Friday, December 19, 2008

Looking ahead: Sector by sector surveys of the landscape ahead

Shrinking endowments force colleges to freeze hiring, seek federal support

By Brendan Lynch

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During a recession that has wiped $8 billion from Harvard University’s $36.9 billion endowment in four months, local colleges say they aren’t necessarily relying on their endowments to fund research in 2009.

University of Massachusetts Lowell chancellor Marty Meehan expects federal funding for research to increase next year. Only half of one percent of UMass’ research budget comes from the UMass endowment, which is spread among five schools, Meehan said. The school budgeted $32 million for research in fiscal 2008 — and 70 percent of that came from the federal government.

For that reason, Meehan said UMass Lowell isn’t facing the same problems as some private schools — and he believes federal funding will increase next year.

“We think it’s an advantage not to have research tied to endowments at this point,” Meehan said.

The school is moving ahead with plans to build the 97,000-square-foot Emerging Technology and Innovation Center, focusing on nano- and bio-manufacturing research. Meehan called the $80 million center, expected to open in 2011, crucial to the local economy, though he said the recession may cause some changes.

“We’re going to build that building,” he said.

UMass has also been insulated from state budget cuts because of its growing enrollment, and the fees it brings. Meehan anticipated nine percent to 12 percent cuts in state funding next year, which may force the school to raise those fees. In the meantime, the school has laid off 50 people from outreach positions, and reduced the number of vice chancellors from seven to four.

At Boston University, spokesman Colin Riley said he hasn’t seen a disruption in the level of research being done at the school. BU recently froze hiring in response to the recession, except for mission-critical positions such as researchers funded by federal grants, Riley said. On Monday, a BU dental medicine researcher got $1.5 million from the National Institutes of Health for work on the antifungal properties of saliva.

BU gets only about 2 percent of its revenue from its endowment, which was valued at $1.2 billion as of June, instead relying on tuition — making enrollment growth a key. Riley said enrollment is up, but he also said that with the financial crisis only about 12 to 15 weeks old, it may be too early to tell how BU will be affected.

“We just don’t know what it means at the end of the day,” he said. 

Harvard also recently froze hiring after its endowment dropped in October. Harvard spokesman B.D. Colen said the school wouldn’t discuss the loss other than to say Harvard’s dedication to research “would guide us as we make decisions and choices in a significantly more constrained fiscal environment.”

MIT wouldn’t comment on its finances. But MIT said in a letter last week the school is planning for $100 million to $150 million in budget cuts over the next three years — 10 percent to 15 percent of its budget.