Emory Report

March 2, 1998

 Volume 50, No. 23

Emory posts 5th straight balanced budget; endowment, sponsored research grow quickly

Emory's financial future remains bright, as the 1998-99 Educational and General Budget approved by the Board of Trustees last month shows. The income used to support initiatives and operating costs in schools and administrative departments is budgeted to rise by $19.5 million next year to a total of $326.3 million, boosted by strong increases in endowment income and indirect cost recovery from sponsored research. The rate of increase in income is down slightly from the budget for the current year, and administrators believe this trend may continue since increases in tuition rates are expected to continue to decline.

"The 1998-99 budget reflects prudent management of a very healthy fiscal picture," said President Bill Chace. "We are running a small surplus on a very big budget, and we have been able-with the same prudence and care-to allow our endowment to pulse a good deal of energy into the University's needs and hopes.

"But we must be mindful, even with our good results, that we still are heavily dependent on tuition income and that some of those paying are severely stretched," he added. Tuition revenue still accounts for 59 percent of the basic educational and general income but will grow more slowly next year than in the past. The increase in tuition income for 1998-99 is projected to increase only 3.3 percent, down from 5.3 percent in the 1997-98 budget. University administrators are committed to containing tuition increases and to ensuring funds are available to keep financial aid at a level equal to or above the prior year, said Edie Murphree, associate vice president for administration.

Emory College tuition will increase 4.8 percent-slightly less than last year-to $21,870. Upperclassmen in the School of Public Health will have the highest tuition increase at 11 percent, a single shot that will equalize tuition rates for all students. Significantly, next year's entering medical school class will pay the same tuition each of its four years. In all schools except theology, Emory's tuition rates remain lower than other top-tier universities.

While still a smaller slice of the revenue pie than tuition income, endowment income and indirect cost recovery from sponsored research are growing at much faster rates. Endowment income will account for $50.1 million of the budget next year, an increase of 22.5 percent over last year. Indirect cost recovery is projected to grow by 9.4 percent to $32.8 million.

Expenses include salaries and benefits, which account for 61.1 percent of expenditures, student aid (17.7 percent) and utilities (4.5 percent). The pool for faculty and staff salary increases will be slightly lower this year at 3.75 percent. The remaining 16.8 percent of the budget is devoted to support basic operating costs, teaching and curricular innovation, interdisciplinary scholarship, and international programs and infrastructure improvements, among other initiatives.

Budget support for academic programs will rise by some $13 million, an increase of 6.6 percent. All schools, except nursing, posted increases in their budgets. The law, graduate and theology schools each showed small increases due to anticipated decreases in enrollment. Declining enrollment in the nursing school will cause its budget to decline by 18.2 percent next year; overall enrollment at Emory is projected to decline slightly next year-by approximately 68 students.

A brighter outlook for nursing appears elsewhere in planning for the 1988-99 fiscal year. The board approved capital matching funds of 0.75 percent for building projects, and some $15 million will be available to begin design for the new nursing school building, arts center, cancer center, medical research building, alumni center and physical sciences (Phase I) building.

"The 1998-99 budget supports the most important initiatives within the college," Emory College Dean Steve Sanderson said. "These include the development of Science 2000-a multidisciplinary initiative in our science departments that will explore new directions in research and provide an outstanding scientific experience for Emory undergraduates." Next year's budget will also support implementation of the new undergraduate curriculum. "There will be a focus on small classes for freshmen, international perspectives and innovative courses in traditional disciplines as well as in emerging interdisciplinary areas," Sanderson said.

Among initiatives elsewhere, the business school will unveil a new graduate degree next year that will give Emory students a head start in meeting the more stringent requirements of the certified public accountancy (CPA) exam. The program will run from summer to summer and grant a master's of professional accounting degree.

Budgeted funds for support units will rise by 5.9 percent, or $6 million. As in years past, much of the increase goes to fund salary costs and other ongoing requirements to maintain University programs. A significant portion will go to "computing" for salary adjustments and fringe benefits, where competitive forces are driving these costs to a significantly higher level. "We found ourselves way below market in information technology salaries," Murphree explained.

The endowment's growth also made additional income available from the Emily and Ernest Woodruff Endowment. These funds will be used to support academic enhancements including Choices and Responsibility initiatives, additional Woodruff professors and scholars, and the Faculty Research Fund.

Murphree finds reason for caution and optimism in the future. Emory's current good fortune with its endowment had a great deal to do with the booming stock market that's bringing prosperity to many. "We've had two good years of endowment increases, but you cannot depend on endowment increases forever," she said. "This year's 22.5 percent increase cannot be assumed to continue into the future."

But Murphree believes the building projects the University undertakes now will pay off in the future. "On the medical side, we may see some significant increases in sponsored research if we continue our plan to build the two new research buildings," she said.

"I note with satisfaction that research dollars continue to come to the University in increasing amounts," said Chace, "that compensation to faculty and staff remains very competitive; that we are increasing our diversity of students, faculty and staff; that we are planning new building where new building has to be; that new endowment gifts have come our way; and that our investment policies have returned considerable advantages to us." Emory's continuing good fortune should serve it well in the future-whatever that future holds.

-Stacey Jones

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