately $95 million by fiscal year 2014.

“Brown University has made significant investments in its academic core so far this decade and has achieved unprecedented progress in faculty growth, student financial aid, instructional technology, research support, and campus infrastructure,” said Brown Chancellor Thomas J. Tisch. “While the economic environment for higher education remains extraordinarily difficult, the Corporation and administration are absolutely resolved to maintain those achievements and continue to invest in the core elements of Brown’s academic excellence.”

Although the approved budget includes $30 million in reductions to projected spending, Tisch said, it will provide support for key areas, including:

• Commitment to student support. The undergraduate financial aid budget will increase by 6.5 percent, following an increase of nearly 11 percent authorized last year. Policies for need-blind admission and reduced loan requirements will continue unchanged. Graduate student stipends and medical student financial aid will be increased. The Alpert Medical School’s financial aid budget will increase 16 percent.
• Faculty and staff salaries. After a year-long salary freeze, the University will provide salary pools for merit and equity raises. This will allow the University to remain competitive as economic conditions improve and competitive hiring pressures increase.
• A new medical education center. Adequate donor funding having been secured, work will begin this year to reconstruct and retrofit a former factory building in the Jewelry District as the new home of the Alpert Medical School.
• Campus facilities improvement. Work will begin or continue on a number of capital projects, giving the campus much needed new facilities and providing hundreds of construction jobs for the Rhode Island economy. These include the Granoff Creative Arts Center and the Robert Campus Center, and new aquatic and fitness facilities. All projects are expected to be donor-funded.

In approving the budget, the Corporation also set tuition and fees, the University’s primary source of revenue. Building on a three-year average tuition increase of 3.8 percent, undergraduate tuition for the 2010-11 academic year will rise 4.9 percent to $39,928, and the overall undergraduate charge, including standard room and board, fees for health and other services, and a new usage fee for recreational facilities, will rise 4.5 percent to $51,360. Tuition for graduate students will rise by 4.9 percent, and medical tuition will increase by 5 percent.

Organizational Review

The University Resources Council, an 18-member planning body of faculty, students, staff and senior officers, normally develops a proposed budget for the president. Because the preliminary 2011 budget projected a $30-million deficit, President Simmons established a University-wide Organizational Review Committee and charged it with recommending actions that would streamline, consolidate or eliminate processes with a goal of reducing the projected deficit by $14 million.

Working in 12 teams involving more than 150 faculty, staff and students, the committee studied all major areas of the University’s operations and presented Simmons with recommendations for organizational change that should produce $12 million in budget reductions and $2 million in additional revenue.

Simmons endorsed nearly all of those recommendations, and the University Resources Council included them in the draft budget it prepared for Simmons to present to the Corporation. The full text of the URC’s report is available for download (pdf) at the Provost’s Web site, as are previous reports since 2003.

“I believe there is broad consensus in support of the proposed organizational changes and an understanding that the implementation will need to be done with great care,” Simmons said in a message to the campus community today. “I am confident that once implemented, Brown will be better positioned organizationally to make progress toward our most critical goals.” [See various reports on the Brown and the Economy page.]

While the committee did its utmost to retain jobs, the University will not be able to achieve the necessary deficit reduction without eliminating further staff positions. With the budget now approved, senior administrative officers will determine in the coming weeks which positions will be phased out. To the greatest extent possible, the University will try to eliminate positions that are currently vacant or from which staff will retire. (A total of 139 employees chose to accept a voluntary early retirement program offered late last year. Those retirements will take effect in April or June 2010, but new staff will be hired for many of those vacant positions.) Staff whose positions are to be eliminated will be given special consideration for available vacancies, and staff whose employment ends will receive a generous severance package.

Revenue Highlights

Although the exact mix of revenue sources varies among institutions, all private research universities rely on four principal revenue sources: tuition and fees, endowment, fundraising, and sponsored research.

• Tuition — Tuition and fees from all sources ($389.5 million) provide 49.6 percent of revenue for the University’s consolidated budget. In addition to the 4.5-percent rise in the total undergraduate charge, the Corporation approved a slight increase in the undergraduate student body size — to 5,895, an increase of 30 students over the current year. The additional students will be admitted from a very strong pool of transfer applicants; the first-year class will not be expanded.
• Endowment — Payout from the existing endowment will decrease by about $20 million from the current fiscal year, offset slightly by $1.9 million in income from new endowment gifts. In the current fiscal year, the endowment payout accounted for 20 percent of the total Education and General revenue; in fiscal 2011 the endowment will supply 16.3 percent, about $91.9 million.
• Annual gifts — Although the recession has proven to be a difficult time for fund-raising, the University Advancement Office anticipates a 3.3-percent growth in annual giving for next year to $41.1 million ($39.1 million for the Education and General budget and $2 million for biology and medicine).
• Sponsored research — The University anticipates receiving research grants totalling approximately $130 million during fiscal 2011. Research universities receive partial reimbursement for overhead costs of research at a federally negotiated rate. Brown’s rate will increase from the current 61.5 percent to 62 percent next year. Brown faculty have had good success at attracting stimulus funds for research, which should result in an overall 10.8-percent increase in indirect cost recovery to $36.8 million ($17 million for the Education and General budget; $19.8 million for biology and medicine).

Expenditures

Despite the overall reduction in spending and the organizational changes identified through the campuswide review process, the budget approved by the Corporation will maintain momentum in several key areas:

• Financial aid — A 6.5-percent increase will bring the undergraduate financial aid budget to $81.5 million. Budgeted support for graduate students will rise 14.4 percent to $45.5 million. Medical student financial aid will rise 16.3 percent to $6.7 million.
• Faculty and staff salaries — After improving its competitive position for faculty salaries during the first five years of the Plan for Academic Enrichment, the University began to lose ground, including a total freeze of faculty and staff salaries for fiscal 2010. For fiscal 2011, the Corporation has authorized funds for salary increases — 4 percent for faculty, in order to remain competitive in the international pool, and 3 percent for staff. These salary pools will cover merit increases, equity adjustments, and promotions.
• Targeted staffing — Brown will create staff positions in the Center for Computing and Visualization to support the new IBM supercomputer, enhancing the faculty research environment. Funds will also be available to provide enhanced administrative support for research.
• Research support — In addition to staff improvements for computing and research administration, the University will increase support for faculty start-up funds, provide more cost-sharing on grants, and support funding for new academic initiatives from theater (through the Brown-Trinity Consortium) to biological sciences (through the collaboration with the Marine Biological Laboratory at Woods Hole).

Background

The University Budget

The University’s consolidated budget includes three separate budgets:

• Education and General — By far the largest of the three, E&G includes revenue and expenditures for the undergraduate College and the Graduate School — everything except the Division of Biology and Medicine.
• Biology and Medicine — The Biology and Medicine budget includes revenue and expenditures for the Warren Alpert Medical School and for academic activities of campus-based life sciences departments.
• Auxiliaries — The auxiliary budget includes a variety of campus services — dining, dormitories, bookstore — that raise sufficient revenue to cover their operating costs without University subsidy.

Revenue: Fiscal Year 2011 Consolidated Operating Budget

Undergraduate Tuition and Fees: Recent History (with percent increases over previous year)

Undergraduate Financial Aid: A 10-Year History