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After two difficult years, MIT has “aligned its budget with economic realities” and has improved the institute’s economic resilience, President Susan J. Hockfield said at the annual State of the Institute forum on Wednesday.

As a sign of recovery, the endowment gained 10 percent from last year. This is a significant improvement over the previous year, when the endowment investment suffered a 17 percent loss with the total endowment value plunging from $10 billion to $8 billion. After subtracting operational costs, however, the overall endowment value only increased for 3.7 percent this year.

“It is fantastic news that we are going in the right direction, but we still have a long way to go to recover the ground we lost in the global downturn,” said Hockfield.

Though plenty of cuts were made in the past couple years, there were things MIT’s financial officers would on principle try to preserve, Hockfield said. Their top priority was to sustain need-blind admission and need-based financial aid.

“MIT continues to serve as a very strong economic escalator,” Hockfield said. This year, two-in-three MIT freshmen are from public school, and 16 percent of them are first generation college students, she said.

Furthermore, the other goal of the officers was to keep recruiting and hiring new faculty. As a result, there are 40 new additions in the faculty this year, which constitutes about 4 percent of the entire current faculty.

Present at the Q&A session of the forum besides President Hockfield were Provost L. Rafael Reif, Chancellor Phillip L. Clay PhD ’75, and Theresa M. Stone SM ’76, the Executive Vice President and Treasurer. Five questions were chosen from those submitted online in advance, while only three more questions were taken from the floor. After no further questions, the forum dispersed.

One of the floor question concerned the “Campaign For Students.” According to Hockfield, it was initiated in 2007 and designed to be a 150th birthday present to MIT. The goal of the campaign is to raise $500 million to support MIT students. Clay remarked that the campaign has gotten great response in the very beginning from alumni and friends of MIT, and has now achieved the original fundraising goal with 39 weeks left.

The $500 million fund is divided into $200 million for undergraduate scholarships, $100 million for graduate fellowships, $100 million for student learning (faculty support and curriculum development), and $100 million for student life (housing, athletics, etc).

“There are many elements of the campaign that have been fabulously successful, and we are already benefiting from them,” said Hockfield.

The establishment of Fariborz Maseeh Hall in place of Ashdown House, which will house 450 students, was part of the campaign. It will allow the undergraduate body to increase by 250 over the course of three years, and will generate more space in the other undergraduate dorms.

When asked whether there will be more layoffs this year with respect to the current budget, Reif responded that the budgets for 2010 and 2011 fiscal years had included layoffs to achieve the plan for a $120 million expense reduction. Beyond those that have already taken place, he said, it’s “very hard to predict,” as there are layoffs every year unrelated to endowment changes, such as when grants expire and are not renewed.

In response to a question about whether MIT will continue to be at the mercy of economic gyrations, Reif said that the administration is trying to figure out a more robust and resilient budget process that will depend less on fluctuations in the endowment value. Stone added that we should also keep efficiency and intelligent spending in mind when budgeting in the future. As President Hockfield reminded everyone in the beginning of the forum, “We have a remarkable future yet to invent.”