Stanford University

News Service


NEWS RELEASE

06/18/91

CONTACT: Stanford University News Service (415) 723-2558

Stanford faces $24.5 million deficit in 1991-92 operating budget

STANFORD -- Stanford is facing a $24.5 million deficit in its 1991- 92 operating budget, Provost James Rosse told the Faculty Senate Thursday, June 13.

The university will draw on reserves to cover the deficit. The $24.5 million deficit remains after $17 million in special, one-time actions to reduce expenses for 1991-92.

In the operating budget guidelines distributed to members of the senate, Rosse said that the gap between income and expense has been caused principally by a series of external events, including the federal government's decision to reduce the university's provisional indirect cost rate to 55.5 percent.

"Closing this budget gap will take the time, energy and wisdom of many in this community over the coming months," Rosse said. "While the problem cannot be solved overnight -- nor should it be -- we must move with dispatch to develop a plan to place Stanford on a solid long-term financial base."

The budget guidelines were approved June 14 by the Board of Trustees. After years of budget growth -- 3.9 percent in 1987-88, 4.5 percent in '88-89, 4.8 percent in '89-90, and 1.15 percent in '90-91 -- the 1991-92 budget is expected to be 3.25 percent smaller.

The budget guidelines are based on several assumptions about income and expenses, Rosse said. Key assumptions about income include the continuation of the 55.5 percent indirect cost rate and flat nominal research growth in the non-medical areas of the university; a 4.9 percent endowment payout rate; and a tuition increase of 5.75 percent, which was approved by the Board of Trustees in February.

Expense calculations assume a salary increase program averaging 4 percent, with a delay of six months in implementing that program.

General funds supporting undergraduate financial aid will grow by 27 percent to $16 million. This increase, Rosse said, reflects Stanford's commitment to meeting the financial need of all undergraduates. More general funds are needed, he said, because more students are qualifying for aid, outside gifts are growing more slowly than previously forecasted, and federal and state governments are reducing grant support.

One-time actions to reduce expenses for the 1991-92 year will save $17 million, Rosse said. These actions include, in addition to the six- month delay in the implementation of the salary program, one-time holdbacks and budget reductions of 2 percent, and a commitment to identify $5 million in budget reductions and income improvements over the course of 1991-92.

Chemistry Prof. John Ross said that, at the risk of being parochial, his own department is extremely lean and "cuts in an already lean department would mean disaster."

Rosse replied that he could not promise to immunize the chemistry department against all budget reductions. However, he said, he would repeat the statement he has made several times before in connection with budget reductions: "This institution must preserve its strength and go forward as a strong institution."

Edward Feigenbaum, professor of computer science, said sponsored research "is a certain kind of goose that lays golden eggs in terms of the operating budget." It is important in times of turmoil, he said, to keep the goose healthy so that it will continue to lay eggs.

President Donald Kennedy said that the budget question involves two separate tasks. The first is to deal with budget deficits in the current year and the 1991-92 year. The second, he said, is to reach a long-term budget equilibrium.

"Obviously, we hope that the kinds of cuts that will be required will not be damaging. But until that future is clarified, nobody can write anybody any guarantees, nor should they," Kennedy said.

"The critical point for now is whether we here will decide to support the retention of quality and momentum through this transition to an equilibrium that we collectively define."

910618Arc1289.html


This is an archived release.

This release is not available in any other form. Images mentioned in this release are not available online.
Stanford News Service has an extensive library of images, some of which may be available to you online. Direct your request by EMail to images@news-service.stanford.edu.

© Stanford University. All Rights Reserved. Stanford, CA 94305. (650) 723-2300. Terms of Use | Copyright Complaints