Bromberg shares stats on budget breakdown

In response to inquiries about Wesleyan’s rising tuition cost, now at $40,124, the Administration recently released data concerning the revenues and expenses in the University’s budget, which balances at nearly $123 million for the 2004-2005 academic year.

According to Marcia Bromberg, Vice President of Finance and Administration for the University, tuition and fees for the academic year produce $92.1 million, or 75 percent of the total “Educational and General Revenues.” The other revenue includes $16.3 million withdrawn from the endowment (13 percent), $11.2 million from private annual gifts, (nine percent), $1.8 million in overhead recovery (one percent), and $1.9 million in “other revenues,” (two percent).

On the other side of the budget are “Educational and General Expenditures,” which are calculated on a continual basis. For the current academic year, instruction and academic support receive $56.4 million (46 percent), financial aid receives $25 million (20 percent), Physical Plant and Public Safety receive $15.9 million (13 percent), institutional support receives $9 million (7 percent), external relations receive $8.3 million (7 percent) and Student Services receive $8.1 million (7 percent).

According to the University, “other revenues” include miscellaneous fees such as the application fee and parking fees, “overhead recovery” comes from government grants, “institutional support” includes paying for administrative offices and property insurance and “external relations” includes fees for fundraising-related purposes.

These expenditure and revenue projections are calculated every March for the upcoming year by the Board of Trustees and are then used to calculate tuition cost.

“We start with what is necessary to run the University and then we see what we need to fund it,” Bromberg said. “Usually we think we need more than the funds available.”

Justin Harmon, Director of University Communications, explained that the University tries to limit expenditures to ensure that it will remain safely within revenue projections and will be able to channel money into high-priority activities.

“We’re trying to squeeze [our resources] as much as possible into instruction and academic support,” Harmon said.

Bromberg said that the administrative offices are constantly re-evaluating to see where they can cut back on spending.

“We run a very efficient institution,” Bromberg said. “We do more with less than our peer schools.”

Bromberg explained that Wesleyan employs fewer people in its accounting office and in the physical plant department than peer schools such as Amherst and Williams. She added that the physical plant has taken a leadership role in energy efficiency, saving money and helping the environment.

Still, at $40,124, Wesleyan’s tuition is higher by over a thousand dollars than the tuitions of Amherst and Williams, which are $38,940 and $38,100, respectively.

According to Bromberg, part of the reason that Williams can charge a slightly lower tuition rate is that its endowment is so large. Wesleyan’s endowment is $525 million while Williams’ is over one billion dollars.

“One of our important goals is to widen the amount [of money] we take from the endowment and from private gifts to relieve pressure on tuition,” Harmon said.

“We are very much aware that Wesleyan is at a disadvantage with respect to peer schools due to a significantly smaller endowment per student,” President Bennet wrote on the Wesleyan Planning website. “The endowment disparity may be the single most important strategic challenge for Wesleyan, forcing us to rely more on tuition and fee income and gifts for current operations.”

Since a significant percentage of the endowment is invested in the stock market, its health and size are related to the state of the market. According to Bromberg, due to the nature of Wesleyan’s investments, the University lost comparatively less than its peer institutions during the recent recession.

In defense of criticism that tuition has risen at a faster rate than inflation, Harmon maintained that costs associated with running an institution, like healthcare for faculty and staff, may increase as much as 15 percent while market inflation may rise by only two percent.

The University has considered the idea of “freezing” tuition, or keeping the tuition cost the same for a single class year throughout all four years of study. According to Bromberg, however, freezing does not work because an institution loses too much money. She said that Williams, which tried freezing tuition about a decade ago, lost a significant amount of money and regretted the decision.

Harmon asserted that each year thoughtful consideration is put into the University’s budget.

“Every year I’ve been here for the last five years we’ve reallocated money from lower priority activities to higher priority activities,” Harmon said. “We never begin by just saying, ‘What can we add to last year’s budget?’ We can’t be complacent.”