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BU Looks to Boost Aid, Cut Costs

Increased student need leads to review of operating expenses

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President Robert A. Brown says that the University must cut costs to provide financial aid to students in need. Photo courtesy of BU Photo Services

Faced with an increase in financial aid applications at a time of decreasing revenues from the endowment and other sources, the University is looking to implement permanent cost-cutting measures that will keep BU focused on quality of students, faculty, and programs, President Robert A. Brown announced today.

“Our classroom and co-curricular educational programs are the most important components of what we do,” Brown says. “The quality and size of our faculty and teaching staff is key. Our plans for increased efficiency and cost reduction are designed not to impact these critical components.”

The University’s finances have been affected by the nationwide economic downturn this fall: the endowment dropped 24.1 percent, to $897 million, between June 30 and November 30, 2008, and, for planning purposes, up to a 30 percent decrease is being projected for the fiscal year ending in June 2009. The endowment only represents 4 percent of the University’s operating budget; however, this impact, combined with the potential for higher debt service expenses, and other cost increases, currently lead to a projected $10 million budget gap for the fiscal year that begins next July. In a letter sent to faculty and staff today, Brown said that the University leadership intends to balance the budget in the coming months, and emphasized that the first priority is maintaining BU’s quality while keeping it affordable and accessible to students and families. However, with mid-year financial aid applications up 41 percent over last year, Brown says that the administration “must prudently recognize the potential need for additional financial support for our students.”

“We expect the financial need of our students to continue to rise next year, and we are preparing for it by substantially increasing our financial aid reserve,” Brown says.

During December President Brown worked with the academic and administrative leadership of the University to study options for balancing the budget for the next fiscal year and the overall strategy for leading the University through the recession. The steps that are being undertaken were developed in collaboration with this group.

“Many of us came away with a strong commitment to work together to find ways to reduce expenses to resolve the shortfall without sacrificing educational programming or quality of life at the University,” says Gail Steketee, the dean of the School of Social Work and a participant in the planning process. “This is the positive side of stark economic times — with a forward-thinking management team, we can find sensible ways to cut costs, solve problems and end up a better, more integrated University for it.”

To provide more financial aid for Boston University students, and meet other projected expense increases, the University has already implemented a hiring freeze and held constant the salaries of employees earning more than $150,000. All capital expenditures for the fiscal years 2009 and 2010 will be reassessed to conserve cash. Current projects, including the Student Village II and the College of Fine Arts practice room project, will be completed; summer classroom and residential renovations, as well as the planned School of Law expansion, will be reviewed in the coming months.

The president also plans to review all of BU’s operating expenses to eliminate redundancies. Working groups have begun analysis of six service sectors — communication and Web-based publications, financial and administrative services, research administration, alumni relations, and event coordination — to look for possible reorganization strategies. The Office of the Provost has also initiated a review of subsidies provided to centers and institutes throughout the University.

"What drives us is a commitment to keep BU affordable to a wide and diverse group of students, both in the U.S. and around the world," says Laurie Pohl, the vice president for enrollment and student affairs. 

The fiscal year 2010 budget currently includes modest salary increases for faculty — a measure that Brown says is justified because of the current “below market position” of faculty salaries. At this stage of the planning process, next year’s budget also includes a salary provision for current administrative employees. A salary freeze may be implemented “if economic conditions worsen,” Brown says.

The hiring freeze, implemented at the end of September 2008 to preemptively manage financial risks, will remain in effect until the structure of the reorganization is complete. The open staff positions will give the University some flexibility in reassigning staff to other assignments. Even with this flexibility, Brown says some layoffs will be “very likely.”

A town meeting, where faculty and staff can discuss the current state of the University and ask questions about the University’s budget and the steps outlined in Brown’s letter, is scheduled for Thursday, January 22, from 10 a.m. to 11 a.m., in the George Sherman Union’s Metcalf Hall; a video feed of the meeting will be shown in the Hiebert Lounge on the Medical Campus. Faculty and staff can register for the meeting at www.bu.edu/president/townmeeting/.

12 Comments

12 Comments on BU Looks to Boost Aid, Cut Costs

  • Sarah on 01.12.2009 at 8:09 am

    The Cost of a BU Education

    “What drives us is a commitment to keep BU affordable to a wide and diverse group of students, both in the U.S. and around the world,” says Laurie Pohl, the vice president for enrollment and student affairs. ——————–

    As a BU student, I do not believe this. It makes me extremely mad that only now with the economic slowdown are they considering the cost of a BU education. It’s already over $50,000 a year! I think it’s too late to say that we need to watch what we are spending. —————–

    Also, BU students want TRANSPARENCY! If you are charging us $50,000 a year then show us where our money is going. If a policy of transparency was in place this whole time, maybe we wouldn’t have to be forced to see where we could cut costs. We would already know where the money is going.

  • Anonymous on 01.12.2009 at 10:21 am

    I have seen no evidence of the “increase of the financial aid reserve”, at least not in my department. My advisor told me that there was no money for scholarships next year, which leaves me with nowhere to go. I wonder how many others are in the same predicament?

  • Barney Morisette on 01.12.2009 at 11:04 am

    Financial Statements

    In response to the above comment regarding transparency, BU’s financial statements are publicly available here: http://www.bu.edu/comp/finstate.html
    What further transparencies do you desire?

  • Anonymous on 01.12.2009 at 11:47 am

    From the Financial Aid Web Site - www.bu.edu/finaid/

    Complete this application if:

    • You believe your calculated financial eligibility has increased.
    Students denied aid for the academic year on the basis of financial eligibility and those
    who received aid but seek additional funds will both be considered. Decreased family
    income or increased non-discretionary expenses must be documented.
    • You are regaining satisfactory academic progress.
    Students who did not meet 2007/2008 academic progress standards and thus forfeited
    2008/2009 Boston University aid, and expect to meet fall 2008 semester academic
    progress standards, will be considered for a spring semester award on a tentative basis.
    • You are applying to be a first-time Boston University grant recipient.
    Students who have never received BU grant in the past, although they may or may not
    have applied for it previously.
    • You are returning from a Leave of Absence (LOA).
    Students who are returning from a LOA and would like to be considered for the spring
    semester.

  • Anonymous on 01.12.2009 at 6:15 pm

    Education is not transparent

    Your comment about knowing where your tuition dollars are going is not realistic. You are not buying a thing and you cannot think of education is consumer terms. It is a very complicated thing to finance a university. Infrastructure, research, land, salaries – these are the obvious items that get funded. But in reality there are so many elements that go into this venture that full transparency would be impossible.

    I’m a late 90′s BU grad and I fully understand the hardship of affording a college education. I’ll be paying mine off for a long time yet. Still, people need to stop acting as if they are “buying something” when they pay for school. Besides, you knew what costs were when you accepted admission — as well as when you decided to apply.

  • Anonymous on 01.12.2009 at 8:08 pm

    cost of a BU education

    I have to agree with the earlier post above me. The cost of a BU education is absurd and they don’t care. As a married military veteran in my late 20s, with parents in special circumstances, I would be counted an independent student anywhere in the world (on multiple counts) except apparently BU because i am not over 30 years old. Because i cannot get my parents tax info, i am excluded from any BU financial aid. I’ve applied and been denied 2 years in a row, appealed and told “tough luck” or “its policy”. Its absurd. If they really cared about making BU accessible, the administrators would treat their students as more than cash machines to be pumped dry. If i hadn’t literally moved myself and my husband cross country solely to come here, i would have gone somewhere else once i found out that “official policy” overrules all reason. I like BU for the most part, but I’m certainly not going to recommend it to others as worth the price it costs.

  • Anonymous on 01.12.2009 at 8:42 pm

    I am glad something is being done about the outrageous costs of BU education. And I am confident in President Brown’s ability to cut the costs – after all, the university is not paying him a little under $one million for nothing…

  • Anonymous on 01.13.2009 at 10:32 am

    The real problem

    It is interesting in this discussion, that no mention of administrative salaries is made. The American Association of University Professors salary study across many universities, both public and private, shows that the rate of increase in faculty salaries falls well short of increases in the salaries of presidents and other central administrators. Moreover, the major increases in college and university employees are not in tenure-track faculty, but rather in full-time, nonfaculty professionals. In short, the AAUP concludes that growing costs for education are NOT due to increases in faculty numbers or salaries, nor of staff support positions. Hence, Brown should consider the savings he could produce by getting rid of the excessive number of assistant VP’s or associate VP’s. In his letter to the BU community, he states that he is freezing salary increases for any administrator making $150K or more, but if they’re making that much, they should be working a lot harder and have fewer helpers (aka assistant and associate VPs). The business model of high salaries for the middle to upper managers and low salaries for the actual workers hasn’t worked well for business and doesn’t work well for universities either.

  • Anonymous on 01.14.2009 at 9:02 am

    There are many reasons why an individual student may or may not qualify for Boston University financial aid. Most of the press coverage of financial aid has been centered upon undergraduate aid issues. Graduate students should be checking with their school or college Dean’s office for financial aid opportunities.

  • Anonymous on 01.23.2009 at 10:49 am

    It is not only the cost of BU which is absurde. So many other universities are impossible to pay for. It’s the American education system which is letting families and students down. I am taking a semester off because I just paid $5,000 for a single course in the fall and I just can’t pay anymore. That money was all my savings from a full-time summer work and not spending a penny of it.

  • Anonymous on 02.18.2009 at 12:11 pm

    I can understand people’s frustration to a certain degree but at the end of the day you should be thankful for any Aid you get from BU. Financial Aid is a handout and should be treated as such. The reality is that there are still plenty of students, albeit probably less talented, willing to come here without aid. As far as salaries are concerned…you’re worth what your worth. If BU needs to spend $200k on an administrative position instead of gift wrapping it and giving it to families who failed to plan accordingly for the cost of higher education, then that’s their prerogative.

  • Waply on 10.05.2010 at 1:49 pm

    I am glad as well that something is really being done about the outrageous costs of BU education. This should be done long ago.

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