Provost presents budget plan at Faculty Senate

At the Faculty Senate meeting on Thursday, Provost Persis Drell presented a 2018-19 budget plan that provides strong support for the university’s academic enterprise and begins to invest in initiatives coming out of the long-range planning process, including initial funding for efforts to address issues of affordability, diversity and access.

Outlined by President Marc Tessier-Lavigne in his annual address to the Academic Council on May 17, these initiatives are part of a larger vision for Stanford, “Navigating a Dynamic Future,” that emerged from a yearlong, university-wide long-range planning process.

In presenting the $6.5 billion budget to the senate, Drell noted that the strategic context of this year’s budget plan was unique because the university was engaged in the planning process at the same time budget preparations were taking place.

“We tried to stay close to and well-informed about the long-range planning process so that we could start to invest, where possible, in the launch of some of the initiatives coming out of long-range planning,” she said.

Funding priorities

Of the many themes and initiatives proposed in the long-range vision, Drell announced that several will receive initial support in the 2018–19 budget, including:

• IDEAL: As part of the presidential initiative for Inclusion, Diversity, Equity and Access in a Learning Community (IDEAL), incremental funding will be directed to student-focused community centers, as well as to the Faculty Incentive Fund and the Faculty Development Initiative to enhance efforts to increase the diversity of the faculty.
• Affordability: To begin to address the effects of the high cost of living in the Bay Area, the 2018-19 budget includes an enhanced faculty and staff salary program. The university will also create an Affordability Task Force to analyze the many aspects of affordability affecting the Stanford community, including housing, transportation, child care and benefits.
• Undergraduate financial aid: Stanford will increase funding under the budget to support low-income and first-generation college students.
• Research computing: As part of the plan to strengthen shared infrastructure to support research, funds will be directed to enhance the Stanford Research Computing Center.

Among other budget priorities for 2018-19 is the continuation of a multi-year strategy to expand housing opportunities for students, faculty and staff. The capital budget includes funding for a variety of housing efforts, including the construction of expanded graduate student housing in Escondido Village, plans for building additional faculty and staff housing at 500 El Camino Real in Menlo Park and subsidies for off-campus housing for graduate students.

Stanford’s budget plan is composed of two parts: the Consolidated Budget for Operations, which includes all of Stanford’s operating revenue and expense for 2018-19; and the Capital Budget, which is set in the context of a multi-year Capital Plan. The budgets for Stanford Health Care and Stanford Children’s Health are separate.

The budget plan will go to the Board of Trustees for approval at its June meeting. A formal budget document will be available on the Stanford Bondholder Information website following board approval.

Consolidated Budget for Operations

Projections for the Consolidated Budget show a 3.3 percent increase in revenue in 2018-19, with an ending surplus of $171 million on $6.5 billion in revenue.

The revenue increase is the result of a projected 7.5 percent increase in health care services – reflecting the robust clinical activity of Stanford faculty physicians – and a 6.5 percent rise in investment income, offset by an 11 percent reduction in sponsored research funding at SLAC National Accelerator Laboratory. The decline in SLAC’s budget is expected, as it reflects funding levels for construction projects that are near completion.

Tuition income is expected to grow 3.8 percent next year, based on a previously approved 3.5 percent increase in undergraduate and graduate tuition, as well as modest growth in the number of graduate students.

Sponsored research revenues (including SLAC) are expected to increase by 2.4 percent, with federal research making up just 0.9 percent of this increase. This reflects a trend in recent years of declining federal research support.

Overall, expenses in the Consolidated Budget are projected to increase 4.9 percent in 2018-19.

Stanford will increase the amount of need-based financial aid, athletic aid and graduate tuition aid by 5.1 percent in 2018-19. This allows the university to maintain its generous need-based aid program for undergraduates, particularly for families with incomes below $125,000. Financial aid for graduate students will grow by 4.5 percent, reflecting a slight increase in the number of graduate students and more generous graduate support in selected disciplines.

Compensation costs are expected to rise 7.2 percent next year, based on a strong merit-based salary program, a market/equity/retention component of the compensation strategy and a 3.3 percent overall increase in headcount.

The university has earmarked $1.8 billion for other operating expenses, which include graduate stipends, operations and maintenance, utilities, capital equipment, materials and supplies, travel, library materials, subcontracts and professional services.

General Funds Budget

A key element of the annual budget process is the development of the general funds portion of the Consolidated Budget. General funds can be used for any university purpose and support many of the core academic and support functions of the university. Stanford expects a general funds surplus of $15 million in 2018-19.

The $1.15 billion General Funds Budget includes $66.9 million in incremental allocations, most of which will cover increases in operating costs. The remainder will support a variety of high-priority projects, including the following:

• Long-range planning: $12.4 million will be directed at the launch of initiatives coming out of the long-range planning process focused on affordability, diversity and access, with another $15 million held in reserve for additional initiatives as they are developed.
• Academic programs and faculty: The bulk of funding for academic initiatives comes from restricted funds; however, in 2018-19 the General Funds Budget will provide core personnel and program support to the Stanford Neurosciences Institute and enhanced funding for master’s students in the Graduate School of Education.
• New facilities debt and operation: As new buildings come online, their operating costs are typically funded with general funds. The university is budgeting for a full year of operation for the Bass Biology Building and a partial year of operation for the Stanford Neurosciences Institute and Stanford Chemistry, Engineering & Medicine for Human Health (ChEM-H) complex.
• Administration: The university will expand its investment in cloud computing and strengthen the lab safety program, among other initiatives.

Capital Budget

Drell also presented a 2018-19 Capital Budget, which is part of a multi-year capital plan.

The Capital Budget calls for $1.2 billion in expenditures in 2018-19, supporting several construction projects that, when fully completed, will total approximately $4.1 billion. Some of these projects are currently underway, including:

• Escondido Village Graduate Residences, providing housing for 2,400 graduate students, opening in fall 2020
• Stanford Redwood City, a new campus in Redwood City, the first phase of which is expected to open in early 2019
• Biomedical Innovation Building, the first in a series of buildings to replace several outdated laboratories with leading-edge research facilities for Stanford Medicine
• An interdisciplinary research center to house the Stanford Neurosciences Institute and Stanford Chemistry, Engineering & Medicine for Human Health (ChEM-H), which is scheduled to open spring 2019

Other business

Also at the senate meeting Thursday, Academic Secretary Tom Wasow announced the results of the Faculty Senate election. Stephen Stedman, senior fellow at the Freeman Spogli Institute for International Studies, will serve as chair of the 2018-19 senate, and Marcia Stefanick, professor (research) of medicine, will serve as vice chair. Their one-year terms will begin in fall quarter 2018.

The senate also heard a report on the composition of the faculty and about efforts to increase diversity among the professoriate.

In other business, the senate unanimously passed a motion to amend the rules of the senate to include the chair of the Stanford University Postdoctoral Association as a standing guest of the senate with the right to speak.

The full minutes of the May 24 meeting, including the discussion that followed the presentations, will be posted on the Faculty Senate website. The final senate meeting of the 2017-18 academic year is scheduled for June 14.