The University’s finances still face several hurdles, despite improvements since the 2008 economic crisis, Arts and Sciences Council members learned at their Thursday meeting.
Vice President for Finance Tim Walsh presented information on the University’s sources of revenue and the biggest financial challenges Duke faces to the council. Central strategic funding, undergraduate financial aid, federal support for research and undergraduate residential renovations are the main stressors on the University-wide budget, Walsh said. The economic situation is not as dire as it was following the crisis, he noted, but significant obstacles remain.
“During 2009, it felt like the entire world was collapsing, and the entire financial ecosystem at Duke was on the brink of falling apart under our feet,” Walsh said. “Now the challenges are much more specific and minor in terms of their number... but very profound in terms of importance.”
Duke lost nearly 25 percent on its investments in 2009, Walsh said. Since then, 70 percent of the value lost has been recovered. The University’s endowment also took a big hit from the 2008 crisis, Walsh noted. But the impact on Duke was not as great as it was for some of its peer institutions—such as Harvard and Yale Universities—which depend more heavily on their endowments.
The University system is heavily dominated by the Duke University Health System, School of Medicine and School of Nursing, which combined account for nearly 75 percent of the institution’s value, Walsh said. Additionally, about half of the University’s revenue comes from federal research funding. This funding will likely decrease in the near future due to government budget cuts, Walsh said, which would affect the rest of the University.
“The scale of the School of Medicine drives... the entire revenue structure of the University,” he said.
The University’s commitment to need-based financial aid for undergraduates is also straining the budget, he noted.
Provost Peter Lange noted that Duke increased its generosity with financial aid in 2001 as part of a larger trend of providing need-based financial aid among Duke’s peer institutions. The financial collapse and the subsequent depletion of the endowment funds caused the need to draw funding from the University’s operations budget, decreasing the funding available for other endeavors. Three factors compound the stress associated with financial aid, Lange said—an increase in the number of students in need of financial aid, an increase in the amount of aid each student needs and a decrease in the incoming funding for financial aid.
Walsh also addressed the impact that the recently launched Duke Forward capital campaign will have on alleviating the financial problems. Although donations are coming in, they are often in the form of pledges, which will not amount to actual available funding until five to 10 years from now.
An ad hoc advisory budget committee has been tracking the budget, with the purpose of keeping the Arts and Sciences Council informed about the University’s financial climate and priorities, Dean of Arts and Sciences Laurie Patton said.
In other business
The Arts and Sciences Council approved a proposal from the curriculum committee to change the transfer credit policy. The policy previously stated that students may receive transfer credit from an “approved U.S. four-year college or university.” The wording will be changed to “approved four-year college or university in or outside the United States.”
The proposal was presented by Steffen Bass, professor of physics and member of the curriculum committee. Bass noted that the change will allow students to take courses for credit overseas over the summer or during the academic year, if they are part-time students or on a personal leave of absence. This policy stands independent of the study abroad policy, and will not change the way study abroad credits are handled, Bass said.
The directors of undergraduate studies of the relevant departments will be responsible for determining whether the international courses are approved and what requirements they will count toward, said Lee Baker, dean of academic affairs for Trinity College of Arts & Sciences.
“The outcome of this subtle but important change is we will not get out of the very surreal and even strange business of identifying who is a domestic student and who is an international student,” Baker said. “It really makes things a little more straightforward.”
The Council discussed the inclusion of the phrase “four-year” in the policy after Mark Goodacre, associate professor of religion, noted that many British universities follow a three-year model.
Baker noted that the modifier would be removed, adding that it does not affect the meaning of the policy change.