In the coming fiscal year, the University will lift both the hiring and salary freezes in place for the current Fiscal Year 2021 in response to financial setbacks caused by the COVID-19 pandemic, Provost Richard Locke P’18 announced at Tuesday’s faculty meeting. President Christina Paxson P’19 also addressed the current state and future of Brown’s endowment and discussed the potential of a new residence hall project on the corner of Brook and Power streets.
The University will also see an increase in tuition and fees that will be “very modest” compared to more substantial increases in recent years, Locke said.
Paxson also provided updates on the University’s endowment and its payout rate.
Brown’s endowment currently supports about 17 percent of the operating budget, which is approximately $170 million per year or $17,000 per student, according to Paxson. She clarified that the contribution from the endowment is dictated by a “payout rate” each year, which is held within a band of 4.5 percent to 5.5 percent of the average market value of that endowment. With financial markets fluctuating recently, Paxson said, “you want to kind of even that out so that you don't have big swings.”
Paxson pointed out that the University’s payout rate was “really high for a long time. It was 5.49 (percent payout) in FY17, (and) it was a little bit over five and a half before that.”
An excessively high payout rate is “not a good thing. It means that you really depressed the ability of your endowment to grow,” she said. The Corporation has yet to make a decision on the payout rate for next year but is hoping to “get it down to about 4.8 by FY22,” Paxson said. As the endowment grows, there will also be a corresponding increase in the operating budget.
The University is considering a new residence hall project that would sit on the corner of Brook and Power streets, and would “be a pair of buildings on both sides of the street.” This new dorm would push the University closer to its goal of being “primarily residential” and housing 80 percent of students on campus, which Paxson argued would also benefit the larger Providence community.
Paxson will further discuss “tuition and fees; employee merit pool; gift acceptance; endowment payout rate; strategic academic priorities; planning and opportunities in the arts; emerging plans for the School of Public Health; equity and access in admissions; consideration of new residence hall project and health system integration” at the February Corporation meeting.
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