President’s Statement on Distribution from FY 2011 Operating Surplus
President Berkey announced the plan for distributing FY 2011 operating budget surplus funds to various faculty initiatives. Learn more...
Due to the continuing excellent performance across all components of WPI’s operations, we experienced another very strong financial outcome for the fiscal year 2011, which ended on June 30. As in the past several years, a significant operating surplus resulted both from revenues and enrollments that exceeded budget and from the prudent management of expenses. To express appreciation to the faculty for their strong contributions in achieving this result, we are again distributing 15% of the “net” surplus to various faculty and staff for the support of faculty needs and initiatives, graduate education, and the arts.
As stated in an earlier memorandum, in round numbers the FY 2011 operating surplus, according to the approved FY 2011 operating budget, was $14.7 million, or about 10.5 percent of budgeted revenues. (I say this so formally because there is a slight difference between the internally calculated margin, based on how our budget is structured, and the margin appearing in our audited financial statements, which are issued under “generally accepted accounting principles,” or GAAP. For those curious about the difference, Mr. Solomon can explain the “crosswalk” in excruciating detail, and with great pleasure!) Of this amount, the “net” margin on which this year’s 15 percent return is based is $9.7 million. This results from subtracting the budgeted contingency of $3 million and another $2 million that was designated earlier for “fit-out” of WPI-occupied space in the new Gateway II building currently under construction. (At the time when the FY 2011 budget was built, which was early in calendar year 2010, there was not a good estimate for the cost of building the state-of-the-art laboratory facilities for the Fire Protection Engineering Department, as the plan for that facility was still a work in progress. Fully funding the final cost required an additional $2 million, which we earmarked from the operating surplus rather than making a mid-year adjustment to the capital budget.) The total amount being distributed this year is slightly more than 15 percent of $9.7 million, about $1.474 million.
After consultation with Provost Overström, I am pleased to announce this year’s distributions. As we did last year, we are distributing a significant portion of this amount to the three academic deans for their use in supporting faculty needs and initiatives. We are, however, making several refinements to that process.
One is to make several distributions directly to interdisciplinary programs or projects that do not fall exclusively under the support of a single dean. An invitation to request such funding was issued several weeks ago, and we are pleased to be able to fund all of the requests that were received from these programs and projects.
Another is to recognize better the disparity between the circumstances of the Humanities and Arts Department (HU/A) in comparison with the other academic departments with respect both to its role in supporting the WPI Plan and in its opportunities, or lack thereof, to gain discretionary funding via means available in the other departments. On the first point, every WPI undergraduate takes two full units (six courses, or two full terms) of work in HU/A, including what has evolved from the former HU/A qualifying project (the Sufficiency, or “Suff”) to the current Inquiry Seminars and Practicums. It is an important quality of the WPI Plan that our students have such strong engagement in the humanities and arts. Essentially, every WPI undergraduate completes the equivalent of a “minor” in the humanities and arts, and it presents a very large workload for that department, which actually has the complexity of a small division of the Institute. The second observation about HU/A results from the department’s lack of opportunities for overhead-bearing research grants, the directing of corporate-sponsored MQP’s, or teaching in CPE, all of which generate discretionary funding in the other departments.
I said in my initial remarks to the faculty in 2004 that I wanted to elevate the stature of the humanities and arts at WPI to the equivalent of those of engineering and the sciences. The modifications that affect HU/A in this year’s distribution of discretionary funds advance that commitment, as well as reflecting our strong confidence in, and appreciation for, the excellent leadership being brought by the HU/A department head, Professor Kristin Boudreau. Thank you, Professor Boudreau and HU/A faculty and staff.
Finally, we are moving somewhat away from making the allocations strictly on the basis of faculty headcount. Each of the faculty or staff leaders receiving a distribution has a vision for how to put the funds to good use, or will be shaping one with colleagues over time. The relative sizes of the distributions are intended to provide some greater recognition of the variety of views. For your information, the current distribution of FTE faculty is as follows, in the format (# of TTT faculty/# of NTT faculty/total FTE faculty), where by “Science” departments we are referring to all of the Arts and Science Departments except HU/A:
Engineering departments (84/20/104)
Science departments (94/35/129)
Humanities and Arts Department (31/22/53)
Business School (19/7/26)
Thus, we have a total of 319 FTE faculty, of which 230 are TTT and 89 are NTT.
The distributions are as follows, with the names of the faculty and staff with authority for the respective accounts indicated in parentheses.
- For support of the engineering faculty, $300,000 (Dean Guçeri)
- For support of the science faculty, $300,000 (Dean Oates)
- For support of the business faculty, $150,000 (Dean Rice)
- For support of the HU/A faculty, $150,000 (Professor Boudreau)
- For support of the IGSD faculty, $20,000 (Dean Vaz)
- For support of Graduate Education, $200,000 (Dean Sisson)
- For support of the arts on campus, $100,000 (Professor Boudreau)
- For support of the CeHIPT/ReHDI center on health IT and the changing nature of health care delivery, $50,000 (Professor Johnson)
- For support of the Center for Teacher Preparation and Development, $50,000 (Professor Cyr)
- For purchase of a cell analyzer/sorter for the Center for Regenerative Bioscience and Engineering, $44,000 (Professor Gaudette)
- For support of a Program on The Theory of Dynamic Materials, $35,000 (Professor Lurie)
- For support of entrepreneurship and innovation education developments in business and engineering, $75,000 (Dean Rice).
As stated previously, we expect that these funds will be used primarily to support faculty needs and initiatives, although some student support will no doubt be involved. (A report on the use of funds will be sought from each of the indicated individuals at the end of the year, and Provost Overström will be reporting on the use of last year’s surplus distribution at an upcoming faculty meeting.) Except for the dollars being returned in this distribution, the operating surplus dollars are spent exclusively in improvements to the campus facilities, including the creation of additional classrooms; state-of-the art research and teaching facilities; improvements to library, residential, and dining facilities; and other campus amenities in demand by students, most prominently this year the new recreation facilities.
We expect that future operating surpluses will be more modest due to the stabilizing of undergraduate enrollment (we are now at, or certainly near, our limit); a decreasing yield from the endowment draw (due to both rate reductions and market declines); debt service on capital projects (new construction, renovations, and deferred maintenance); and increases in the amounts budgeted directly for depreciation in the operating budget. Nonetheless, we expect continuing strong financial performance due to the continuing excellent work by faculty and staff, and our practices of conservative budgeting and prudent management of resources. We are committed to maintaining a stable student/faculty ratio; competitive employee wages, salaries, and fringe benefits; and restraint on tuition increases to below the national averages.
Of course, financial considerations are only a small part of our expectations for the future of WPI, something we all think about with both concern and excitement. These are trying times for higher education, as for the world generally, and we must sustain the important responsibility for clear, collaborative thinking about what is best about, and best for, this institution, its students, and its faculty and staff. In this regard I read with interest, as many of you must have done as well, a piece entitled "On the Future of Harvard" in the “Ideas” section of the October 16 edition of the Boston Globe. It is a set of four responses by the living current and former presidents of Harvard to the question what that institution will look like in another quarter century as it approaches its 400th anniversary. As you would expect, there is a variety of observations and opinions, but the synthesis provides encouragement for many or all of the major strands of WPI's current development: encouraging collaboration across the disciplines; the rise and potential impact of digital humanities; the increasing importance of engineering and technology in medicine and health; understanding and applying more about how students learn; moving further toward problem-based curricula; and, especially, focusing our teaching and research on the big, important problems in the world.
This administration is fully enthusiastic about the continued development of these important aspects of what we are and can be doing at WPI. As an extremely important example, I want to reply to Dean Wobbe’s recent excellent report on the progress of the Great Problems Seminars (GPS) by assuring the faculty that we will invest whatever is required to grow this important program. Personally, I would be thrilled to have it become a degree requirement for all students by 2015, as she has proposed. The GPS can assume an even more prominent role as the gateway and enabling experience to the heart of the WPI Plan. Similarly, we will continue to ensure the full staffing and support of the IQP program, with whatever combination of faculty recruitment and incentive/reward/support structure best supports its continuing success. As with the Great Problems Seminars, the IQP experiences engage our students with the hard and important problems of the world, in the world. We will continue to encourage and support research and scholarship that combines essential components from whatever combination of disciplines, abilities, and interests are required for significant advance on important problems. And we will continue to work to infuse learning and practice with the spirit of entrepreneurship and the passions of innovation broadly across the institution as a key differentiator and simply an urgent necessity.
As the disciplinary boundaries fade away, there is increased need and opportunity for visionary leadership that is developed broadly and collaboratively across the Institute. I suggest that we think of this work as more than just change, but rather as progress and opportunity, moving along the mainstream of the living tradition that is this great institution. I assure you that, in so doing, you will have my full support and that of the Trustees.
Budget development in higher education is a complex undertaking. The administration and the Board of Trustees look forward to continuing collaboration, communication, and transparency with the campus community in this important aspect of WPI’s continuing development. Keep up the great work!
Best wishes to all,
October 18, 2011