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Record Year for Reinvesting in BU’s Mission

Closing the books on fiscal 2017

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BU closed its budget for the fiscal year ending June 30 with a record $180.3 million in operating reserves, capital that will be reinvested in the University’s academic mission and other needs.

It was the fourth straight year that the budget reserves set a University record, says Martin Howard, senior vice president, chief financial officer, and treasurer. The reserves, up 14.5 percent from the previous year, will support such capital projects as the Kilachand Center for Integrated Life Sciences & Engineering, the Joan and Edgar Booth Theatre, and renovation of Myles Standish Hall, says Derek Howe, vice president for budgeting and capital planning.

Howe says the reserves will also fund schools’ and colleges’ start-up costs for faculty hiring and retention, and upgrades and replacement of BU’s student information systems.

Over the past five years, BU’s net assets increased by more than $1.24 billion, says Howard.

“This strengthening financial position enables the University to enhance its distinction among the best global universities,” he says. “We will continue to work to strike the right balance between the management of operating and financial risks and the critical importance of ongoing investments” in teaching, research, and public service activities.

The good news extends to BU’s $1.9 billion endowment, which earned a preliminary return on investment of 13 percent in the fiscal year, benefiting “handsomely from the global bull market in equities, as well as from our long-standing partnership with active equity and hedge fund managers,” says Clarissa “Lila” Hunnewell, the University’s chief investment officer.

BU’s return outpaced Harvard’s 8. 1 percent return and was similar to the double-digit returns at MIT (14. 4 percent), the University of Virginia (12.4), and the University of California (15.1).

The endowment, overseen by BU’s eight-person investment office, grew last year because of a confluence of favorable events. In addition to its investment performance, the endowment received a $44 million infusion from the Campaign for Boston University, BU’s $1.5 billion comprehensive campaign, which is running through 2019.

It also received $114 million from proceeds of the sale of University buildings in Kenmore Square.

Continued improvement in the University’s key financial health indicators in recent years led Moody’s Investors Service to revise BU’s rating outlook in 2016, from “stable” to “positive.”

In the just-ended fiscal year, Howard says, BU “continued on a path of steady, disciplined growth to support its broad academic mission, while targeting resources to support strategic objectives in teaching and research.”

4 Comments
Rich Barlow

Rich Barlow can be reached at barlowr@bu.edu.

4 Comments on Record Year for Reinvesting in BU’s Mission

  • Aaron on 10.10.2017 at 4:58 pm

    It would be great if BU would reinvest some of those “record” surplus funds into making attendance more affordable for students. BU is one of the most expensive public universities in the country in one of the most expensive cities in the world. As a student here, I think part of the academic mission of BU should include accessibility, and reducing attendance costs would help. The money that BU invests in the “global bull market” and hedge funds belongs to the students that pay handsomely to be here, and those same students should benefit from the investment.

    • Grad on 11.18.2017 at 10:57 am

      BU is a PRIVATE university.

  • Logic Rules on 10.12.2017 at 12:53 pm

    What is the University of California doing that Boston University is not?

    • Grad on 11.18.2017 at 10:58 am

      The University of California gets several billion dollars of taxpayer money since it is a PUBLIC university.

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