Deficit forces tution hike

Volume 109 >> Issue 62 : Tuesday, February 6, 1990

Deficit forces tution hike

@ByName:By Andrea Lamberti

These measures will distribute the burden of the deficit among faculty, students, and staff, Provost John M. Deutch '61 said in October.

"If we can adhere to these parameters, the budget problem should be eliminated in a couple of years," said Vice President for Financial Operations James J. Culliton.

The Corporation actions came in response to the recommendations of an ad hoc committee appointed by Deutch to address the budget problem.

The ad hoc committee predicted that its plan would reduce the deficit from its fiscal year 1989 level of $5.4 million to $3 million this year. In FY 1991, the committee projected a break-even budget, with a small surplus likely the following year.

Some of the reasons Culliton cited for the continued deficit included the growing need to provide competitive salaries, especially for the faculty, a reduction in the number of overall students, and a lower research base growth.

Other factors enlarging the deficit, according to Culliton, were increased employee benefit costs -- particularly for health care -- and increased unrestricted fund support to meet full undergraduate need.

Largest increase

in five years

The 7.2 percent increase in tuition for this year was the largest in the past five years. The total increase in tuition, room and board was $1295, making the total cost of attending MIT $19,335 this year. Tuition -- rising from $13,400 to $14,500 -- accounted for most of the that increase.

MIT's self-help level, the amount of money a student receiving financial aid is expected to contribute through loans or work-study, grew by $400 after remaining at $4900 since the 1985-1986 academic year.

The rise in self-help to $5300 once again created a gap between the self-help level at MIT and other schools with comparable expenses. According to President Paul E. Gray '54, the Corporation Executive Committee held the self-help level constant during the past four years to allow other institutions to catch up to MIT.

Gray blamed MIT's endowment for the increase in the self-help level. "MIT's endowment is substantial in absolute terms, but it is not large in the context of MIT," Gray said in February.

"In absolute terms, the size of MIT's endowment ranks around seventh. Harvard has the largest at $4 billion; MIT has about $1.2-1.3 billion. However, you must relate absolute endowment to size of institution. [Taking into account the number of faculty members and graduate students], MIT is 20th-30th," he explained.

Gray also said that the "self-help level had to increase," and students should not have expected a permanent ceiling of $4900. "The increase in the costs [of attending MIT] has to be borne by both families and the Institute," he said.

The decision to maintain a constant self-help level for the past four years was "carried out one year at a time," said Leonard V. Gallagher '54, director of student financial aid. "We were warned each time that it would have to go up the next year."

At an unprecedented tuition forum last February, students asked Gray if he thought the tuition increases would drive qualified to students to other schools. Because so many factors are involved in a student's decision to attend a college or university, it is difficult to assess the impact of higher tuition costs, Gray responded.

The distribution by family income across the national income quartiles has been stable, he added. "There has been a steady upward trend in the lowest income quartile, and a downward trend in the highest income quartile," Gray said.

Culliton said that the Institute was "shaving back salary increases," and freezing certain individual budgets in order to prevent further growth of the deficit that, in a few years, could be as large as $10 million.

Deutch summoned an ad hoc committee to address the budget problem, and the resulting plan projected a deficit of $3 million for fiscal 1990, a break-even budget in 1991, and a small surplus in 1992.

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