During development of the fiscal 2010 budget, the University identified revenue and expense gaps totaling $120 million in fiscal 2010 compared to the previously adopted financial plan. The gaps were the result of both external economic forces and internal policy choices.Revenue Gaps
Due to the decline in the endowment's market value and the fact that New York remains one of the very few states not to adopt a more modern version of endowment spending regulation, the budget for income from endowment is $33.2 million less than the original financial plan.
Short-term investment earnings on the University's working capital are expected to be $6.6 million below plan due to very low short-term interest rates.
Annual fund and expendable cash gifts are projected to be $17.6 million less than plan.
Other revenues, including sales of computers at the University's book store, are budgeted with a decrease from plan of $2.3 million.
The fiscal 2010 budget increases undergraduate tuition at 3.85% above fiscal 2009 tuition, which is lower than the planned increase of 4.5%. The dollar impact of this change, net of higher enrollment, was a revenue decrease compared with the plan of $8.1 million.
The fiscal 2010 budget increases the room and board at 2.5% above 2009 levels, rather than the planned increase of 4.5%. This represents $5.1 million less revenue than plan.
To meet anticipated increased demand for financial aid, undergraduate gift and grant aid from the University's general operating fund increases by 7.8% in the fiscal 2010 budget, which is $8 million more than the planned rate of increase of 4.9%. This is the second consecutive year that the increase in gift and grant aid for undergraduates from the general operating fund will grow by more than twice the rate of increase of undergraduate tuition.
Revenue Gap Total
Primarily due to required additional contributions to a defined benefit pension fund (to offset investment losses) and a new "Regional Mobility Tax", the cost of employee fringe benefits increases by $7.6 million.
As a result of NYU choosing to participate in guaranteed loan programs for international students (our prior loan program for international students did not require these reserves, but lending conditions have changed), the University set aside $4 million in student loan reserves.
Provost's academic investments — including funding for capital programs in the Steinhardt School of Culture, Education, and Human Development and in the Tisch School of the Arts — total $11.6 million.
An increase in transfers from the operating budget for capital projects equals $13.6 million for the following purposes:
- Pre-development costs (design and analysis) associated with NYU's long-term plans for physical space.
- Information technology investments for the continuation of a project to install wireless internet connectivity in all buildings across the campus and continuation of funding for a new student information system.
The University has set aside a reserve of $2.3 million for employee severance payments.
Expense Gap Total
The $120 million of revenue and expense gaps compared with the financial plan were closed through actions that affected every part of the university.
Zero percent salary increases in fiscal 2010 for non-contract employees generate $23 million of savings.
As a result of re-engineering efforts that began with the fiscal 2008 budget, University-level administrative and auxiliary units have reduced their base-line expense budgets by $53 million as compared to plan. The savings equal 12% of these units' controllable budgets.
Schools have devised plans to generate recurring annual savings and/or produce new revenue with a net total dollar value equal to $38 million, or 3.4% of net tuition revenue in fiscal 2010. The budget requires savings to grow to 6.4% of net tuition revenue by fiscal 2013, and then level off.
Balances that have built-up in schools' endowment fund spending accounts from endowment distributions in prior years provide a one-time resource of $6 million to help offset the shortfall of endowment income in fiscal 2010.