"MIT is the world's premier academic institution focused on science and technology," Professor Wrighton said. "The financial strength of the Institute is considerable and needs to be applied to enhance our leadership position, but chronic budget deficits will drain our flexibility to develop new education and research programs."
In explaining his concerns, the Provost pointed out that a budget deficit of $6.3M on a total budget of about $1.1B does not, at first, seem like a large problem. However, he said, it should be noted that about $700M of the MIT budget is for sponsored research programs and comes from external sources such as corporations and government. Thus only about $400M of the overall budget is derived from MIT sources including endowment income, tuition payments and income from auxiliary activities such as the MIT Press. Viewed against an operating budget of $400M, the $6.3M deficit is significant.
Further, the Provost noted, "The mechanisms used for maintaining the deficit at $6.3M involved using more than $6M of unrestricted gifts and to balance the budget ultimately we used discretionary resources. Therefore we actually used more than $12M of unrestricted resources to close the `operating gap' in FY 92. This level of lost flexibility has a chilling effect on the development of new initiatives in an era of unprecedented opportunity."
The Institute is just beginning its annual five-year planning process and fiscal matters will be an important component of this year's process, the Provost said.
A version of this article appeared in the September 30, 1992 issue of MIT Tech Talk (Volume 37, Number 8).