University trustees Jan. 22 adopted a 2005-06 operating budget of
nearly $950 million that includes special funding for health and
well-being, compliance, and recruitment and retention.
The trustees acted on a budget proposal from President Shirley M. Tilghman, based on the recommendations of the Priorities Committee of the Council of the Princeton University Community.
The committee, which is composed of faculty, students and staff and
chaired by Provost Christopher Eisgruber, has served as the mechanism
for recommending fiscal and programmatic priorities for more than three
decades.
"The committee's recommendations ... focus on requests in three areas:
responses to the work of the Task Force on Health and Well-Being;
efforts to strengthen the University's compliance with its regulatory
obligations; and our continuing commitment to recruit and retain the
best faculty, staff and students," Eisgruber wrote in an introductory
letter to the report along with Katherine Rohrer, vice provost for
academic programs and executive secretary to the Priorities Committee.
The group recommended a slight increase in the faculty and staff salary
pools along with the allocation of approximately $500,000 to fund its
highest priority programmatic requests in an overall balanced budget.
This amount is less than was available to the Priorities Committee last
year.
"This year's committee found itself functioning in a delicate financial
environment," according to the report. "A number of negative
developments in the FY05 budget -- including sharply higher energy
costs, higher-than-normal vacancies in graduate and faculty/staff
housing and decreased income from indirect costs earned by sponsored
research -- created an unexpected and unusually large projected deficit
for the current year. Budget projections for FY06 showed a significant
deficit for that year as well."
While the report said that the University's endowment enjoyed healthy
returns during the 2004 fiscal year due to rebounding markets, it noted
that the operating budget did not experience any "sudden influx of
cash" as a result. Transfers from endowment income to the operating
budget are controlled by a spending rule
intended to strike a balance between present and future needs of the
University. The amount of spending per unit of endowment increases each
year by a stipulated amount, currently set at 5 percent. The improved
performance of the endowment enabled trustees to avoid downwardly
adjusting the rule.
The provost and the Priorities Committee, working with the finance
committee of the Board of Trustees, developed a plan to respond to this
fiscal situation. It includes cutting the contingency line in the
budget, implementing measures to decrease energy consumption and
filling vacant housing units, while keeping tuition increases as low as
possible. Any remaining gap will be addressed by reducing transfers
from the operating budget to the renovations budget.
Health and well-being
About half of the committee's $500,000 allocation will go toward
initiatives intended to improve the health and well-being of the campus
community.
In November, the University's Task Force on Health and Well-Being
issued its final report that recommended several significant changes in
University policies and programs to address the health care needs and
promote the health and well-being of students, faculty and staff. The
task force "made important, thoughtful and well-researched
recommendations," according to the Priorities Committee, and the
2005-06 allocations are intended to help the University make
"substantial progress" in this area.
Additions to the operating budget for University Health Services will
provide for expanded psychiatric consultation services and increased
summer coverage, among other crucial staffing needs.
Another allocation will fund the University's contribution to improve
coverage provided through the Student Health Plan, which enrolls about
45 percent of undergraduates and all graduate students. The
improvements will include an increased number of outpatient mental
health visits and increased coverage for those visits, as well as a
reduction in fees for dependents.
The University also has committed funds from other sources to support health and well-being initiatives (see related story).
Compliance
While Princeton has long taken compliance responsibilities seriously,
the University recently strengthened its efforts in this area to deal
with dramatic increases in the number of requirements and the higher
standards to which institutions are being held. Laurel Harvey, a senior
member of the administration, last fall was named chief compliance
officer, and several University offices have taken active leadership
with regard to responsibilities in this area.
The Priorities Committee, in an effort to "reinforce the University's
capacity to advance these initiatives," approved funding to increase
staffing in the Office of the General Counsel and the Office of
Internal Audit.
Recruitment and retention
Several recommendations were aimed at improving the recruitment and
retention of students, faculty and staff, and generally enhancing the
quality of their experience at Princeton.
Two areas in particular that directly serve students -- Career Services
and the Lesbian, Gay, Bisexual and Transgender Center -- will receive
additional funds for staffing and operations.
The importance of competitive stipends in attracting the best graduate
students (and in supporting faculty recruitment and retention) was
recognized through additional funds designated for Centennial
Fellowships. These honorific fellowships are used to draw top-ranked
students to Princeton's graduate programs.
In addition, the committee recommended that the operating budget
include a slight increase in the faculty and staff salary pools for
2005-06. "The committee recognizes the importance of competitive
compensation to attracting and retaining the very best faculty and
staff members," the report stated.
The committee also recommended an addition to the University library's
budget for the acquisition of serials, books and electronic resources.
The funds are intended to address the impact of "rapidly escalating
costs of serials and periodicals as well as expenses associated with
securing materials for emerging fields and new programs."
Tuition and fees
Recognizing the critical role that college costs play in student
recruitment and retention, the Priorities Committee stated that it "is
steadfast in its commitment to recommend as low a rate of increase in
tuition and fees as is consistent with sustaining Princeton
University's overall excellence."
For 2005-06, the committee recommended a 5 percent increase in the rate
of tuition, room and board, which the trustees also approved. The rate
of increase is slightly more than last year's 4.5 percent, and is lower
than the average national rate of increase last year in both public and
private institutions. According to the College Board, tuition and fees
increased 6 percent at four-year private institutions and 10.5 percent
at four-year public institutions between 2003-04 and 2004-05.
The report noted that the financial aid budget will be increased enough
to cover these additional charges for students on aid. Students on aid
only pay what they can afford, and the University has significantly
enhanced its financial aid program in recent years to make a Princeton
education even more affordable. Improvements have included replacing
loans in financial aid packages with grants, decreasing the required
annual contribution from student savings, eliminating home equity from
the calculation of family assets and admitting international students
on a "need-blind" basis.
The percentage of students on financial aid at Princeton increased from
38 percent of the class of 2001 -- the last class admitted before the
improvements -- to a record 52 percent of each of the last two freshman
classes. The average scholarship for Princeton students on financial
aid is $25,400 in 2004-05, and some students receive much larger
amounts -- scholarships of $37,000 or more. Even the students whose
families can afford to pay full tuition at Princeton receive a
discount, since the tuition they pay covers only about half of what
their educations actually cost the University to provide.
Princeton's undergraduate charges will increase next year to $40,213,
which is expected to be one of the lowest rates among its peers.
Tuition will be $31,450, an increase of 5.15 percent; room will be
$4,610, an increase of 6.8 percent; and board will be $4,153, an
increase of 2.0 percent. Graduate tuition and fees are scheduled to
increase by similar percentages.
In addition to increasing these mandatory fees, the University expects
to raise two other fees paid by many students: the residential college
fee, which is paid by those living in the colleges; and the premiums
for the Student Health Plan. Both increases were recommended by the
Task Force on Health and Well-Being as a means to accomplish some of
its goals. The increase in the residential college fee, which has not
yet been set, will support current college programming in a way that
frees up general funds that can help fund the activities of a health
educator and clinical nutritionist. The increase in the insurance
premium, from $810 to $1,000, would help fund plan improvements.
The Priorities Committee report is available online as well as from the Office of the Provost.