Returns on the University's endowment have ended fiscal 2009 much more strongly than was originally projected, according to the information presented at a staff budget meeting last Thursday. The endowment return for fiscal 2009 was -17.3 percent, compared to the predicted endowment return of -26 percent presented by Executive Vice President and Chief Operating Officer Peter French in March. The University also ended fiscal 2009 with a positive operating result of $500,000 and is currently projecting a surplus of more than $300,000 for fiscal 2010.In March 2009, University officials estimated that the endowment return would approach -26 percent. Contingent on the completion of the proposals made by the Curriculum and Academic Restructuring Steering committee, this endowment return could have led to budget deficits for the subsequent years as high as $28 million.

In May, that estimate was revised and officials estimated a return of -20 percent, which would have led to deficits between $16 million and $4 million, again dependent on the CARS proposals. The University ended fiscal 2009 at -17.3 percent endowment return; this leads to projected deficits in the next five fiscal years between $14.3 and $2.2 million.

Because of the stronger-than-expected returns due to an improving economic climate and an increase in revenue coupled with a decrease in expenses, the University only used $2 million of the $4 million in reserves granted for use by the trustees in fiscal 2009.

"The original deficit estimate of $8.9M was reduced to $6.9M because the University utilized $2M less of reserves in FY 2009 than previously anticipated, and thus did not have to pay that amount back in FY 2010," French wrote in an e-mail to the Justice. He added that the deficit was substantially closed by the savings from the suspension of contributions to staff and faculty retirement funds, totaling $7.4 million.

Both French and Prof. Sabine von Mering (GRALL), who is the chair of the Faculty Senate, stressed that the suspension of retirement contributions is only for this year and will not continue next year.

French also wrote that a number of estimates are being reviewed but that currently "these items would indicate that the budget is slightly better than balanced at $300K." The University has seen its projected deficit shrink by $2 million due to less-than-expected utilization of reserves. Due to this, the University expects that with the money raised from the suspension of contributions to retirement plans and money received from other sources, including midyear enrollment and fundraising, will lead to a more than $300,000 surplus at the end of fiscal 2010. French stressed, however, that this number was continually changing as the economic climate shifts and revenues are projected with new data.

When the original budget estimates were released, the endowment return stood at -26 percent. Based on this return, the University projected two sets of deficit numbers corresponding to the estimated deficits if the CARS proposals were not met and the estimated deficits if CARS proposals were successfully completed. If the proposals are met, projected deficits would range between -$24 million in 2011 and -$13 million in 2014; if the proposals are not met, projections range between -$28 million and -$22 million.

In May, the projected endowment return had improved to approximately -20 percent and "indicated that the deficits would range from $8M in FY 2011 to $4M in FY 2014 if CARS objectives were met. If CARS objectives were not met, the projections in May indicated that the deficits would range from $12M in FY 2011 to $16M in FY 2014," French wrote in his e-mail.

Based on the current endowment return of -17.3 percent, estimated budget deficits for the upcoming years are much lower than originally projected. If the University is not able to achieve the CARS proposals, the deficits will be between -$11.0 million in fiscal 2011 and -$14.3 million in fiscal 2014. If, however, the University is able to meet the objectives set forth by CARS, the projected deficits range between -$6.8 million in fiscal 2011and -$2.2 million in fiscal 2014, according to French.

French added that "FY 2011 is the first full-year of implementation of the various CARS objectives, and the target is to achieve the CARS goals by 2014."

Dean of Arts and Sciences Adam Jaffe said of the CARS proposals, "We are working on all of them; none of them was expected to be complete by now. The [increase of] 400 students is beginning with the class that will be entering next fall. As for the reduction in the faculty, we've announced incentives for retirement which the faculty are thinking about. . The JBS semester, we're working on, there will be a pilot next semester."

Another effect of the improved endowment returns is that the University reserves, which currently total around $85 million, will last much longer than originally expected. French wrote that in March it was estimated that the University reserves would only support the budget through fiscal 2011, but with the improved returns, "the University will not use the reserves as quickly as previously anticipated."

"I wouldn't have signed off on it if I didn't think that it was possible. . I am always optimistic, but there is no question that this will be extremely difficult," said von Mering when asked if she was optimistic that the CARS proposal would be successfully implemented.

Prof. Timothy Hickey (COSI), another member of the CARS committee, said, "In the next few months we should start seeing faculty being affiliated with different departments. . That's one step. The other is the Justice Brandeis Semester ideas."

Von Mering said, "I think that our financial team . has done a yeoman's job this summer to bring us to where we are now."

She added that while she was aware that Brandeis had fared much better through this crisis than other institutions, "We are not kidding ourselves that this is a good situation, and looking forward, we are still facing deficits for years to come and we will have to be very creative.