By Lisa M. Krieger - Mercury News - Posted: 06/02/2009
Scientific research is re-emerging as the leading contributor to Stanford University's budget, surpassing income from its multibillion-dollar endowment and other investments.
The collapse of Wall Street — and Washington's sudden enthusiasm for research — reverses a recent trend, where investment income led all other sources of Stanford's support, according to Stanford Provost John Etchemendy.
Next year, federally funded research — including an infusion of stimulus dollars — will account for the largest share of the university's revenue, 30 percent. Investment income will contribute only 24 percent.
The changing money sources mean the university will have funds to build science and medical research, but hinders other programs that do not have a dedicated source of funds and have historically been paid for by earnings off the seven-figure endowment.
Income from medical, engineering and physics research is expected to grow 10 percent to $1.13 billion in fiscal 2010, compared with $1.03 billion this year. By comparison, investment income is expected to fall 16 percent to $886 million in fiscal 2010, compared with $1.06 billion this year.
"The science budget this year is tremendous. Thanks to this administration, it is a whole new dawn for science," said Persis Drell, director of SLAC. SLAC has already been awarded $68 million of stimulus money, which it will use to upgrade its facilities and fund its Linac Coherent Light Source project to generate the world's brightest X-rays when it opens for business in September. The Stanford School of Medicine was recently awarded $15 million to study flu vaccines, $1.5 million to study the genetics of cancer progression and much more.
University spokeswoman Lisa Lapin said the stimulus money and boost of NIH funding was fortuitous. "Federal research funding has flattened out in recent years, and to see an uptick is extremely welcomed," Lapin said. But she cautioned that research funding, unlike investment income, generally stays within the labs and cannot be used to support general campus functions.
"It has a specific purpose, so does not translate into a boon for the entire university," she said. "It is very targeted." While 350 jobs have been eliminated in recent months as a result of budget cuts, Stanford anticipates adding positions to support research projects. Stanford's total head count is expected to remain flat — about 11,270 staff and 1,880 faculty — next year.
"But unfortunately, these will be different people," said Etchemendy, the university's chief academic and budgetary officer.
So far this year, Stanford's endowment dropped 30 percent — the largest drop in the last four decades. Previously, the largest decline was 8 percent. Valued at $17.2 billion in 2008, the endowment is expected to drop to $12 billion this year.
Stanford is "spending down" its endowment and other investments by $1.1 billion to help pay for a variety of expenses, such as faculty salaries and student financial aid. The university has also issued a $1 billion bond to borrow money.
But other programs are being cut. The "First Generation Program," which connects first-generation and low-income students to campus resources, is canceled. The Bridge Program, designed to help students from weak high schools, is on indefinite hold.
"As you can imagine, it has been a tremendously difficult year for budgeting at the university," said Etchemendy, adding that there are no expectations for the endowment to quickly return to its stratospheric 2008 level.
Because of rigorous budget-cutting steps now under way, he predicted recovery over the course of the next two to three years.
"The good news is things will be looking up as we go forward," he said. "We will be back in a growth mode in a couple of years."