The University's academic restructuring plans are projected to close $18 million of the University's $25 million yearly deficit, but the institution will still face a sustained $11 million gap starting in 2014 because spending its $84 million in reserves over the next two years will decrease the earnings from the endowment, according to a presentation by the Faculty Budget Committee last Thursday. The Faculty Budget Committee, composed of Prof. Peter Conrad (SOC), Prof. Carol Osler (IBS) and Prof. Gina Turrigano (BIOL), among others, presented the data to the faculty and administrators at a special faculty meeting last Thursday.

The Committee received the information for the presentation through many discussions with Executive Vice President and Chief Operating Officer Peter French, Conrad said in a March 2 interview with the Justice. "But this is our interpretation of the data; this is not necessarily [French's] interpretation," Conrad said.

French did not respond to repeated requests for comment. Vice President for Budget and Planning Frances Drolette and University Provost Marty Krauss referred all questioning to Conrad.

The University projects that the academic restructuring plans will provide $6 million in revenue by increasing enrollment over four years. One-time expense reductions this year would cut total expenses by $6 million, the projected decrease in faculty over five years would save $5 million and cuts to the graduate school would save $1 million, according to the proposal. Those plans would cut $18 million from the $25 million deficit and leave a $7 million gap.

The University uses 5 percent of its endowment for operations, according to the presentation. "The plan is as we are restructuring, we will spend our reserves," Osler stated at the meeting, adding that the reserves are also part of the endowment. With that $84 million missing, the University will no longer receive $4 million, or 5 percent of those reserves, Conrad said Monday. Conrad explained that the University placed $84 million in reserves in bonds that don't gain interest when the stock market began to fall.

Before the economic crisis, the University had a $710 million endowment, $470 million as the original principal and $240 million of reserves, which together were expected to generate $36 million as an earning of 5 percent. After the reserves fell from $240 million to $84 million as a result of the crisis, total expected earning-that 5 percent draw-was lowered by $8 million. With the $84 million gone, the University not only is very low on liquid assets but is also adding an additional cost of $4 million, the missing 5-percent draw of the $84 million specifically to the remaining $7 million gap as an indirect effect of the economic crisis, Osler explained. "Essentially," Conrad said, "we have no liquid assets available."

Regarding the 5-percent draw from the endowment, Conrad said that "if your sustainable income is too low, then we have a gap between your expenditures and your revenues. The 5- percent sustainable endowment draw under the best of circumstances is supposed to fill that gap." The $11 million is a "yearly gap [beginning in 2014] that persists if we don't do anything about it," Conrad said.

As an example, Osler explained at the meeting that if the University received $10 million to build a pool, with $8 million going toward construction and $2 million to support ongoing repairs, those funds could generate a 5-percent draw of $100,000 to pay for the pool's operating costs. "The donor intends us to support the pool forever; if we were [to] use some of that $2 million [for other purposes], . we would not be able to use it [to] help the pool," she said.

The $11 million gap does not include the structural deficit Brandeis bears as a result of not renovating buildings. "We're balancing our budget only by leaving out things we should be fixing," Osler said.

Rounding down that deficit to $10 million for simplicity's sake, Conrad went on to present various theoretical options that would close such a gap. He said the most likely response would be combining several measures. Reducing costs by $10 million would be equivalent to cutting 91 faculty jobs or 130 staff jobs, eliminating all retirement benefits, a three-year salary freeze for faculty and staff with no catch-up or closing 25 buildings.

Conrad said during the presentation, "We are not recommending any of these, this is just a way of understanding what our options are." Not only could these measures severely affect the academic standing of the University, but the University would still be facing high risk due to low reserves, Conrad said.

To increase revenue by $10 million, the University would have to add an additional 500 undergraduates in addition to the already announced increase of undergraduates, double- sponsor research by government research grants, raise tuition by 5.5 percent over three years or drop financial aid coverage from 34 percent to 27 percent of students.

Replenishing the endowment, which would be the least painful option, would require an additional $200 million per year in revenue, Conrad said. "If a fairy godmother gave us $200 million to go into the endowment, we'd be all set." Realistic possibilities for achieving this goal could include selling off assets such as real estate, treasures and art. The committee set the possibility of funding through art at an arbitrary number of "$100 million plus," Conrad said.

The value of total marketable Brandeis real estate is around $30 million, which includes the Brandeis House in New York City, three small lots in Waltham, graduate student housing, the Foster Mods and the Charles River apartments, according to Conrad.