Report on the April trustee meetings

May 10, 2018

Dear Students, Faculty, and Staff,

I write to provide a summary of the April 24-25 trustee meetings. In my view, these were the most productive board meetings in my time at the university. We engaged in important issues, had serious discussions with one another and with guest presenters, and acknowledged as a board the need to invest in the university as we move forward with planning our future.

Before I provide the full summary, here is the list of motions brought to the full board by the major committees for discussion and vote:

  1. Approval of the FY19 (AY2018-19) operating and capital budgets. Included in the approval was the setting of tuition for next year: Tuition for undergraduates will increase by 3.5 percent, which represents the lowest tuition increase in 17 years; tuition for graduate programs will increase from 3 to 3.5 percent. In addition, the university was able to eliminate unsubsidized loans for incoming first-years.
  2. Approval of the refinancing of up to $42M of bonds that become callable this October.
  3. Approval of the recommendation for the promotions of two colleagues to associate professor with tenure and two colleagues to full professor. Please join me in congratulating Professors Jonathan Anjaria (Anthropology) and Davide Pettenuzzo (Economics), who received promotion to associate professor with tenure, and Jonathan Decter (Near Eastern and Judaic Studies) and Michael Hagan (Physics), who were promoted to the rank of full professor with tenure.

Summary of the Meetings

The meetings began with an Investment Committee meeting. The committee reviewed investment returns, risk exposures, liquidity, expected cash flows, and investment manager news.

For the five-year and 10-year periods, the Brandeis endowment performed in the top 10 percent of peers with $500 million to $1 billion endowments and in the top 25 percent of peers with greater than $1 billion endowments. The university generated these returns with one of the most conservative portfolios among our peers, and, when ranking peers by their returns in excess of the risk they took, Brandeis was in the top 20 out of 167 for both the five-year and 10-year periods. The committee discussed the need for an enterprise-level review of the current conservative investment posture in light of the fact that peer universities have portfolios with higher risk levels and therefore higher expected returns.

The committee conducted an asset class review on the endowment’s fixed-income allocation, focusing on past and future purpose, size, strategy, and implementation.

Following the Investment Committee meeting, there was an extensive (and planned) executive session, which included only board members and me. Board chair Meyer Koplow and I provided an update from the university-wide town hall meeting and the related external investigation. The outside investigators continue to interview those who contact them and will forward their report to Meyer as soon as they conclude their work.

The bulk of the executive session was devoted to a report on my first two academic years at the university. I summarized what I see as strengths and gaps across the institution on the basis of what I learned from meetings during my office hours; weekly lunches with students, faculty, and staff; the 33 self-reflection documents completed by faculty and staff; open meetings on the future of the university; and my meetings with alumni, parents, and friends as I visited cities across the U.S., London, and cities in Israel. I continue to admire greatly the dedication of the faculty and staff toward our students and the sense of loyalty evident throughout the organization. My hope is that this sense of loyalty, so clear on one level, will become more demonstrative and commonplace in the future. There is so much here about which to be proud, yet we seem to hold back when it comes to celebrating excellence.

I provided the board with a “gaps analysis,” which highlighted short-term human, physical, and capital needs of the university — needs that I believe must be met if we are to pursue the institution’s strategic objectives and plan for a major capital campaign. The most critical gaps noted were faculty and staff positions; programmatic support; compensation; and more time for faculty and staff to devote to teaching, research, and mentoring/supporting our students. We began a discussion on how best to finance the most critical needs, and we will continue these conversations through the summer.

Following the executive session and lunch, we had the first block of concurrent meetings. The Academy Committee went on a detailed tour of the library, learning about the physical improvements made over the past two years (e.g., the Archives and Special Collections). Trustees visited with students in the Maker Lab and got a sense of both the breadth of services provided to faculty and students by staff as well as the building’s limitations (it was packed at 1:30 p.m.). After the tour, the committee discussed the four faculty promotion cases I noted earlier. The review of these cases highlighted for trustees, once again, the quality and talent of our faculty.

And finally, the committee discussed a proposal to establish a new BS degree program in applied math, plus the next steps in circulating our self-study for the university’s decennial re-accreditation to take place in the fall. The chair of the visiting re-accreditation team, President Peter Salovey of Yale, will be on campus next week for his scheduled pre-accreditation site visit.

In the Risk Management and Audit Committee meeting, trustees heard an update on the Workday system implementation followed by a report from our internal auditors on executive expenses. The committee then reviewed the internal audit plan for the upcoming year, which is likely to include cyber security, an auxiliary services contract, and follow-up on prior years’ audits.

The external auditors provided a review of the FY2017 (CY2016 compensation) 990 tax return. KPMG, our external auditors, presented its update on higher education, which will soon be shared with the full board.

EVP Stew Uretsky provided the committee with a review of the active shooter drill that was held on campus in March, which was followed by an executive session with external auditors and management.

The Institutional Advancement (IA) Committee received a report on this year’s fundraising. Giving by alumni and parents has increased, gifts from friends are similar to last year, while gifts from corporations and foundations have decreased slightly. Phonathons, direct mail, and online giving programs have shown greater success than in previous years, and the university saw a record number of gifts for a one-day fundraising effort (“Giving Tuesday,” in December) — 1,099 donors.

The IA staff will conduct a global data review of Brandeis’ graduate and undergraduate alumni. The goal of the review is to develop a system for engaging a broader audience of alumni, families, faculty, and staff who could help the university build stronger relationships across the global Brandeis community.

And, finally, IA will reconstitute a Gift Acceptance Committee, to be composed of constituencies from across the campus. The group will meet regularly and make recommendations to the IA Committee and senior leadership regarding all matters related to fundraising.

In the second block of meetings, the Nominating and Governance (N&G) Committee and Resources Committee (RC) met concurrently.

The N&G Committee voted to recommend to the board that it amend the bylaws to require that each standing committee charge be annually approved by the full board. The committee finalized plans for the roll-out of the new, comprehensive trustee orientation program to begin this fall. Members then discussed the structure of our board meetings and ways to make them more effective, reviewed the slate of trustee candidates that it recommended to the full board for approval, and discussed ongoing trustee recruitment efforts.

In the RC meeting, members reviewed key FY18 goals for finance and administration; heard a report with an update on the (current) FY18 budget — operating results, capital budget, and cash position; discussed plans for future debt refinancing in 2018-19; heard a report on endowment policy and practice, and an update on the ERP-Workday implementation.

The RC received an update on our efforts to revamp the financial framework and budget priority-setting process of the university, which included an explanation of the full allocation of indirect costs to each of the schools, non-school-based centers and institutes, and the Rose Art Museum. The committee heard an update on the Human Resources strategic plan and an update on the launch of the staff advisory council (BUSAC).

Regarding campus operations, the RC was updated on the status of Skyline — the new residence hall (scheduled to open on time and on budget this August); the active shooter drill in March; plans for a campus-wide safety and security audit by an outside security firm; the completion of negotiations with the police union; and a variety of other updates in food services, campus accessibility, and campus sustainability.

The Resources Committee had a thorough discussion of the FY19 budget proposal, which is projecting a year-end surplus of $170K. The total budget is expected to grow by 2.7 percent to $365M. The budget includes incremental progress in major strategic areas (e.g., a slight increase in the annual faculty and staff salary increase pool to 2.25 percent).

On the second day of the board meeting, trustees discussed two issues that were carried over from previous meetings. The first discussion began with a report from an ad hoc committee that had been asked to provide recommendations on how best to resolve the lingering issues surrounding the one-year (AY2009-10) suspension of retirement benefits. Following the presentation and discussion, the administration was asked to come back to the board within 60 days with a plan to redress, at least in part, the forfeiture of the benefit.

The second discussion was a response to a proposal to divest fossil fuel holdings from the university’s endowment. An ad hoc committee had been constituted to answer specific questions raised during the January board meeting, and members circulated a report and gave a summary of their findings. Several faculty and students who have worked on the fossil fuel divestment issue for several years were present to answer questions and take part in the discussion. The board, ad hoc committee, and faculty and student guests engaged in a lively discussion, which prepared the trustees for the board’s planned discussion in executive session later in the afternoon.

After these two reports and discussions, Stew Uretsky and CFO Sam Solomon presented a financial primer to trustees on the foundation of the university’s financial model — its major sources of revenues, expenditures, and, most important, the financial relationship among the various parts of Brandeis. Stew and Sam will make a similar presentation to faculty and staff in the fall, as I believe it is critical for the community to understand the financial underpinnings of the university as we begin to plan the future, including preparing for a major capital campaign.

The meetings then adjourned so trustees could take part in the annual Scholarship Luncheon, which featured comments made by two outstanding students (one undergraduate and one graduate). Both speakers provided eloquent, compelling, and inspiring testimonials about their Brandeis experience. The students’ comments highlighted the importance of scholarship support and showcased the remarkable talent that comes to Brandeis through the generosity of our alumni, friends, and trustees.

The meeting’s plenary session followed lunch. In the plenary, each committee reported out on its deliberations, followed by votes taken on the motions moved to the full board (reported on at the beginning of this report).

The plenary session was followed by an executive session, during which the board continued its discussion of divestment. The board chair appointed a small subcommittee to consider the multiple options outlined in the ad hoc committee report. The goal is to arrive at a decision on the divestment of fossil fuels within 60 days. Following the divestment discussion, the meeting was adjourned.

Though the academic year will come to an end this weekend with Commencement, I will provide updates on a variety of issues during the summer. I would like to thank all faculty and staff for their commitment and dedicated work this past year, and I wish everyone a productive and restful summer.

Ron Liebowitz