Widgets Magazine

Etchemendy: surplus projected for University budget

Provost John Etchemendy Ph.D. ’82 presented Stanford’s annual budget report for 2010-2011 on Thursday before the Faculty Senate, saying the financial pressures on the University resulting from economic instability in 2008 were showing signs of lifting.

Etchemendy summarized the endowment decline and anticipated loss in endowment payouts in excess of $200 million, as well as the University’s suspension of the traditional endowment smoothing formula. Etchemendy also highlighted that the University chose not to shrink financial aid programs in light of the financial declines.

John Etchemendy spoke on Thursday to the Faculty Senate. (Courtesy of Linda A. Cicero/Stanford News Service)

“The capital budget for next year is projected to decrease from $649 million to $368 million as projects are completed,” Etchemendy said. “However, a number of projects have also been reactivated, including the Bing Concert Hall, Madera Grove and the child care center.”

As for the consolidated budget for operations, revenues were actually up 2.6 percent averaged over the past two years.

“It doesn’t cancel inflation, but it doesn’t explain the turmoil we went through,” Etchemendy said.

Income from students was up 3.9 percent after the tuition was hiked 3.5 percent in 2009. However, financial aid outputs accounted for half of what the University pulled in for undergraduate tuition. Furthermore, outputs to support graduates accounted for another $285 million of outlays.

“Basically, we ought to get out of the student business,” Etchemendy joked.

Nonetheless, need-based financial aid is expected to decrease in the coming years as the economy improves and the families of students have less need.

On the other hand, while University research funding has been relatively steady over the past 10 years, this is mostly due to research funding receipts from American Recovery and Reinvestment Act (ARRA). Etchemendy expressed concern that this funding was not sustainable.

“As you can see, without ARRA our research funding has basically been flat, and adjusted for inflation, research funding would have gone down,” Etchemendy said.

“As for what the future holds, my guess is the country is probably not going to be able to support [it],” he added. “I hope that’s wrong, but that’s a big worry going forward.”

The budget for general funds, which are budgeted centrally, was projected to have a $26 million-surplus in non-formula general cuts; the biggest priority for the general funds budget the past two years was to support the schools whose endowments had dropped significantly. The general funds helped to fill some of that gap.

However, even with general funds used to plug up some of the monetary holes in financial aid and endowment mitigation, a surplus was projected for the coming two years.

The Tier 1 buffer of the expendable funds pool has also experienced a significant recovery. The expendable pools fund is the cash the University can spend at any given moment; the money is invested and any excess returns go to fill the Tier 1 buffer, which can grow up to 35 percent of total expendable funds before the money starts going to the Tier 2 buffer.

Investment income is projected to be flat in the coming year.

“Our current projection is that the payout on the individual endowment fund will go up by inflationary amount in 2012,” Etchemendy said.

In other business, Stephen Monismith, civil and environmental engineering professor and chair of the Committee on Research, delivered a short presentation describing the committee’s request for the Senate to grant a Primary Investigatorship (PI) Eligibility Exceptions Policy for a limited trial period of up to four years.

The request was divided into two parts: the first requesting PI Eligibility Exceptions for SLAC National Laboratory senior/distinguished scientists, and the second requesting the same for University postdoctoral students.

The Senate voted to authorize the Committee on Research to conduct a “trial period” exception to Stanford’s policy on PI eligibility for senior/distinguished scientists at SLAC.

Senators expressed concern at granting this one-time exception to all postdocs across the University and instead voted to have the Committee for Research refine its proposal with regards to the scope of applicability of the PI eligibility exception.

  • PXU69

    ‘as the economy improves’ ?????????????? The Ostrich Syndrome.

  • Prof. Etaoin Shrdlu

    It’s “Primary Investigator,” not “Private Investigator,” honest.

  • Is this a joke?

    ‘However, financial aid outputs accounted for half of what the University pulled in for undergraduate tuition.’

  • @ Is this a joke?

    Probably not. Stanford has one of the most generous financial aid programs in the nation, which means that more people have access to those funds. So there’d be a lot of students using it.