Trustees approve 2 percent increase in infrastructure charge
BY RAY DELGADO
The Board of Trustees approved a 2 percent hike in the infrastructure charge on certain restricted and designated funds at its meeting last week to ease the increasing costs of supporting the programs that are funded. The new charge, which covers the administrative and facilities costs associated with new programs, will go into effect Sept. 1, 2005.
Under the new policy, the infrastructure charge will rise to 8 percent for all restricted expendable gifts (money designated for a specific purpose) and grants and contracts that do not otherwise allow a portion of the gift for infrastructure purposes. The charge will be applied at the time the funds are expended or transferred. Gifts for building projects will be exempt from the charge.
The infrastructure charge also will be applied to designated funds (funds that are unrestricted but are directed to particular schools and departments by management agreement) at the time the funds are received by the university. An infrastructure charge on restricted-endowment payout will be collected when the payout is expended or transferred. As is currently the case, gifts whose principal purpose is to fund academic-year tenure-line salaries, undergraduate and graduate student financial aid or undergraduate research stipends will be exempt from the charge. Although the provost has occasionally exempted some funds from the infrastructure charge, the new resolution states that exceptions are to be made rarely, if at all.
Two percent of the new rate will be allocated back to schools and departments to help support their space and administrative costs. Formula budget units (units whose allocations of general funds are predetermined by a formula agreed to by the provost and the unit) such as the Graduate School of Business, Medical School, Hoover Institution, Continuing Studies and auxiliaries will receive the full 8 percent.
The trustees in June approved a 2 percent increase that was scheduled to go into effect Sept. 1, but university officials decided to delay the policy for a year to provide donors with adequate notice about the change in policy, to provide time for expendable gifts made prior to the change to be spent before the higher charge becomes effective, and to enable the Oracle financial system to be programmed to collect the charge automatically.
Randy Livingston, vice president for business affairs and chief financial officer, said the increase was necessary to fund facilities and administrative overhead costs for programs supported with restricted funds. The university collected only $6.5 million in infrastructure charges on $624 million of restricted and designated funds in fiscal 2003, which Livingston said was "clearly inadequate" to pay for the infrastructure associated with these programs.
The Board of Trustees first approved a 6 percent infrastructure charge in 1995 in recognition of expenses resulting from increased police, fire protection and maintenance services placed on the university by the activities supported by restricted gift funds. Many of the university's peer institutions already had adopted similar charges to offset the costs of the programs that were being supported.
The infrastructure charge caused concern among some faculty and administrators who worried that potential donors might object to some of their money being used for administrative purposes. Some faculty also voiced objections about using funds in that manner.
Restricted and designated funds continued to come to the university in increasing amounts, however-growing at an inflation-adjusted annual rate of 4.2 percent during the 10 years since the policy was implemented. Teaching and research expenditures also increased by more than 4 percent per year during the same time period, while administrative expenditures grew by 2.2 percent per year.
The trustees also approved a revised concept and site plan for the Munger Graduate Residences, three buildings that will be built behind the Law School to house more than 600 graduate students. The project also includes the construction of an underground parking structure with approximately 750 spaces and a planned widening of a portion of Campus Drive East that stretches from Vaden Health Center to Mayfield Avenue.
The trustees approved an earlier concept and site plan of the housing proposal in 2002 that planned for a 300- to 400-bed complex that would cost between $49 million and $66 million. The current plan is expected to cost more than $100 million and will help fulfill the university's goals of providing more campus housing for students as part of its General Use Permit with Santa Clara County.
The trustees also approved the construction of the new $10.6 million Kavli Institute for Particle Astrophysics and Cosmology that will be built at the Stanford Linear Accelerator Center (SLAC). The institute is expected to attract faculty from the Physics Department, the Applied Physics Department and SLAC to study the emerging field of particle astrophysics and cosmology, one of the most rapidly growing disciplines within the physical sciences. The institute will comprise about 90 occupants, including permanent and rotating faculty, staff and visitors. Completion is planned for fall 2005.
Share This Story