Commencement 2009, University News

A troubled past

By
Senior Staff Writer
Thursday, May 21, 2009

In a campus-wide e-mail to the Brown community on Jan. 27, President Simmons announced the University stood to lose $800 million from its endowment, reducing its safety net by 30 percent to $2 billion. The e-mail marked the first mass University communication since September 2008 when the economy took an unprecedented plunge, forcing administrators to grapple with the pressing concerns.

There would be deep cuts in the annual budget totaling $60 million, Simmons wrote in the January e-mail. The payout to the University from the endowment was projected to be more than $40 million less than previously expected, and fundraising would be hit especially hard. Simmons also announced there would be freezes on salaries and faculty hiring in addition to staff layoffs — 31 Brown employees have since been informed of their dismissal. Capital projects would be suspended until all funds were raised to complete the projects. For example, instead of a new Mind Brain Behavior building, Brown is looking instead to renovate an already existing building to save funds.
These changes mirror decisions made during previous times of economic crisis at Brown.  A main difference between the administration’s approaches then and now, however, is a stronger commitment to keeping tuition costs reasonable and maintaining financial aid. Simmons wrote in her e-mail that tuition would increase, but not as much as previously projected. The amount of money allotted to financial aid would exceed previous projections by nearly $1 million through increased expenditures from scholarship funds. During previous economic crises, tuition increased dramatically and financial aid was not prioritized.

“I think our approach has simply been to stick to priorities,” Simmons said about the proposed solutions to the situation.  She stressed the need to maintain faculty strength and a favorable faculty-student ratio to continue the availability of first-year seminars and advising and mentoring programs.

“The point is that if you don’t do this, you come out on the other side of this crisis trying to recover,” Simmons said. “It’s most important that the University remains strong.”
Simmons herself requested a reduction in her compensation for the current and previous fiscal years.

Brown has experienced economic crises in the past — from the depression in the mid 1890s to the energy crisis in the 1970s to rampant inflation in the late 1980s and early 1990s.

According to Luther Spoehr, lecturer in education and history, Brown faced administrative upheaval when President Elisha Benjamin Andrews supported William Jennings Bryan in the 1896 presidential election. Bryan advocated free silver, which benefitted the nation’s rural farmers. The farmers owed money to the Northeast’s wealthy tycoons — men from whom Brown sought to raise funds. The Corporation expressed concern that continuing to have Andrews as president would jeopardize fundraising efforts in difficult financial times. Despite the president’s numerous educational improvements, including professionalizing the faculty and increasing student enrollment, the Corporation fired Andrews.

Firing a president for political reasons wouldn’t happen today, Spoehr said. In the 1890s, Brown only had about 800 students, largely upper-class men from New England, he said. The Corporation was more concerned with maintaining access to the “deep pockets” of business men than supporting students, he said.

Simmons said the current situation has no bearing on her tenure as president of the University despite the difficult atmosphere. “My being at Brown is completely unrelated to the current issues. I’m at Brown because it’s a good place to be,” she said.
There is little mention in The Herald’s coverage of the University’s financial situation during the Great Depression, perhaps because news from the nation’s economic centers was slow to reach Rhode Island. Yet communication between the administration and the community also held less importance than it does today. In fact, there is no mention of the previous day’s stock market crash on Oct. 30, 1929 in The Herald. Not until Nov. 19 of that year did Brown’s President Clarence Barbour announce that a report would be given to the Corporation that would “consist of the outstanding events and changes that have taken place during the past year in the University by the recommendation of the President.”

During the energy crisis of the 1970s, skyrocketing gas prices and runaway inflation forced the University to take drastic measures. In October 1974, President Donald Hornig called for retrenchment and a program to cut Brown’s budget by 15 percent in the following three years. To accomplish this reduction in expenditures, Hornig initially proposed replacement and firing of faculty — eliminating 75 positions. He also recommended cuts to student service, financial aid and minority-related issues.

“To get the budget in balance by ’77 will call for the cutting of $6 million from expenditures, no withdrawals of endowment capital, substantial increases in giving, major addition to the endowment and maintaining tuition at competitive rates but still so any qualified person can attend,” Richard Seaman, associate vice president and director of development told The Herald in the spring of 1974.

Many of the proposed faculty cuts targeted untenured professors, whom Spoehr called “the stars of the future.” Faculty members also feared that women would be targeted, Spoehr said, especially because women held many junior faculty positions.
Money allotted to financial aid only increased 3 percent despite the pressures on families. The average freshman financial aid loan did rise to $1600 in 1975 from $1100 in 1974, The Herald reported in September 1975. Additionally, financial aid included a ceiling of $3.234 million, which was $21,400 over that year’s budget but was $200,000 less than what some groups proposed.

Paul Maeder, then vice president for finance and operations, told The Herald in February 1975 that he expected a tuition hike of 9.1 percent — reaching a total including room and board of $6275 for the 1976-77 year from a previous sum of $5750. At the time, competitor schools charged tuition ranging from $6050 at Cornell to $6500 at Yale. Maeder told The Herald that these decisions regarding tuition called into question two factors — the amount of money the university need to operate, and “what we can competitively charge … in relation to other private colleges.”

Though Hornig did stress the need to maintain the University as an institution for research and learning, his suggestions sparked outrage amongst the faculty and the student body. A four-day strike and a building takeover by a coalition of minority students played a role in Hornig’s resignation in 1976. But in his resignation letter, Hornig steadfastly promoted his policies to solve the financial crisis. “I believe that when the present retrenchment, and particularly the faculty cuts, have been completed, fresh energy and a new outlook will be in order,” he wrote. 

In the late 1980s and early 1990s, rampant inflation and a plummeting stock market forced the University to scramble for funding. In October 1987, Senior Vice President for Administration and Finance Frederick Bohen announced that Brown’s endowment had lost 15 percent of its value, falling to $325 million from a previous high of $375 million.  Officials said they thought the university might have to raise tuition, cut programs or limit financial aid to compensate for this loss. Ultimately, Brown raised tuition by 7 percent, pushing tuition over the $18,000 mark for the following year.

“We’re in a recession now,” Donald Reaves, Brown’s budget director and chief financial officer from 1988-2002 and currently the chancellor at Winston-Salem State University told The Herald. “The problems I faced were nowhere near what they are today.”
Reaves said Brown resorted to “short-term stop-gap measures” during previous
crises, such as freezes on hiring and limiting expenditures and traveling. But he stressed the severity of the current situation — the combined effects of crises in the auto industry, banking industry, unemployment and consumer confidence — has led to a shift in the philosophies of many colleges and universities. Institutions of higher education must consider the long-term effects of their decisions in the current crisis.

“Just because you are in a recessionary period doesn’t mean you should shortchange — for lack of a better word — an entire generation of students,” he said.

“There is much more explicit concern now with reaching out to constituencies who did not otherwise have access to higher education,” Spoehr said, adding that the University is in less danger of laying off faculty than it was in the past.
 

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