Next steps on financial pressures

Increasing revenue

We will do this in part through an increased emphasis on fundraising for core needs, such as scholarships, fellowships, professorships, building funds and unrestricted resources. Flexible funds like these enable us to support our people and sustain our mission as we start to bear new fiscal burdens.

We are also finding new ways, largely through Open Learning, Professional Education and MIT Sloan, to increase revenue through in-person and online offerings that engage additional learners. We expect these can serve as models for other areas that would like to expand their educational reach in ways that generate new revenues.

Reducing costs

Within the Institute’s central budget, some costs are managed by the central administration and others by individual units. We have made it a priority to reduce costs centrally, which helps reduce the local unit burden.

One important way we’re reducing central costs is through how we handle leases and spaces; because of the rise of more flexible work arrangements since the pandemic, MIT needs less office space than it used to. We are therefore able to achieve considerable savings by not renewing several major leases and consolidating administrative units on campus. Further cost savings will come from the recent decision to forgo merit increases this year for employees earning more than $85,000 (except in the case of promotions).

Still, a substantial part of the overall required savings must come from local administrative and academic units – including our own offices – finding ways to operate more efficiently, as they began to do last spring. As units work to limit their costs, unfortunately some will have to make the painful choice to reduce positions. Such decisions generally reflect changing realities in the life of the Institute, such as shrinking demand for certain services, as well as opportunities to make many aspects of our operations and activities more efficient, including through new staffing arrangements.

“Rebalancing”

This is a technique that departments can use to tap underutilized funding they receive each year because of past gifts. A primary example: Many departments have endowed funds for professorships. Given the extraordinary returns on MIT’s endowment in 2021, incoming funds for a given professorship each year may now exceed the costs of supporting the professor. In many cases, it’s possible, while staying true to the donor’s intentions, to use those extra funds to cover additional costs currently borne by MIT’s central budget; a typical step is to name additional faculty to these endowed chairs. When departments do this kind of “rebalancing,” they are able to cover their current costs while providing direct relief to the central budget.