On Feb. 14, the Board of Trustees approved Emorys $425 million
educational and general budget for the 200203 fiscal year,
projecting a growth in revenue of 4.8 percent and new incremental
resources of just under $19.3 million.
For the past four years, growth has ranged from a low of 6.4 percent
to a high of 8.3 percent, according to Charlotte Johnson, senior
vice provost for administration. Multiyear projection models developed
as part of the budget process indicate that, for the next three
years, growth will be just under 4 percent.
The slowdown in revenue growth is due in part to endowment performance,
Johnson said. From fiscal year 2000 to 2001, the market value of
the Universitys endowment declined by $485 million. This loss
figures into endowment spending distribution over time and will
contribute to the slowed growth for the foreseeable future.
In these circumstances, said interim Provost Howard Hunter, the
focus must be on maintaining the core academic programs of the University.
Although Emory is strong financially and in many ways strategically
better placed than many peers, we do have challenges, Hunter
said. Due to resource constraints, we will achieve our goalsbut
over a longer period of time. For instance, faculty growth will
happen at a slower pace than desired, a commitment to fifth-year
funding for graduate students in certain disciplines will be phased
in more slowly, and the units that support research will grow but
at a slower pace.
The new budget provides resources for a modest merit salary program,
a 1.5 percent increase in the fringe benefit rate and partial funding
for market adjustments for a small number of specific staff job
titles, Johnson said.
The increase in the fringe benefit rate is being driven by health
care costs that, after remaining stable for about five years, have
begun to increase at a rate of 15 percent annually. In addition,
efforts are continuing in Arts & Sciences, Goizueta Business
School and Oxford College to keep faculty salaries competitive with
Emorys peer institutions. Salaries and benefits absorbed 56
percent ($10.8 million) of the new resources.
The budget invests an estimated $4 million in the Universitys
nine schools beyond the salary and benefits program, Johnson said,
such as new faculty and staff lines in Emory College and the business
school, and graduate school funding for the new business Ph.D. program.
All schools have resources to maintain their current scholarship
The University also continued investment in teaching and research,
including additional staff positions to support research activities,
inflationary increases for library acquisitions and system-related
expenses for E-Learning at Emory.
An additional $1.3 million was absorbed by insurance. Consistent
with nationwide trends, the Universitys costs for property
and liability coverage are increasing dramatically, said Edith Murphree,
associate vice president for administration.
Due to budget projections, the ways and means committee is slowing
down a number of capital projects that were in the initial stages
of development, according to John Temple, executive vice president
and chief operation officer.
Temple anticipated that new large capital projects will focus on
renovating existing facilities rather than construction of new space
on the main campus.
In the FY03 budget, operating costs for new facilities required
funding of just under $1.3 million. Many of the facilities currently
have partial funding but will require full operational funding in
200203. These facilities include the Whitehead Research Building,
the Schwartz Center for the Performing Arts, Science 2000-Phase
II, the Faculty Building at Grady Hospital and the Winship Cancer
As these new buildings are completed, Hunter said, the need to
continue to increase Emorys facility major repair and replacement
fund becomes even more crucial. Currently Woodruff Library and the
P.E. Center are in need of major repair work, he said, with both
buildings suffering from water incursions that are damaging structural
The remainder of the available resources were used to address other
systems costs and inflationary and volume increases, Johnson said.
In the area of information technology, we are delaying additional
investment in Web infrastructure and a comprehensive recovery plan,
Hunter continued. We are facing costs related to the upgrade
of the two major PeopleSoft systems, and the current donor records
system is in dire need of replacement.
Hunter reiterated this budget reflects the ever-tightening fiscal
environment in which Emory must make careful and deliberate choices.
In FY03, growth in endowment spending is relatively flat, increasing
only 0.3 percent. In the following two years, projections reflect
possible declines in endowment spending of 3 percent and 4 percent.
Although endowment spending accounts for only 20 percent of the
budget, it has contributed to the Universitys extraordinary
growth in the past 10 years. Emory has benefited from the growth,
Hunter said, but it now must turn to other revenue sources and reallocation
of existing resources to fund high-priority academic initiatives.
Indirect cost recovery is one revenue steam that is growing and
will continue to grow as research space and number of faculty researchers
grow, Johnson said. However, this income is designated to the schools
and faculties that produce it and covers research costs.
Tuition revenue contributes about 57 percent for this budget, Johnson
said, and salaries and benefits represent about 55 percent of the
costs. Few Emory schools are increasing enrollments, and the current
economic environment will limit ability to raise tuition rates,
Currently there are ongoing discussions with various campus groups
to discuss possible changes to some benefits.