Boston University administrators warned the BU community of a $10 million budget gap for the fiscal 2010 budget at the start of the spring 2009 semester, but after cutting some administrative corners, the fiscal 2010 budget is officially balanced, BU officials said.
Initiatives, such as closing Sargent Center for Outdoor Education and the retail University Computers store, have made balancing the fiscal 2010 budget possible, Executive Vice President Joseph Mercurio said in an email.
President Robert Brown said in a Jan. 12 letter to the faculty and staff that adjustments to the recession, including the increased number of students applying for financial aid, would create a $10 million budget gap when it came time to plan for fiscal year 2010.
Brown said at a town hall meeting for faculty and staff Jan. 22 that groups would be looking at eight different administrative offices and determining how to best cut back on inefficiencies.
The groups are focusing on ‘rethinking’ the PC clusters within dormitories and schools, Mercurio said, which drew backlash when students came to believe that meant the administration was completely shutting down the ResNet labs.
Dean of Students Kenneth Elmore said rumors began to spread when the administration asked students how they felt about the ResNet labs, but no decision has been made yet.
‘There’s nothing set in stone,’ he said. ‘The university is looking at efficiencies . . . we want to have some way to engage people in candid conversations on how to improve.’
The groups are also looking at restructuring subsides for academic centers and institutes, coordinating publication and web-based support, ‘clustering’ alumni relations activities and clustering information technology, Mercurio said.
The ‘clustering’ of information technology included closing down the retail location of University Computers and consolidating services and computer purchasing to an online model that will provide buying service through the Personal Computing Support Center.
Mercurio said in an interview that computer sales have gone down 20 percent, one reason behind the decision.
BU’s utility bill is around $900 million a year, Mercurio said. Renegotiations of BU’s utility contracts helped in closing the budget gap, he said in the email.
Administrators have also made health and dental benefits more cost effective by changing provisions for employees who leave BU before reaching age 65, Mercurio said. The changes will begin in September.’
Although the endowment, which accounts for less than three percent of the annual operating budget, totaled $1.1 billion at the end of last June, it dropped an estimated 28.7 percent from July 1, 2008 through March 31, 2009, though it is still early after the quarter’s end and the estimates are subject to change, Chief Investment Officer Pam Peedin said.’
Officials had anticipated the endowment to drop by at least 30 percent by June 30, 2009, according to the Jan. 12 letter.
‘We’re sure, looking at what trends are nationally, that the endowment will be lower this year than it was at the end of June 30 last year,’ Mercurio said.
Even with the drop, BU’s system for determining how much of the endowment gets delivered to the operating budget each year involves taking a five-year average of market value endowment performance, Peedin said. Under this system, which cushions the endowment from volatile markets, Peedin said she does not anticipate delivering less of the endowment to the university in fiscal year 2010.
BU is not an endowment-dependent school, as schools such as Harvard University are, but is a tuition-dependent school, with about 50 percent of the operating budget coming from tuition and fees, Mercurio said. Endowments are based heavily in investments, so when the economy is strong, endowment-dependent schools do extremely well, but in times of economic decline, endowment-dependent schools suffer more.’ ‘
‘I’d rather we be endowment-dependent, that’s what we all strive for,’ he said. ‘But they have bigger budget problems now.”
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