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Simmons warns faculty 'painful' budget cuts on the horizon

The University will face "very painful" budget cuts in the fiscal year beginning in July necessitated by a sharp drop in revenue, President Ruth Simmons said at a monthly faculty meeting Tuesday.

The Corporation recommended that the University decrease its payout from the endowment by 20 percent next fiscal year, Provost David Kertzer '69 P'95 P'98 said. The endowment lost $740 million in the last fiscal year and was valued at the end of June  at around $2 billion.

Since the University's three main sources of income — tuition and fees, fundraising and outside research funding — will not increase enough to make up the lost revenue from the endowment, there will be "significant reductions" in expenditures next fiscal year, Simmons said. She added that the University could not incur much more debt without putting its financial health at risk. "Simply put, our planned expenses, no matter how urgent or how worthy, cannot exceed our revenue," she said.

Though the final budget will not be approved until the Corporation meets in February, the University Resources Committee — the group of administrators, faculty and students that reviews budget requests — will make its preliminary budget recommendations to Simmons at the end of the semester.

The University chose to cut $30 million from the annual general budget at three points —this year, next year and in the fiscal year beginning in July 2010 — rather than cut $90 million all at once, Simmons said. Though some peer schools made huge reductions last year, preferring to have "all the pain at one time," Brown's slower timeline "should not be taken to mean that we do not have a severe problem," she said.

Rather, spreading out the cuts over three years allows the University to "keep people working longer" and take more time making its decisions, she said.

Kertzer reminded the faculty that of the $30 million to be cut from next year's general budget — which does not include the Division of Biology and Medicine — $7 million has already been saved by reducing capital expansion plans. The organizational review process, which is currently seeking ways to cut spending by altering administrative structures and processes, is projected to save another $14 million, he said.

Finding areas to cut the final $9 million is difficult because of pressure to remain competitive, along with "particularly painful" increases in utility costs and debt service, he said. "If you do absolutely nothing new, there are all sorts of inflationary pressures that lead to added costs," he said.

On top of that, the University needs to keep up with its peers in compensation and graduate student stipends — both of which were frozen for the current fiscal year — and financial aid offerings.

BioMed, which has already made a necessary $10 million in cuts, is dependent on the University endowment only to support financial aid for medical students, Kertzer said. It will be challenged to find new funding for financial aid next year, which Kertzer called both a competitive and "humanitarian" issue.

Simmons also announced at the meeting that the University will officially be re-accredited for 10 years by the New England Association of Schools and Colleges.

The faculty also unanimously approved four motions on its agenda, including officially establishing a doctoral program in Africana Studies.

Three of these motions — the doctoral program, changing the name of the Program in Ancient Studies to the Program in Early Cultures and creating a master's program in Behavioral and Social Science Intervention — will now go to the president and Corporation for review.

The fourth motion immediately changed the Faculty Rules and Regulations to reflect an updated procedure for appealing actions taken in response to sexual harassment charges.



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