GW’s Board of Trustees voted Friday to approve the University’s plan to fill an $8.2 million gap in next year’s budget.
For the last two months, administrators and faculty members have been discussing how to make up for a gap between the University’s income and expenses in next year’s budget. Administrators initially proposed $4 million worth of cuts to three major areas: academic spending, capitol projects and administrative expenses.
Heeding a call from the faculty to reduce cuts to academic spending, administrators proposed a budget to GW’s highest governing body Friday that would extract $1 million from academic expenses over the summer and reallocate the money to programs that only require funding for one year. Another $1 million will also be taken out of academic expenses and may be released for spending by individual schools in the fall pending a University budget census.
“They thought the budget was good,” said Executive Vice President and Treasurer Louis Katz, one of the architects of the budget.
“We have achieved our major goals,” Katz added after the meeting.
Next year’s budget calls for $5 million to be cut from capitol spending, which includes future building projects, and $3.2 million to be cut from administrative spending. The new structure of the Community Living and Learning Center planned for next year will account for a significant portion of those cuts.
The board also approved Friday to increase the endowment payout from 4.3 percent to 5 percent, Katz said. Over the last two years, GW has taken out 4.3 percent of the more than $980 million endowment to put towards the operating budget. The board voted to increase the payout to 5 percent, the level it had been at before 2004.
The additional money, about $6.2 million, will go towards the GW Medical Center, funding for academics and implementing the University’s 20-year Campus Plan, which includes a new F Street residence hall on the site behind the School Without Walls, Katz said.
Katz and Executive Vice President of Academic Affairs Donald Lehman will be working over the summer with individual schools and departments to finalize changes to next year’s budget, which takes effect July 1.
Katz said earlier this month that the flexibility given to the University budget by implementing reserve funds in academic spending could lessen future budget shortfalls. He said next year’s budget shortfall could total $11 million, compared to this year’s $8.2 million gap.
Board of Trustees Chairman Charles Manatt said he is not concerned about future years’ budget shortfalls.
“You have to understand the mechanics of financial control,” Manatt said. He added that the budget was manageable this year and will be in future years as well.