Daily file photo by Evan-Robinson Johnson
President Morton Schapiro said after two years of operating in a multi-million dollar deficit, the University ended fiscal year 2019 several million dollars in surplus.
“Instead of being 47.5 million in the red, we’re going to be modestly in the black,” Schapiro said in an interview with The Daily earlier this month.
Provost Jonathan Holloway first alerted Faculty Senate about a deficit in January 2018. In January 2019, the University drew $100 million from its endowment to finance the $94 million budget deficit from fiscal 2018.
In 2019, Holloway also announced a seven-year capital improvement plan to lift the University from its budget crisis and to factor into all future financial decisions. According to the plan, the University was to remain in a deficit in fiscal 2019 and 2020 and was given permission to continue to take money out of the University endowment. Though Schapiro said the audited numbers have not been finalized, the president estimated a surplus of around 5 to 30 million for last year.
[Read a recap of how the budget deficit impacted the University here]
Schapiro said moving forward, Northwestern will work to increase funding in areas such as IT, salaries for faculty and staff, filling vacant positions and financing student affairs.
Schapiro credited the unexpected surplus to higher sponsored research and several large donations that came in over the course of the summer, including a $50 million gift to financial aid.
However, moving forward, he said the University will take extra precaution to prevent a large scale deficit from happening again. For example, budget meetings — which prior to the deficit occurred quarterly — have been taking place weekly.
The credit rating agency Moody’s Investors Service knocked Northwestern down from the top rating of Aaa to Aa1 earlier in October, a decision Schapiro said was largely due to Northwestern’s recent budget crisis. While Schapiro said he was sorry the University lost the top credit score, the change did not cost the university financially, equating the market penalty of the downgrade to “basically just a rounding error.”
He said the surplus, though smaller than previous years, will allow the University some flexibility in its spending.
“I’m really glad we’re back in the black, because the last two years have been hard on a lot of people — everybody in our community,” Schapiro said.
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