Budget cuts ended
President David Leebron announced during his semiannual Town Hall meeting on Feb. 22 that no more across-the-board reductions were expected for the next fiscal year, which starts July 1. However, he said the university would still maintain a tight budget.
Leebron said each dean and department leader will have discretion about how to use their resources. He added that Rice is committed to minimizing job losses for its employees, sustaining its growth and campus enhancement plan under the Vision for the Second Century, maintaining its financial aid support.
Ultimately, he said he wanted Rice to strengthen its impact and reputation as one of the finest research universities in the country.
"Despite that harsh recession, we emerged with enhanced academic programs, two beautiful and environmentally friendly new residential colleges, the BioScience Research Collaborative, a new physics building, a new recreation center and many other enhancements to the educational experience here at Rice," Leebron said, "These successes [and others] are the result of prudent financial management and the generosity of Rice donors."
Vice President of Finance Kathy Collins explained that past budget cuts had been caused by decreases in the endowment. She said about 62 percent of the core budget that funds most of the university was supported by the endowment. According to Collins, the endowment lost about $1 billion during the recent economic downturn, so Rice needed to slow the spending from it.
As a result, she said Rice required a 5 percent budget cut in fiscal year 2010 and again in fiscal year 2011. The deans and department chairs again made their own decisions about how to implement those budget cuts in their areas.
For this year, Leebron noted that the endowment market value was up to $3.79 billion at June 30, 2010 from $3.61 billion at June 30, 2009 and $4.61 billion at June 30, 2008.
Interim Vice President for Investments and Treasurer Ron Long added that the endowment is made up of investments and thus has been positively affected by the recent economic recovery.
According to him, the endowment grows through gifts, investment, and Rice's spending policy. He said the policy specifically seeks to distribute spending over time so that Rice will able to support university operations today and in the future.
"Rice's endowment funds are the permanent capital of the university; they were established to provide a perpetual source of revenue for current operations and certain capital needs," Long said, "So increasing the value of the endowment is always in Rice's best interests."
However, he said he could not speculate on the future value of the endowment.
One part of the university that is not affected by the end of budget cuts is the Jones Graduate School of Business, according to Jones School Dean Bill Glick.
He said the Jones School of Business paid Rice an overhead amount but was dependent solely on a separate endowment and tuition for their annual budget.
"During the past few years, we have experienced a great deal of growth, and have received tremendous recognition for excellence," Glick noted.
He added that the economic recession and BP oil spill had hurt the Jones School, but it was still continuing to search for top students, faculty, staff and greater support to keep up its positive trend.
Martel College freshman Meagan John said she did not completely agree with the decision to end budget cuts.
"Depending on how this situation develops in future years, some departments may be receiving money they're not spending, which could be put to use somewhere else," John said, "So they should get a budget cut."
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