The approved $1.061 operating budget includes $122.1 million for financial aid, a 4 percent tuition increase and a reduction in the endowment’s contribution, a move intended to support Brown’s long-term fiscal health.

PROVIDENCE, R.I. [Brown University] — At its winter meeting from Feb. 9 to 11, the Corporation of Brown University approved a $1.061-billion consolidated budget for the University’s 2018 fiscal year and set tuition and fees for the 2017-18 academic year. The meeting also included a vote authorizing architect selection for a performing arts center at Brown and the election of a new Corporation officer, welcoming Richard A. Friedman to the leadership team as secretary.

As part of its business agenda, the Corporation officially accepted more than $62 million in gifts in support of the BrownTogether campaign, which to date has raised $1.26 billion toward its goal of $3 billion.

The approved $1.061-billion budget for the next fiscal year invests in academic excellence, support for undergraduate and graduate students, key initiatives outlined in the University’s diversity and inclusion action plan, and other strategic priorities. It increases funding for undergraduate financial aid to $122.1 million and includes a tuition increase of 4 percent to $52,231 for the 2017-18 academic year.

In addition, the budget includes measures expected to strengthen the University’s long-term financial health, including a 9.4 percent reduction for fiscal year 2018 in the Brown endowment’s annual funding contribution to the operating budget. This strategic decision to reduce spending from the endowment’s investment returns comes in recognition of the endowment’s long-term mission to provide budgetary stability and funding for future generations of Brown students.

The fiscal year 2018 budget also builds on the 2015 recommendations of a deficit reduction group, which outlined steps toward a balanced budget for Brown. Work on deficit reduction continues in the wake of national federal research funding declines and growth in financial aid, health care and other costs, which contributed to operating deficits in recent years. While the budget reflects a $4.8 million consolidated operating deficit — largely the result of the decision to reduce the endowment payout — it helps place the University on the best possible footing for the years ahead, with the expectation of resolving the remaining deficit in fiscal year 2019 or shortly thereafter. 

“The fiscal 2018 budget approved by the Corporation strikes a thoughtful, deliberate balance between the need to continually invest in academic excellence while sustaining and strengthening the University’s long-term financial stability,” Brown President Christina Paxson said.

The budget Paxson presented for the Corporation’s approval during its business meeting was developed by the University Resources Committee (URC), a working group of seven faculty, seven senior administrators, seven students (four undergraduate, two graduate, and one medical students), and two staff representatives, chaired by the Provost. Paxson thanked the URC for its work developing a budget that advances the core of Brown’s work.

“The budget supports our mission of teaching, research and scholarship, expands student financial aid and deepens our commitment to creating a fully inclusive campus community,” Paxson said. “Just as significantly, it ensures our ability to provide future generations of students the opportunities to engage in learning, research and discovery that benefit students at Brown today.”

The full URC report is available online on the website of Brown’s Office of the Provost.

BROWN’S FISCAL YEAR 2018 OPERATING BUDGET

Budget highlights

The University’s $1.061-billion consolidated budget comprises four main budget divisions:

  • Education and General: $748.8 million
    Instructional and academic programs exclusive of the Division of Biology and Medicine and the School of Public Health
     
  • Biology and Medicine: $152.6 million
    Biological sciences and the Warren Alpert Medical School
     
  • Public Health: $50.7 million
    Formerly part of Biology and Medicine, the Brown University School of Public Health became a separate unit in 2013.
     
  • Auxiliary Operations: $109 million
    Business operations that support the campus community, including dining services, housing, health service, and the Brown Bookstore. It is funded by revenues from those operations.

Tuition and financial aid

The budget for undergraduate financial aid will increase to $122.1 million. Over the last eight years, the undergraduate financial aid budget has increased by nearly 60 percent, and the portion of the undergraduate student body receiving aid has risen from 41 percent to 43 percent in the same time frame.

The URC strives to keep tuition increases as low as possible, even as tuition continues to provide the major share of revenue for the Education and General budget, approximately 64 percent for fiscal 2018. Undergraduate fees, approved by the Corporation today, will be:

Tuition: $52,231 (a 4 percent increase)
Standard room rate: $8,784 (a 6 percent increase)
Standard board: $5,236 (a 6.5 percent increase)
Health fee: $850 (a 5.7 percent increase)
Student activities fee: $274 (unchanged)
Student recreation fee: $64 (unchanged)

TOTAL: $67,439 (a 4.4 percent increase)

Graduate tuition for doctoral and master’s degree candidates is the same as undergraduate tuition: $52,233 (a 4 percent increase). Medical tuition will increase by 5 percent to $58,328.

Increased funding will support a 2.5-percent increase in academic year stipends for graduate students as well as increased summer stipends to support graduate students in the humanities and social sciences, which now puts their 12-month stipends on par with those of graduate students in the STEM fields.

Diversity and inclusion

The budget includes $1.5 million to support a number of items in the University’s Pathways to Diversity and Inclusion action plan in the next academic year. This includes funding for travel grants to bring prospective students from low-income families to Undergraduate Admission’s “A Day on College Hill” program; staff positions in the First-Generation College and Low-Income Student Center and the LGBTQ Center; a director of diversity and inclusion in the Office of Institutional Diversity and Inclusion; investments in the Native American and Indigenous Studies Initiative; and support for faculty hiring.

Endowment income

Brown’s endowment payout is governed by a disciplined policy that balances the need for current income with the important goal of preserving the endowment’s value to provide funding for future generations of students. This year’s budgeting process was informed by the strategic decision to reduce the percentage of the endowment’s market value contributed to the annual operating budget. The policy recommends a payout in an amount in the range of 4.5 and 5.5 percent of the endowment’s 12-quarter average market value. The payout has been at the high end of the policy’s range in recent years; the decrease will bring it near the range’s mid-point.

For fiscal year 2018, Brown’s endowment, with a market value of more than $3.1 billion, will provide $123.5 million (17 percent) of revenue for the Education and General Budget. That is a decrease of $12.8 million (or 9.4 percent) from fiscal year 2017.  The payout reduction helps to preserve the value of the endowment and ensures the University’s solid financial footing over the next decade and beyond.

Brown’s $3-billion BrownTogether fundraising campaign, launched in fall 2015, recently reached $1.26 billion, helping to build the endowment’s ability to provide additional revenue in future years.

Faculty and staff compensation

Salary increase pools of 2.75 percent for both faculty and staff should allow Brown to maintain its market competitiveness for faculty and to continue to address critical equity issues to improve its marketing position for staff. The pool of funds for faculty and staff increases, covering both salary and benefits, will total $8.3 million in the Education and General budget.

Consolidated budget revenue

Undergraduate tuition: $343.3 million
Graduate tuition: $174.5 million
Other tuition and fees: $39.5 million
Study abroad, health fees
Endowment: $140.5 million
Sponsored activities: $139.6 million
Indirect cost recovery: $46.2 million
(Compensation for University support of sponsored research at a negotiated rate)
Annual giving: $43.4 million
Auxiliary and miscellaneous: $133.8 million

Consolidated budget expenditures

Faculty compensation: $142.3 million
Graduate student support: $107.9 million
Other academic support: $174.3 million
Support for instruction, academic departments, libraries, staff
Undergraduate financial aid: $133.7 million
Student services: $82.4 million
Athletics: $17.7 million
General administration and institutional: $57.6 million
Development and alumni relations: $31.6 million
Computing, information technology: $33.6 million
Facilities, debt service, maintenance: $145.3 million
Sponsored research: $139.6 million
(Direct costs of research)

OTHER ACTIONS OF THE CORPORATION

A new Corporation secretary

With his election as the Corporation’s secretary, Richard A. Friedman will succeed Donald C. Hood, who has served in the role since 2008, effective July 1, 2017. Friedman will join a leadership team that includes Chancellor Samuel M. Mencoff, Vice Chancellor Alison S. Ressler and Treasurer Theresia Gouw. 

Friedman is head of the Merchant Banking Division at Goldman Sachs and sits on its management committee. He joined Goldman Sachs in 1981, became a partner in 1990 and currently chairs the firm’s investment committee and its real estate principal investment committee.

Friedman earned his bachelor of arts from Brown in 1979 and continued his studies at the University of Chicago, where he earned an M.B.A. in 1981. He was elected to the Corporation’s Board of Fellows in 2013 following a term on the Board of Trustees. In 2005, Friedman and his wife Susan, a 1977 Brown graduate, gave the University funds to develop a 24-hour study center — a frequently expressed student priority — in the lower three floors of the Sciences Library.

Beyond Brown, Friedman serves on the board of trustees of Mount Sinai Hospital, and the Richard A. and Susan P. Friedman Family Foundation provides funding primarily for education, hospitals, health associations and interests of the Jewish community.

“I am excited to work with Christina Paxson and Sam Mencoff and other leaders of the Brown Corporation and community to meet the objectives of our strategic plan and continue to see Brown thrive, be distinctive and be among the leading universities and research centers in the world,” Friedman said. “In these times, leadership has never been more important. Brown is fortunate to have an administration and Corporation with vision, courage and compassion, and I’m proud to be a part of it.”

Gift acceptance, endowed positions, professorships

University policy requires that the Corporation formally accept gifts and pledges in the amount of $1 million or more. At its business meeting, the Corporation accepted 16 gifts and pledges totaling more than $62 million.

“These generous commitments provide critical support to a wide range of Brown’s academic priorities,” Paxson said in an email to the Brown community. “The success of BrownTogether to date and in the future builds from gifts of many dollar amounts, and all are essential to our success and deeply appreciated.”

The Corporation established of a number of endowed positions in recognition of gifts received:

  • The Warren Alpert Medical Professorship with funding from the Warren Alpert Foundation;
  • The Warren Alpert Professorship in the Alpert Medical School’s Brown Institute for Translational Science with support from the Warren Alpert Foundation;
  • The Jonathan M. Nelson Professorship with funding from Jonathan M. Nelson, a 1977 and Brown parent;
  • The Stanley M. Aronson Professorship within the Warren Alpert Medical School with funding from anonymous donors.

In addition, the Corporation appointed two faculty members to named professorships:

  • Joseph W. Hogan, Carole and Lawrence Sirovich Professor of Public Health;
  • Joseph M. Braun, RGSS Assistant Professor of Public Health.

The Corporation will hold its next regular meeting in May.