Daily file photo by Katie Pach
The University’s expenses are projected to outpace revenue in the coming fiscal year, Provost Jonathan Holloway informed Faculty Senate Wednesday.
While Northwestern finished the 2017 fiscal year with a surplus — albeit its smallest in years — the University is on track to accumulate a deficit ranging between $50 million and $100 million this fiscal year, Holloway said. Considering NU’s operating budget of approximately $2 billion, he classified the deficit as an “annoyance” rather than a problem.
“We’re in a moment of financial challenge, but we are not in crisis — not by a longshot,” Holloway said. “But, we have some work to do.”
Holloway, whose address was the first of what he intends to make an annual update to the Faculty Senate, explained that while NU’s long-term financial trajectory is strong, the University is facing a short-term struggle.
Some senators expressed surprise at the news of the deficit.
“Everything financial always seemed pretty rosy,” said Feinberg Prof. Lois Hedman.
The additional expenses came from the maintenance and utilities costs of new buildings, hiring high-profile faculty and fundraising campaigns, Holloway said. Due to the nature of the current expense cycle, the various costs hit during the same window of time.
Holloway said NU has a long history of achieving a budget surplus every year. However, he assured Faculty Senators that an occasional deficit is commonplace at other universities such as Yale University, where he worked before coming to Northwestern.
“He described it as a natural ebb and flow within college budgets or university budgets,” art history Prof. Claudia Swan told The Daily. “In this case, it would strike the broader Northwestern audience as unusual because we’ve been so far in the black for so long. But, in the larger scope of things, it doesn’t strike me as a problem.”
Holloway said he is optimistic that the University’s financial strategy will have NU running a surplus again by the end of the 2019 fiscal year. The administration is currently in the process of developing new budget planning tactics, he said.
To mitigate the financial shortfall, he said, the University has been allocating funding for vacant positions as they’re filled instead of pre-funding them, and plans to defer facilities and management projects until it has the financial capacity. He added that a large cash gift could be an immediate fix.
However, Holloway emphasized that the University will not compromise its academic mission to save money.
“This annoyance is not going to have a major impact on our academic priorities,” he said. “We’re still recruiting faculty, we’re still pursuing opportunities. … My hope is that for the great majority of the campus, including the faculty, you will not notice any difference.”
During Senate, Holloway also discussed the socioeconomic diversity of this year’s Early Decision applicants and said the University is on its way to achieving University President Morton Schapiro’s “20 by 2020” benchmark of having the entering class be at least 20 percent Pell Grant eligible. He added that the University is also on pace to achieve its goals in the “We Will” fundraising campaign.
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