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Operating Gap Predicted to Grow to $17.85M

By Brian Rosenberg
Contributing Editor

Despite nearly $3 million in net budgetary reductions, MIT's expenses for fiscal year 1994 are predicted to outstrip its revenues by nearly $18 million, Provost Mark S. Wrighton reported in a letter to the community last week.

That prediction comes after several months of intense Institute-wide efforts to reduce the budgetary shortfall, or "operating gap," as it is known. MIT has had a similar gap for several years, and Wrighton has made closing it a high priority.

The predicted $17.85 million shortfall represents an increase from the projected fiscal year 1993 gap of $16 million, however. Wrighton explained this increase as "an investment in MIT's future."

"We've made conscious choices that will cost more now, but represent a commitment to larger policy goals," he said in an interview. One example of this is that MIT gave raises this year. "We want to continue to attract and retain the highest quality people ... and to do that we need to offer competitive salaries," he said.

Wrighton cited several other large, policy-driven expenses, including MIT's commitment to maintaining need-blind admissions and slow growth in tuition, as contributors to the increased deficit. "We've moderated the growth in tuition, which is the one income stream we have direct control over," he said.

The Institute's total operating budget is expected to incerase from $1.11 billion to $1.13 billion in fiscal year 1994, according to Wrighton's letter.

As part of the effort to reduce the operating gap, expenses in academic areas were cut by about $1.6 million. Because of indirect cost billing, these cuts result in only a $1.2 million net savings. For the same reason, nearly $4 million in reductions in the support areas result in only $1.6 million in net savings.

In his letter, Wrighton said described the effect of the reductions in the academic areas as "lost flexibility." Departmental resources allocated to unfilled faculty positions were reduced, and 15 faculty openings were eliminated. No current faculty were affected by these changes, though, and Wrighton stressed that students would not feel the cuts. "Some students may have to plan ahead a bit more to ensure that their classes are available" at the right times, he said.

Eight positions in the library system were eliminated, Wrighton said. Those staff members were offered other positions within the system, he added.

Within the support areas, about 20 people will be laid off during fiscal year 1994, which begins July 1, Wrighton said. Though layoffs occur regularly as research grants dry up and projects are completed, Wrighton said these positions are being eliminated as part of the budget-trimming process. "The Institute will aid those individuals affected in finding placement opportunities," he said.

An additional 20 unfilled positions in the support areas will be eliminated. Wrighton stressed that most of the necessary reductions in staffing have been achieved through attrition, however.

A change in the distribution of income from one group of endowment accounts will save an additional $2 million, Wrighton said. Some of the income from what are known as Pool C accounts will be directed to general Institute funds. Research groups and faculty members holding these accounts will immediately feel this change as reduced buying power and flexibility.

The Undergraduate Research Opportunities Program will be affected by this change, but Wrighton expressed hope that that this could be turned to the Institute's advantage. "We may be able to focus some of our fundraising efforts by demonstrating a need [in UROP]... it's a high-profile activity," he said.

Wrighton stressed that the Institute still has much to do to eliminate the operating gap. He plans to continue to ask department heads to reduce their budgets by 2 percent each year

Even these reductions will not be enough to close the gap, however. Other, more specific cuts will also be necessary, he said. Many areas are currently being reviewed by the four budget reduction task forces appointed early this year, including the interdepartmental mail system and MIT publications.