Despite a projected budget shortfall of $264 million for 2021, stemming from uncertain student attendance in light of the COVID-19 pandemic, Boston University finished the fiscal year with sound financial standing.
President Brown gave an overview of the steps the University would be taking to reduce budget expenses in a letter sent out to faculty dated June 29, 2020. These included freezing salary increases for faculty and staff and contributions to the University’s retirement program, as well as furloughing and laying off 250 faculty and staff members.
“These actions and other savings amount to a decrease of $168 million in expenses in the FY2021 University budget and cover approximately 68 percent of the shortfall,” Brown wrote.
However, according to a letter penned by Garry Nicksa, BU’s treasurer and chief financial officer, in the 2021 fiscal report, total assets grew to $8.3 billion that year due to “outstanding returns” on the University’s endowment investments.
Some faculty members expressed discontent with some of the cost-cutting measures the University implemented last year, adding the end-of-fiscal-year results merit they be appropriately compensated today.
“For those of us who lost money during the pandemic because our salaries were frozen, or we didn’t have a retirement contribution, it felt a little bit like a slap in the face,” said Molly Monet-Viera, a master lecturer in the Romance Studies department. “Why not just re-compensate us exactly what we should have been compensated?”
According to fiscal reports from 2020 and 2021, BU’s revenue from operating activities took a hit last year, down almost $36 million from 2020 and approximately $57.7 million from 2019.
The school announced it was suspending in-person classes on Mar. 11, 2020, three months before the end of the 2020 fiscal year.
However, because the University cut operating expenses by over $80 million in 2021, net assets from operating activities remained high — $143.5 million in 2021 compared to $98.6 million in 2020, almost back to the pre-pandemic asset gains in 2019.
President Brown wrote in an April 2021 letter to faculty that retirement contributions have been reinstated this year, adding BU additionally implemented an across-the-board 2% salary and wage increase to make up for lost raises in 2021, according to a similar letter sent out in May.
Monet-Viera said the reinstituted retirement contribution wouldn’t compensate faculty “dollar for dollar what they were supposed to give us last year.”
Monet-Viera said the decision had been particularly frustrating to many faculty because of the “optics” of seeing construction on the new Center for Computing and Data Science continuing throughout the school year.
“They continued on with the data science project at the expense of, it felt like to us, our compensation,” Monet-Viera said. “It feels like they are more a real estate corporation than they are an educational institution sometimes.”
Additionally, the University’s endowment grew to $3.4 billion by the end of the fiscal year, representing a year-over-year increase of $956 million.
BU spokesperson Colin Riley said, unlike some other private universities, BU is a tuition, rather than endowment, dependent school.
Harvard College’s endowment, which currently stands at around $53.2 billion, contributed more than $2 billion to the school’s operating budget, according to the school’s 2021 fiscal report.
BU’s endowment “provided annual operating support in the form of income distributions of over $90 million,” Nicksa wrote in the financial report.
“The endowment… contributes a small amount to Boston University’s operating budget each year,” Riley said. “But it is not something that would be used to address a particular financial issue that arose. We actually budget in the operation budget for contingencies.”
Maggie Mulvihill, an associate professor in the College of Communications, said she had mixed feelings about the school’s budgeting decisions in 2021.
“I was not pleased that my retirement benefits got cut,” Mulvihill said. “Because obviously what we’ve got stashed away for our senior years is critically important. And so it was not welcome news.”
Mulvihill added BU, where she has been teaching for 12 years, is “very generous with benefits,” more so than “any employer I’ve worked for, which has mostly been extremely lean newsrooms.”
“We get some deep benefits here, as employees — phenomenal health care, dental care, life insurance,” Mulvhill said. “Lot’s of employees don’t go this far, so I think you have to do these individual calculations.”