printable versionProvost explains value of infrastructure charge in Faculty Senate presentation
Board of Trustees approved 2 percent increase in charge to help defray administrative, facilities costs created by new programs
BY RAY DELGADO
For many on campus, the mere mention of "infrastructure charge" is enough to elicit groans and a few rolled eyes. Provost John Etchemendy is trying to change that perception by serving as head cheerleader for the infrastructure charge policy. To that end, he delivered a report to the Faculty Senate last week about the charge in an effort to explain its purpose and rally support for it.
The infrastructure charge is an 8 percent fee imposed on expenditures funded with restricted expendable gifts (money designated for a specific purpose), endowment payout, and grants and contracts that do not otherwise bear indirect costs. The charge is also applied to designated revenue income that is unrestricted but directed to a particular school or department by management agreement. The charge is not assessed on endowment funds whose principal purpose is to fund academic-year tenure-line salaries, undergraduate and graduate student financial aid or undergraduate research stipends.
The infrastructure charge, which rose from 6 to 8 percent at the start of the academic year, covers a portion of the administrative and facilities costs associated with new programs that are often created by new sources of funding. Of that charge, 2 percent is allocated 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, School of Medicine, Hoover Institution, Continuing Studies and auxiliaries—for example, the Athletics Department and Residential and Dining Enterprises—receive the full 8 percent. The fee historically has caused concern among some faculty who worried that potential donors might object to some of their money being used for administrative purposes.
The provost said the infrastructure charge is a necessary component of the general funds budget, which pays for most faculty and staff salaries, general maintenance of the university, utilities, debt service and library support, among other financial commitments. Over the past 10 years, restricted and designated funds have grown 114 percent, compared with only 66 percent for general funds. More striking, Etchemendy said, is that restricted and designated funds have grown a very robust 8 percent per year after inflation, compared to 2 percent for general funds.
"It's a sign that our Office of Development is doing a wonderful job," Etchemendy said. "It's a sign that the Stanford Management Company is doing a wonderful job investing our endowment, and it's a sign that the faculty are doing a wonderful job generating income that comes into restricted and designated funds. But it causes problems."
New funding often supports activities or research that require more staffing, more office space and general operational support and supplies, Etchemendy noted, and nearly all activities at the university impose some costs that must be paid out of general funds. The Board of Trustees in 2004 approved the 2 percent increase in the infrastructure charge and also made it harder to grant exemptions from the charge. Most exemptions now require providing an alternate source of unrestricted funds to pay the charge, which made it more difficult for some faculty and staff who would advise donors to object to paying the charge as a way to get it waived.
"It's not a tax," Etchemendy said. "It's used to pay the actual, real costs of funded activity. It's fair and significantly less than other institutions, and the charge helps, but it certainly doesn't solve, the growing imbalance that we see between restricted and designated funds, and general funds."