Despite the budget troubles faced by other tier-one institutions, Tufts' financial situation has remained sound during the recent economic decline.
Stanford University and MIT are among the many schools that have recently suffered financial woes.
A press release from Stanford's office of the provost announced a freeze on salaries and hiring to help relieve the pressures of a projected $25 million budget deficit without major layoffs. Some departments may be required to lay off staff in the near future, though, the press release said.
MIT also instituted a salary freeze for the 2003-2004 academic year in order to reduce spending by $70 million for the next fiscal year and minimize job loss. The freeze affects faculty and staff whose base annual salaries are $55,000 or above. A hiring freeze has also been in effect since Oct. 1, and 250 people are expected to be laid off.
An MIT press release said that "if it weren't for the salary freeze, which will save approximately $10 million, a much larger number of jobs would have to be eliminated."
The situation is so severe that MIT will also have to close the campus from Dec. 25 to Jan. 5 in order to save on heating, electric, and other upkeep and maintenance costs.
Stanford will also close down for two weeks during the winter break, between Dec. 22 and Jan. 5.
MIT and Stanford are following the lead of Brown University, which last December announced a hiring freeze. According to Jorge Lopez from Brown's human relations department, the budget has since recovered and the freeze has been lifted.
All three schools' endowments are significantly larger than Tufts' endowment.
On the other hand, according to President Larry Bacow, "we are giving everybody raises, we are not laying anybody off -- we're doing a lot better than most."
Tufts' ability to avoid these problems is a result of two reasons, according to Vice President for Finance and University Treasurer Thomas McGurty.
First of all, the University does not invest heavily in venture capital or small company stocks that suffered large losses in recent years. Secondly, Tufts uses a different method of determining how much endowment income to spend each year than many other schools.
Other institutions spend five percent of the previous three years' average value of the endowment, McGurty said. "When investments were generating double digit returns in the 1990's, this kind of policy allowed the endowment income to grow at a similar accelerated rate," he said.
"Now that investment returns have declined and turned negative for some institutions, they are experiencing significant reductions in endowment income," McGurty said.
Over the past five years, Tufts' endowment has grown by four percent to approximately $700 million. Though he is satisfied with the endowment's gradual growth, McGurty said "it's still quite modest even for a school our size."
Over the past ten years, Tufts has averaged a nine to ten percent rate of return on its financial portfolio. Despite the two-percent decrease in the Standard and Poors (S&P) 500 index in the last couple of years, Tufts' portfolio still managed to grow four percent.
"Tufts has not experienced this budget pressure and hopefully will not if the recent rebound in the investment markets continue," McGurty said.
McGurty has worked in the Finance Office since 1985, and he does not recall a period when the financial situation at Tufts was as severe as the situation has been at MIT and Stanford.
He said there have been hiring freezes in the past, "but I can't think of layoffs and salary freezes [because of] a severe University-wide budget issue."
Since the 1970s, the University's fiscal policies have provided for a yearly growth in endowment income of five percent. "This provides a stable and predictable growth in income that is very helpful in planning and creating a stable budget," McGurty said.
In light of Bacow's optimism, McGurty said "we'll continue to see salary increases consistent with the market and the higher education industry."
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