Frequently asked questions

Do you have a question regarding Rice University’s budget plan for the 2010 fiscal year or a suggestion for helping reduce spending? Following are answers to some questions you may have, and a form where you can submit other questions and ideas.

Why is Rice making budget reductions?

There are several factors driving the reduction:

• The distribution from our endowment supports about 45 percent of Rice's consolidated budget and 63 percent of the core budget. For planning purposes, we are assuming that the endowment return will be down 20 percent to 25 percent this fiscal year. Given that assumption, we must reduce the annual rate of increase in the distribution in order to keep spending within the board-mandated ceiling of 6.5 percent of the three-year trailing average endowment market value. The endowment spending policy sets a target of spending 4.5 percent to 5.5 percent of the three-year trailing average and our goal is to return to that range over time.
• The budget plans assume an annual rate of increase of 1.5 percent in the endowment distribution, compared with a 4 percent rate of increase we had assumed in our planning before the markets dropped.
• We need to take action now so that we have stability in the endowment distribution and do not face a real cutback in future years.
• Our net tuition revenue growth is slower than expected because of projected growth in financial aid. Half of our financial aid budget for undergraduates comes from A1 funds that would otherwise be available to support operating budgets. We expect this percentage to grow because of economic conditions as well as slower growth in the distribution from endowed scholarships. We're trying to raise $100 million in endowed scholarships but we?re not budgeting for that until it is received.
• We have an ambitious agenda as we work to realize the goals of the Vision for the Second Century. There are new costs coming onto the budget in FY 2010 and the next few years for decisions we've already made, such as enrollment growth, changes in student financial aid policy and new buildings coming on line.

How will the budget reduction be determined for each school and department?

Schools and divisions will have discretion over how to make reductions and internal reallocations, as long as the proposed actions are reasonable, sustainable and in line with strategic goals.

Why is the reduction only against A1/A2 funds?

We are focused on unrestricted funds, which you may know as A1 funds. These funds support our core budget: department operating budgets, utilities and library acquisitions. This is the category of funds supported by endowment distribution, net tuition and fees, unrestricted gifts and overhead on grants. It is the money that we allocate through the budget process. We are asking the auxiliaries (Housing and Dining, Health Services and Parking and Transportation) to participate as well. Their funds are referred to as A2.

How will the budget reduction impact Rice’s commitment to educational programs and research?

Our goal is to sustain Rice’s momentum and continue to move ahead with the V2C’s strategic priorities. Making these budget savings now is a prudent step that may help avoid the need for more stringent reductions later. We will monitor the situation closely and take additional action if warranted.

Are there going to be layoffs at Rice?

We can not promise that there will be no layoffs, but we are taking these prudent measures with the goal of minimizing them. Some staff reductions may result from reductions or termination of some programs of services.

Will salaries be reduced?

Salaries for faculty and staff will not be reduced. Rather, our goal is modest pay raises, although we are deferring decisions on that until late February or early March when we’ll know more about the economic outlook for the 2010 fiscal year. We also will make funds available for pay raises related to promotion and tenure, once those decisions are known. We especially do not want to back track on progress made in raising faculty salaries over the past few years.

Will there be more budget reductions in the future?

Our budget planning requires even greater prudence and flexibility than usual, and may entail further adjustment as we move into the spring and learn more. We will make revisions as necessary as the new budget year approaches. If things improved markedly, we may be able to curtail the budget cut by a percentage point or two.

Is Rice considering other options to reduce costs?

We are soliciting your ideas for departmental, interdisciplinary or university-wide actions that may have the potential to reduce costs and support our strategic priorities. Submit your ideas by scrolling down to the lower portion of this page. We will have extensive discussions before making any decisions.

Will Rice faculty and staff receive a raise?

At this time, the budget guidelines distributed to each school and division do not include a provision for pay raises, but we still hope to be able to allocate funds to support a very modest salary increase for next year. However, continuing uncertainties in the broader economy and in the financial markets require us to defer that decision until later in the spring, when we have a better sense of the financial situation in the new year.

Has the hiring freeze been lifted at Rice?

Yes. The responsibility shifts to deans, vice provosts and vice presidents for making all decisions about hiring (regular and temporary) and other staffing decisions across their schools and divisions in the context of the budget reductions we need to make for FY 2010. Each dean and VP must ensure that any hiring is sustainable into the future.

What criteria should be considered in making reductions?

• Declining demand for a program, activity, service or process.
• Availability of other, less expensive, options.
• Data indicates low benefit or impact of a program, activity, service or process.
• Program, activity, service or process is not central to our mission.
• Reductions must be realistic and sustainable on an ongoing basis.

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