Massachusetts Institute of Technology Administrative and Fiscal Officers Meeting Thursday, April 9, 2009

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Agenda Welcome and Opening Remarks Terry Stone, Executive Vice President and Treasurer Budget Planning Process – Fiscal Year 2010 and Beyond Rafael Reif, Provost Progress of the Institute-wide Planning Task Force Israel Ruiz, Vice President for Finance Member of Task Force Coordinating Team Innovative Solutions Underway Modernizing MIT Travel Robin Elices, Senior Director, Office of the Vice President for Finance Energy Investments Richard Amster, Jr., Director, Campus Planning, Engineering and Construction Lights Out William VanSchalkwyk, Managing Director, Environment, Health, and Safety Programs

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Budget Planning – Fiscal Year 2010 and Beyond Rafael Reif, Provost

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Outline Short term:  Fiscal 2010 Pro Forma General Budget Longer term:  Budget/Task Force Update

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Budget Planning Process Objective Reduce General Institute Budget (GIB) expenses by $100-$150m by FY12 (i.e., in three years)

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Identifying a Long-term Budget Planning Target Projected End-of-Year GIB Deficits as a Function of Endowment Performance (Deficit) / Surplus $M Basic Model Assumptions Annual non-investment revenue growth: Tuition = 4.25% Gifts to GIB = 0% Indirect Research = 0% Endowment unit growth (via gifts) = 1% Annual expense growth: Average annual growth = 4%

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Budget Planning Work Underway Near term (FY09 and FY10) objectives  Achieve a budget reduction of $50m in FY10 Long term (FY11 and beyond) objectives  Reach long-term budget targets ($100m-$150m) assisted by an Institute-wide Task Force effort

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Fiscal 2010 Budget Overview Goal: Develop a Fiscal 2010 budget that achieves a $50m expense reduction General Revenue Parameters:  Tuition increase: 3.8%  Flat endowment payout (FY09 to FY10)  Maintain undergraduate financial aid policies and tuition subsidy for graduate student research assistants General Expense Parameters:  No new recurring funds  Modest merit pool increases  Significant reductions in startup and retention funds

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Budget Planning Work Update Objective for FY11 and beyond:  Reach long-term budget targets ($100m-$150m) assisted by an Institute- wide Task Force effort Guiding principles for the Task Force:  Maintain commitment to:  MIT's mission: Advance knowledge and educate students  MIT's unified structure: One faculty, one staff and one student population, operating under common sets of policies and procedures  Cutting edge research and to closely integrate teaching with research  Need-blind admissions and need-based financial aid  Diversity  Working and communicating with the entire MIT community

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Progress of the Institute-wide Planning Task Force Israel Ruiz, Vice President for Finance Member of Task Force Coordinating Team

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Review and analyze current practices and expenditures that support the Institute’s mission and operations. Identify  Activities or operations closely aligned with MIT’s core mission  Opportunities for efficiency and cost reduction as well as costs/benefits of proposed operational changes  Opportunities to promote environmental impact and sustainability  Paths to implementation that preserve MIT's mission, values, and culture Task Force Charge

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Task Force Structure

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Process: Phase 1 February - May 2009  Each Working Group collects community input  Each Working Group develops prioritized list of opportunities  Deliverable of each Working Group: List of opportunities with estimated impacts June 2009  Synthesize inputs from all Working Groups  Task Force presents report to Leadership Team  Receive feedback

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Process: Phase 2 July - September 2009  Each Working Group receives feedback on opportunities list  Working Groups further refine list based on feedback  Highlight critical implementation issues  Refine estimates of impact  Deliverable of each Working Group: Report of opportunities with estimated impacts October 2009  Synthesize inputs from all Working Groups  Task Force presents report to Leadership Team  Receive feedback

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Emerging Themes Site Engagement  Over 2,000 unique visitors  Approx. 70,000 page views  Average visitor views 14 pages  Average visit: 7 min., 18 sec. Idea Bank Postings  1063 entries as of April 6, 2009  53% comments, 47% ideas

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Emerging Theme: Paperless Solutions Three categories of opportunities: 1. Automation of paper-based systems  Opportunities in every process area  Student systems, HR and payroll processes, accounts payable, travel, events management, facilities, research administration, faculty affairs 2. Stop printing!  Opt-in/ opt-out  Push capabilities, individuals select from a menu of subscriptions 3. Electronic document management systems  Couple with strategies to reduce paper retention

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Overarching Themes OptimizeShareStop Fewer Leverage SimplifyAutomateReduce

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Evolving Culture Cost- effective Focus Collaborative Mind-set Influence Behavior Building a Better MIT

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Innovative Solutions Underway

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Modernizing MIT Travel Robin Elices, Senior Director Office of the Vice President for Finance

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Optimize the Travel Experience We want to offer a system that is so good, you will choose to use it!  Trip planning  Payment  Expense reporting  Reimbursement

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Portfolio of Options Travel credit cards  Corporate pay eliminate out-of-pocket expense  Option to use personal credit cards maintained Concur electronic expense reporting system  Credit card expenses feed to Concur (electronic receipts)  Automated expense reports (electronic workflow for approvals) Reimbursements for out-of-pocket expenses via direct deposit Cliqbook on-line booking tool available through Concur  Under consideration for pilot  Existing methods for booking - agencies or direct with airlines remain Sampling process of high-risk transactions replaces 100% audit

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting PlanPilotImplement Project Timeline Apr ‘09 Nov ‘09 Jul ‘10 Aug ‘09 Project team  Technical experts and business owners (VPF, IS&T)  DLC user advisory group

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Energy Investments Richard Amster, Jr., Director, Campus Planning, Engineering and Construction

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Project Locations Ray and Maria Stata Center – Building 32 The Dreyfus Building – Building 18 Stratton Student Center – Building W20

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Ray and Maria Stata Center Lighting upgrades  Lamps, ballasts, and fixtures  To increase energy efficiency Cost: $520,000 Payback: 3.3 years

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting The Dreyfus Building Fume Hood Face Velocity Reduction:  Recalibration of fume hoods to reduce energy consumption. Cost: $430,000 Payback: 2.65 years

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Stratton Student Center Lighting upgrades  Lamps, ballasts, and fixtures to increase energy efficiency. Cost: $69,000 Payback: 2.8 years

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting NSTAR Rebates Project costs incorporate NSTAR estimate for utility rebate  Stata Center: $100,000  Stratton Student Center: $16,000  Dreyfus Building  Project is a custom measure and thus will need a unique analysis by NSTAR to determine potential rebate.

At a Glance Project LocationEstimated CostPayback Ray and Maria Stata Center$520,000*3.3 years The Dreyfus Building$430, years Stratton Student Center$69,000*2.8 years Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting * Incorporates NSTAR estimate for rebates.

Massachusetts Institute of Technology April 9, 2009 Administrative and Fiscal Officers Meeting Lights Out William VanSchalkwyk, Managing Director Environment, Health, and Safety Programs April 9, 2009 Administrative and Fiscal Officers Meeting

“Greening MIT” Engaging the Entire MIT Community in Our Campus Energy Activities Step One: “Lights Out” Bill VanSchalkwyk Managing Director EHS Headquarters Office AO-FO Meeting April 7, 2009

Green Ambassadors Who we are: Green Ambassadors are people like you and me who make a difference in our local energy and environmental outcome. What we do: We act locally to encourage green behavior and get the word out! How to learn more: Information, tools, institutional support:

“ FLIP THE SWITCH ” 32% of our electricity used for lighting Some spaces unoccupied 30-55% of the time while lights on Seek a Balance in lighting usage Custodian Practices Updated Laboratories and Similar Areas

Walking the Talk on Energy: More! Flip The Switch Power I.T. Down  Up to $800,000 can be saved annually if we used power management features on our 20,000 MIT personal computers Shut the Sash  Lab fume hoods use more energy than 2 single family homes! MIT has over 1,000  Awareness program demonstrated sash height reductions of over 25%. $1,000,000/yr opportunity if adopted widely across campus Resolve to Revolve  On average 8x as much air is exchanged when a swing door is opened vs. a revolving door: if all used revolving doors at E25: $7,500 saved