Budgetary Priorities for Brown

John E. Savage
Department of Computer Science

Having just completed a three-year term on ACUP, I have four suggestions to make concerning changes needed at Brown. First, the financial resources needed to retain and recruit senior faculty are inadequate. Second, we cannot continue to increase our charges at a rate that greatly exceeds inflation without paying a serious price, as we are now doing over financial aid. Third, in addition to generating new revenue, we must find ways to reduce our costs of operation, possibly by restructuring the University. And fourth, we must do a better job of estimating our income and expenses; our annual surpluses are too large.

The need to increase senior faculty salaries persists. Salaries need to be increased about 15% to reach the average of the other Ivy institutions, a differential that has existed for at least five years. Assistant and associate professors are paid at market, but fall below market when promoted. In my view this is an important reason that we are raided so easily. This raidability has increased with our visibility and the increasing relative wealth of the universities with which we compete. Interestingly, the number of dollars needed to solve this problem is less than the size of the budget surplus for fiscal year 1998.

My second point concerns the cost of a college education. Certainly the new emphasis on expanded financial aid at our peer institutions is an expression of concern about the high cost of education. This sentiment was also recorded by the Wall Street Journal in a December 10, 1998 report: When Americans were asked, "Which of the following do you worry are priced beyond the income of the average family?", 70% said their childrenís college education, followed by 44% for a house, 36% for a secure retirement, and 24% for a car.

ACUPís strong response to the financial aid challenge was to present a budget in which the net tuition income after aid is increased by only 2.7% despite a budget increase of 5%. On the one hand, this is good news: our dependency on tuition is declining. On the other, this change illus-trates how quickly the competitive landscape has altered.

To remain competitive on salaries and financial aid and curb the rate of growth of our costs, we must seriously consider restructuring the University. By this I mean we should be asking which services are essential and how can we offer them more efficiently. Inessential services should be phased out. Because restructuring requires a complete rethinking of what an organization does and how it does it, it can be a painful and costly process. However, the pain and increased costs will be temporary and worth the effort.

When we ask where savings can be found, we need to apply the Willie Sutton principle: When asked why he robbed banks, he said, "Thatís where the money is." We have to go where the money is. At Brown, faculty compensation for instruction is less than about 1/6 of the budget. Of the dol-lars spent on staff compensation, only 18% is spent in academic departments. Of the about 2300 non-faculty staff at Brown, only about 260 are employed in academic departments outside of Biology and Medicine. This clearly indicates that the first place to look for savings is outside aca-demic departments.

My last point is that we need to draft budgets with smaller surpluses. In fiscal year 1997-1998, Brownís revenues exceeded the budget by about $6 million, or 2.3%. $3.5 million of this amount was in tuition and fees that exceeded the budget. One reason for surpluses in this category is that ACUP is told it cannot budget for more than 5,450 undergraduates despite the fact that about 150 more students currently matriculate at Brown.

While one can argue that the $6 million was not surplus because it was spent on needed expendi-tures, such spending removes ACUP from the decision-making process and targets expenditures that are not of the base-budget variety, such as financial aid and salaries. I believe that a more pru-dent policy would be to keep the surplus to about 1% of the budget.

While the challenges facing Brown are serious, we are most fortunate to have a President and Pro-vost who understand them and are deeply committed to their solution. It is my hope that under their leadership the faculty, students and staff will come together to make the changes that will insure the continuing success of Brown University.