Months after President Robert Brown imposed a staff hiring freeze and delayed capital projects that were not already underway, Boston University will combat a projected $10 million budget gap for the 2010 fiscal year, according to an email Brown sent to BU faculty and staff on Monday.
Brown attributed the imbalanced budget to effects of the recession, including an increase in financial aid applications and a total endowment decrease of 24.1 percent between June 30 and Nov. 30, 2008, which brought the figure down to $897 million. This percent drop is expected to increase to at least 30 percent by June 30, 2009.
When the total endowment was at $1.2 billion nearly a year ago, ratings agencies Moody’s and Standard & Poor’s rating agencies upgraded BU from a BBB+ to A- rating and ‘stable’ to ‘positive’ outlook, respectively, increasing BU’s ‘ability to borrow money for capital projects,’ president Brown said in an email.
‘Obviously a recession may erode an institution’s financial health,’ Brown said in an email to the Daily Free Press. ‘For example, the decrease in our endowment and the awarding of more financial aid both take away revenue from the university and will limit what we can do to enhance the university.’
Brown said in his letter to employees that he will balance the budget by increasing administrative efficiency and cutting back funding in areas that do not further his Strategic Plan, which includes eight goals pertaining to the quality of education at BU, according to its website.
Although Brown said he hopes the staff hiring freeze he implemented in October will shield most current BU employees, there will likely be some layoffs.
The 2010 budget will take effect July 1 for the new fiscal year, so no decisions have been made yet, Riley said.
‘We’re in a global recession, and you may have realized last September that Bob Brown is a very prudent manager,’ Riley said. ‘He took action immediately and continues to communicate with this information to faculty and staff and students.’
Tuition for the 2008-09 academic year increased about five percent from the previous year, raising the total annual cost for students living in BU residences to nearly $50,000. These figures are typically released in March.
A town hall meeting for faculty and staff has been scheduled for Jan. 22.
Staff writer Vivian Ho contributed reporting to this article.
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