Affleck-Graves addresses ND finances
Madeline Buckley | Thursday, February 26, 2009
In light of the struggling economy, Student Senate hosted Executive Vice President John Affleck-Graves to address questions about the University’s financial situation at Wednesday’s meeting.
“It is a very tough time for our country and our world,” Affleck-Graves said. “We rely a lot on our benefactors, but our benefactors have lost a lot.”
Affleck-Graves said the University is down 90 million dollars in gifts and pledges from last year’s number.
“This is a very significant factor for us, and we don’t see it picking up,” he said.
The University also relies on government grants for research funding and money brought in from auxiliary operations such as the Hammes Bookstore and the Morris Inn, both of which are down this year, he said.
Affleck-Graves said the University’s most critical goal is to continue to meet the demonstrated financial aid need of every student, but he predicted students will require more financial aid next year.
The University’s budget allotted $83 million for financial aid next year, but Affleck-Graves said he believes this number will not cover the costs.
“It is definitely a time when the University budget is feeling some pressure,” he said.
Affleck-Graves said there is good reason to be optimistic because the University has managed its money wisely thus far.
“We have a history of being very fiscally conservative,” he said. “Our operations are reasonably efficient.”
The University has four main sources of revenue: 29 percent tuition accounts, 27 percent endowment, 21 percent auxiliary operations, 14 percent research contracts and 9 percent annual giving.
The University’s budget is always balanced, and there is a low level of debt, Affleck-Graves said.
Also, while most colleges and universities pay out about five percent of the endowment, Notre Dame only pays out about 3.6 percent – a practice that has been heavily criticized in the past, he said.
But Affleck-Graves said this conservative spending approach has allowed the endowment to remain more stable than the endowments at some other schools.
Another policy that has helped the University remain strong in the economic recession concerns the construction projects on campus.
Currently, Ryan Hall, a female dorm, Geddes Hall, the new building for the Center for Social Concerns, Stinson-Remick Hall, an engineering building and the new Law School are being built on campus.
Affleck-Graves said he is not allowed to approve any construction project that is not 75 percent funded from the start, and the remaining 25 percent must follow within five years or less.
“We cannot put a spade in ground until 75 percent of the cash is in hand,” he said.
Because of this, all of the current construction projects are financially stable and will continue on the proposed schedule.
Several senators asked why tuition rates are so high when the endowment is stable and producing returns.
Affleck-Graves said the money that makes up the endowment is given by a donor with the promise that it will be used in a certain way, and the money is an investment, meant to grow, so the University cannot touch it, sometimes for as long as 25 years.
“It’s restricted money,” he said.
Affleck-Graves said another goal of the University’s is to bring more faculty to campus in order to decrease the student-faculty ratio, but faculty salaries present a big expense.
“People with specialized skills that are hard to replace are demanding more money,” he said. “People are loyal to their profession.”
In order to maintain a qualified staff to teach the students, as well as meet financial aid needs, Affleck-Graves said tuition has to remain high.
He said the issue for students to consider is what kind of school they want to attend. The tuition is high in order to bring in top-notch professors to teach at Notre Dame.
Affleck-Graves also discussed the current status of the construction of Eddy Street Commons, a center of commerce just south of the University.
While the University bought the land, the project is owned and funded by a private developer, Kite Realty.
Affleck-Graves said there are many leases pending for shops and restaurants in the Commons.
“Chipotle might come here,” he said. “We are trying to get that letter of intent.”