Brandeis has experienced a 25-percent drop in its endowment from $712 million at the end of June 2008 to $549 million at the end of December 2008 and is projecting annual operating deficits ranging from $4 million in fiscal 2009 to $23 million in fiscal 2014, according to Executive Vice President and Chief Operating Officer Peter French.

French gave a presentation to students explaining the University's financial situation during an open forum yesterday at which he and other senior administrators addressed the student body and answered students' questions. The forum was organized by the Student Union, and it featured a question-and-answer session with students, University President Jehuda Reinharz and Provost Marty Krauss.

French explained in the forum yesterday that the financial standing of the University is compounded by a long-standing structural deficit that has established itself as Brandeis has drawn too many funds out of the endowment, overrelied on gifts and failed to spend enough money to keep up the maintenance of its facilities throughout its history. "Historically we have taken too much out of the endowment," he said.

Because of the drop in Brandeis' endowment, the University's young age and its endowment draws in the past, French said at the forum that "we are going to have to go into our savings account." The University can draw on $85 million in reserves for this year and next, "and then our savings account is, in essence, gone," French explained in the forum.

During the forum, French explained that many other schools that have existed for longer than Brandeis have a larger alumni base and a much bigger endowment. Those two factors have "resulted in a greater vulnerability of the University to economic downturns because we haven't had enough in our endowment to support our operations," he said at the forum.

The University cannot access endowment funds that have decreased beneath their original value because a Massachusetts law only allows institutions to spend money from the appreciation or rise in value of their endowment funds. Twenty-six other states have adopted a 2006 successor to that law that removed this limitation. French said at the forum that there had been discussion among local higher education officials about lobbying to change the Massachusetts law, but "there has been absolutely no enthusiasm on the part of the state legislature" for any change. He also cautioned that having access to endowment funds that have decreased beneath their original value could be risky in the long term because "you would have no basis [upon which to sustain the endowment]."

"I feel very strongly that the University should consider looking at some way . to get some type of waiver [on the law]," said Daniel Millenson '09, who attended the forum and is on the Student Union's Committee for Endowment Ethics and Responsibility. "All the [Massachusetts] universities are financially hurting. They will also have an interest in the temporary suspension of this law."

At the end of this fiscal year, Brandeis will have universally cut its staff by about 5.6 percent, or 70 positions, from last July, French wrote in an e-mail to the Justice. Cost-cutting measures to close the gap in fiscal 2009 and 2010 will amount to gains of $15.5 million, he wrote, achieved through $4.7 million in one-time revenues, $9.2 million in cost reductions and $1.6 million in new sustainable revenues.

"We are experiencing expenditures that are exceeding revenues in this fiscal year, in fiscal year 2010 and the years beyond," French said in the forum. He said that the University had set plans in motion to respond to a projected $10 million deficit for fiscal 2010, which could grow due to possible reductions in gifts, and to respond to a projected $8 million deficit in fiscal 2009.

Brandeis has already taken steps toward "belt tightening," French wrote in an e-mail to the Justice. The University has saved $10.8 million in fiscal 2009 and 2010 through reductions in faculty travel, consulting contracts, training and operating expense budgets and also has access to one-time resources of $4.7 million in fiscal 2009, he wrote.

French said in the forum that, while at other institutions gifts make up about two to three percent of gross revenue, at Brandeis they amount to five percent. It was easy and it was a necessity as the University grew," he said yesterday. "That makes us quite vulnerable to the individual donors when we've got ongoing expenditures."

Both French and Reinharz emphasized that the endowment had been seeing large gains before the unforeseeable financial downturn. The endowment had grown from $190 million when Reinharz became president in 1994 to $715 million through many gains and gifts, French said.

"[In June] we had six years' worth of endowment draw in the endowment between the accumulated gains and the reserves," French said. "Who could have imagined on June 30, 2008 that we'd be looking at a drop of 25 percent of the market value of that endowment?"

A Jan. 26 article in The New York Times noted that colleges are facing their worst endowment drops since the 1970s, with institutions that had endowments between $500 million and $1 billion experiencing on average about a 25.5-percent drop.

-Mike Prada contributed reporting