Kennedy School Budget Burgeons

The historically cash-strapped Kennedy School of Government has completed a stunning financial turnaround, posting a $1.1 million surplus in the 2004 fiscal year after a series of painful budget cuts.

And Executive Dean J. Bonnie Newman said that early projections show the school generating a modest surplus again in the 2005 fiscal year—a remarkable contrast to the school’s $5.9 million shortfall in fiscal year 2002.

The school slashed its full-time faculty by 11 percent since 2002, hiked tuition and sliced every administrative unit’s budget by 5 to 15 percent.

And a surge in fundraising during the last two years of former Dean Joseph S. Nye’s tenure propelled the school’s bounce back into the black.

The school reeled in $3 million in unrestricted gifts in each of the last two years—up from $1.7 million in donations in the 2002 fiscal year.

Then-Dean Joseph S. Nye, who stepped down at the end of last semester, said in April that he expected to see an artificial blip in fundraising as donors gave “going-away presents” in honor of his retirement.

David T. Ellwood ’75, the economist who succeeded Nye as dean this summer, wrote in an e-mail yesterday that he would face a formidable challenge in keeping up with Nye’s breakneck fundraising pace.

But the 2005 fiscal year has already proved quite lucrative for the Kennedy School, with the announcement Wednesday of investment banker David M. Rubenstein’s $10 million gift to the school.

Ellwood noted that the Rubenstein gift “is for new initiatives, not for balancing the budget.” But Newman said that Wednesday’s announcement marked an auspicious beginning to Ellwood’s tenure.

“If Dean Ellwood worried that he was unproven as a fundraiser, the early news is very good,” Newman said.

The school has always struggled financially relative to “our wealthier sisters across the river—such as the Business School and the Medical School,” Newman said.

She noted that the Kennedy School’s alums gravitate toward low-paying public sector jobs, shrinking the school’s donor base.

“We accept and appreciate that our grads may not be the highest paid, as long as they’re doing effective work on behalf of people and democracy throughout the world,” she said.

The school has attracted donations from non-alums like Rubenstein—“people who are financially capable and who share our values,” Newman said.

On top of the fundraising boost, Nye, who now holds the Sultan of Oman chair in international affairs, said yesterday that much of the school’s surplus can be attributed to cost-saving measures and structural reforms.

Associate Executive Dean Stewart A. Uretsky spearheaded the introduction of a “data-driven decision-making” initiative.