MIT to shut down part of campus over holidays
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MIT faces a $70 million budget gap caused in part by rising costs for such things as health care.
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CAMBRIDGE, Massachusetts (AP) -- The Massachusetts Institute of Technology will shut down part of its campus over the holidays, cut spending and eliminate perhaps hundreds of jobs to close a looming budget shortfall blamed on higher expenses and lower-than-expected returns on its endowment.
The university has asked staff and students to save costs in small ways, such as turning down the heat, using e-mail instead of regular mail, bringing brown-bag lunches to departmental meetings, and writing fewer checks, which cost 70 cents each.
MIT, with the nation's fifth-largest private university endowment, faces a $70 million budget gap caused in part by rising costs for such things as health care.
The school has also had a sluggish return on its endowment, which yielded only a 1.1 percent increase in the fiscal year ending in June, when the endowment stood at $5.4 billion -- down from about $6.5 billion in 2000.
MIT executive vice president John Curry said that the problem had been expected since May, when the school began planning its 2005 fiscal year budget. He characterized the cutbacks as a "major correction," but not a crisis.
"Insofar as layoffs have to occur, that's painful," Curry said.
MIT has told students and faculty that portions of the campus will shut down for 11 days, from Christmas to January 4, and workers will be sent home for a paid extension of the holidays to save money on maintenance, electricity and heat.
Dorms and offices necessary to keep the university running, such as the security office, will remain open.
The shutdown comes two months after MIT announced it may have to eliminate 200 to 250 positions out of a workforce of 10,000. Some of those job cuts will involve layoffs; some positions will simply remain unfilled.
"Every single school on the landscape is having to take these very, very hard looks at the costs they incur on campus, and many are, and have been, struggling with that for a long time," said Damon Manetta, spokesman for the National Association of College and University Business Officers.
Many schools, including MIT, base each year's budget on the performance of their endowments over the three prior years. The 1990s were strong years for universities; the return on MIT's endowment peaked in 2000 at 57 percent.
The downturn on Wall Street at the start of this decade brought the worst two years for universities since the 1970s, according to NACUBO. The annual return on endowments fell 3.6 percent in 2001 and 6 percent in 2002.
In 2003, endowment returns increased only 2.9 percent on average, according to Commonfund, which manages investments for schools.
Some schools have done better than others.
Harvard, for example, said its $19 billion endowment earned 12.5 percent on its investments in the year that ended in June.
Some of MIT's woes come from its heavier-than-typical reliance on its endowment for funding school operations.
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