Stanford Report, May 29, 2015

Stanford's 2015-16 budget plan reflects strong fiscal position

By Kathleen J. Sullivan

Stanford's budget for the 2015-16 fiscal year addresses many of the university's highest priorities, including enhancements to the undergraduate financial aid program and support for new teaching and research facilities, Tim Warner, vice provost for budget and auxiliaries management, told the Faculty Senate yesterday.

The budget plan for the fiscal year beginning Sept. 1 also allows Stanford to make targeted investments in new academic programs, including support for interdisciplinary institutes focused on solving the world's most pressing energy problems and on improving human health.

Next year, several new facilities will open, such as the McMurtry Building for the Department of Art and Art History and the Science Teaching and Learning Center, which will be devoted to undergraduate science education and feature state-of-the-art teaching laboratories for chemistry and biology. In addition, the Central Energy Facility, a key component of Stanford Energy Systems Innovations, will be in its first full year of operation.

Speaking at the senate's May 28 meeting, Warner said Stanford is in "terrific financial shape" due to its underlying financial strength.

"We have here at Stanford, of course, extremely impressive programs and extremely impressive academic research activities," he said. "But we also have a very strong financial structure underneath us. We've done really well in fundraising for many years and that continues. The investment returns we've seen on our endowment have been strong. And, unlike many colleges and universities around the country, we really have no deferred maintenance at Stanford. That's a huge benefit to this institution."

Still, there are ongoing concerns, Warner said, such as the high cost of housing for faculty in the Bay Area. Stanford has been pushing very hard to meet that challenge, through a variety of programs offered by the Faculty Staff Housing office. Warner said the issue is a top priority of President John Hennessy, Provost John Etchemendy and the Stanford University Board of Trustees.

Warner presented the $5.5 billion budget plan on behalf of the provost, who was unable to make his usual report due to recent back surgery. The budget plan will go next to the Stanford University Board of Trustees for approval at its June meeting. A formal budget document will be available on Stanford's Bondholder Information website following board approval.

Warner said revenue from the SLAC National Accelerator Laboratory will rise in 2015-16, due to an increase in construction projects funded by the federal government. Tuition revenue will rise 3.5 percent next year, under an earlier action by the Board of Trustees.

Research, financial aid, compensation

Although Stanford faculty continue to be very successful in winning competitively awarded federal research funds, total sponsored research revenue, excluding SLAC, is expected to grow by just 1.7 percent in 2015-16. Revenue from non-federal research is expected to increase 3.6 percent next year, resulting in total university research growth of 2.5 percent.

However, Warner said, the growth in research revenue varies widely across campus. While the School of Medicine and the Graduate School of Education expect increases in federal research funding in 2015-16, the School of Humanities and Sciences and the School of Engineering expect federal funding to be relatively flat.

Student financial aid remains a high priority for Stanford, with a 6.5 percent increase in funding budgeted for fiscal 2015-16.

Consistent with its commitment to need-blind admission for U.S. undergraduate applicants, Stanford has increased funding for need-based undergraduate scholarships to $145.9 million next year, compared with $136.3 million in 2014-15.

In addition, Stanford recently expanded its undergraduate financial aid program to increase the family income thresholds.

"Maintaining affordability is an incredibly important part of what we do at Stanford each year, and this year we have made significant allocation for financial aid to try to improve the affordability of Stanford for undergraduates," Warner said.

Under the new budget, Stanford will provide a total of $280.5 million in direct financial aid to students, including undergraduate, graduate and athletic support, plus an additional $272.7 million in salaries and stipends for graduate students.

Warner said the federal government's contribution to graduate student support – through grants and contracts – has declined over the last decade.

"Fortunately, we've been able to make up for that with very strong fundraising and endowment returns for graduate student aid," he said. "We will continue that effort very aggressively going forward."

The budget also includes a 5 percent increase for overall compensation costs in 2015-16, reflecting salaries, anticipated personnel growth and fringe benefits.

New investments of general funds

Overall, the Consolidated Budget for Operations anticipates a 4.3 percent increase in revenues, with an ending surplus of $128 million on $5.5 billion of revenues.

Within the Consolidated Budget, the General Funds Budget – which can be used for any university purpose and supports many of the core academic and support functions of the university – is projected to increase by 5.2 percent, with an ending surplus of $24.9 million on revenues of $1.3 billion.

The growth in general funds revenue allows for $43.4 million in additional spending of general funds in the 2015-16 Budget Plan. About half that amount will cover inflationary costs. The remainder will fund a variety of high-priority purposes, including the following:

• New Facilities Costs: An augmentation of $7.5 million was made for a variety of costs for new buildings, including the Lathrop Library, the McMurtry Building and the Science Teaching and Learning Center (formerly Old Chemistry), as well as additional debt service on those and other new facilities.
• Undergraduate Financial Aid: Stanford will increase its financial aid budget by $5 million to help existing and future undergraduate students better afford a Stanford education, with particular focus on students who come from low- and middle-income families.
• Teaching and Learning: A number of allocations were made to fund teaching and learning initiatives, including about $1.3 million as a first step to support the newly organized Vice Provost for Teaching and Learning. Also, support was provided for innovative learning technology in the new McMurtry Building, and for an improved learning management system at the university.
• Faculty Support: Stanford has allocated $550,000 in continuing support of the Faculty Development Initiative and the Faculty Incentive Fund, established programs that encourage the recruitment of underrepresented minorities to the faculty. The other large allocation in this category includes $1 million to departments in three different schools to help recruit and retain faculty, as well as address faculty salary equity concerns.
• Student Support: The budget plan allocates $1 million to the School of Humanities and Sciences for ongoing funding of a pilot program aimed at increasing diversity in its graduate student population, and to address graduate aid shortfalls in two specific departments. Also, Stanford allocated $438,000 to provide students with increased access to mental health care providers at Vaden Health Center and to academic advisers in the Wilbur and Stern residence halls.
• Academic Program Support: Interdisciplinary institutes have long been a distinctive feature and strength of Stanford, and the university allocated $668,000 to support the operations of the Precourt Institute for Energy and Stanford ChEM-H: Chemistry, Engineering & Medicine for Human Health. The university also allocated $832,000 to support Stanford University Libraries and Stanford Law School.
• Research Support: Stanford allocated an additional $800,000 to provide ongoing support for the Stanford Electronic Research Administration system, enhance lab safety at the School of Engineering and improve other research-related programs and facilities.
• Other Activities: Stanford allocated $1 million to bolster administrative initiatives across the university, such as campus-wide security and information technology storage and security for various units.

Capital Budget

Warner also presented a Capital Budget for Stanford, part of a rolling, multi-year-plan that includes projects in progress or expected to begin over a three-year period.

The Capital Budget calls for $774 million in expenditures in 2015-16, supporting a range of projects requiring $2.9 billion in total expenditures once fully completed. Among the projects receiving funding in the 2015-16 budget are:

• Initial funding for Stanford's Redwood City campus
• Continued work on the California Avenue faculty housing project
• Continued work on the Stanford ChEM-H and Stanford Neurosciences Institute building
• Completion of Highland Hall, a residence hall for first-year students at Stanford Graduate School of Business
• Completion of the Science Teaching and Learning Center
• Continued work on the expansion of Lagunita Court, an undergraduate residence located on the west side of campus on Santa Teresa Street
• Completion of the 408 Panama Mall Office Building, which will provide offices and conference rooms for several university units

The full minutes of the May 28 meeting, including the question-and-answer period during and after Warner's presentation, will be available soon on the Faculty Senate website. The next senate meeting is June 11.

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