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MIT Budget Tight, Salary Cuts Possible

By Nathan Collins


While painting a positive picture of MIT’s standing, the Institute’s top leaders are preparing the rest of the community for rougher economic times to come.

At a town meeting in Kresge Auditorium yesterday, MIT President Charles M. Vest said that budget cuts “will put pressure on things we feel the most,” including salaries and graduate student tuition subsidies, in the next two fiscal years. The cuts follow endowment losses totaling more than $1 billion in the last two years.

Executive Vice President John R. Curry said that some of that pressure will be alleviated by not filling vacancies that open up, adding responsibilities to current positions, and working to reduce costs, perhaps by doing some extra work in-house.

In a brief interview after the meeting, Vest said that there will be “no salary cutting” in the next fiscal year. After that, in fiscal year 2005, the pressures will likely be sufficiently high that “we’ll have to ask questions,” and salary cuts are an option, Vest said.

Since MIT considers economic trends on a three-year averaged basis, Vest said, the full impact of recent economic trouble will not be felt until the 2005 fiscal year, which begins in July 2004.

During the meeting, Provost Robert A. Brown said budget constraints will also mean a decrease in the graduate tuition subsidy MIT pays to advisors, from 65 percent to 55 percent of graduate tuition. Because advisors pay for the rest of a student’s tuition, Brown said, the cost to a supervisor of taking on a graduate student will increase, but the cut will not affect graduate students’ take home pay.

“We are sensitive to that stipend and increasing that stipend because of the cost of living,” Brown said.

Despite the cuts, Vest said that MIT’s endowment remains strong, having increased nearly three billion dollars in the last five years.

Revenue sources affect spending

Much of the pressure on the Institute’s budget comes from increasing dependence on private sources of funding, including gifts and investment returns on MIT’s shrinking endowment, Vest said. About 40 percent of MIT’s revenue comes from gifts and returns on the endowment, he said, and that percentage has been growing for some time.

When private support increased during the 1990’s, new expenses, including increased graduate support, followed, Vest said. Now that the endowment is shrinking -- by about $1.2 billion in the last two years -- MIT’s dependence on private funding means cutbacks for some programs despite MIT’s long-term positive economic outlook.

Vest said he did not think MIT had expanded too much but instead viewed the expenditures, particularly on faculty and construction, as excellent investments. Brown said during the meeting that 318 of MIT’s 964 faculty joined since 1996.

In the early 1970s about two-thirds of MIT’s revenue came from sponsored research with most of that from the federal government, Vest said, and only a small amount came from gifts. Tuition has made up a relatively constant twenty-five percent of MIT’s revenue over the past few decades.

Mass Ave to be dug up again

Reviewing the various construction projects around campus, Curry said that major construction will once again come to Massachusetts Avenue between Memorial Drive and Central Square.

“We may still achieve that moment when no one can get in and no one can get out,” Curry said, prompting some audience laughter. He described the stretch of road as in poor condition and envisioned Mass Ave eventually “luring” the MIT community toward Central Square. He said the project will begin this summer and finish up in Summer 2005.

Curry said after the meeting that MIT is doing well in staying on its budget targets for new construction. MIT has “as good controls as you can put on projects.” He noted that those targets were in some case adjusted upward from their original values. Around 2000 an expensive construction market forced MIT to budget more than originally planned for several projects, he said.

Curry also said that MIT is working on increased security at its main traffic entrance on Vassar street. In addition to aesthetic improvements, new gates will be installed, and deliveries are already being directed to a different entrance.