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December 6, 2012 issue

December 6, 2012 issue

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The Brown Daily Herald
The Brown Daily Herald

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Published by: The Brown Daily Herald on Dec 06, 2012
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pre-apocalyptic, potlucking,psychoacoustic
Sound policies
Meropol ’13: U. has fair,effective assault standards
Page 7
Going up?
Students take home prizes atelevator pitch contest
Page 8Post
49 / 42
42 / 30
e University’s net assets decreased to
$3.16 billion at the end of 
scal year 2012,
a decrease of about 2 percent from lastyear’s total of $3.23 billion, according to
nancial statements released last month.
Implying that the tough national eco-
nomic climate is continuing to have ane
ect on elite universities
nances, themarket value of the University’s endow-ment dipped to $2.48 billion as of 
year 2012, down from $2.53 billion in
2011, according to a report released by 
the University Resources Committee
last month.
e dip in the value of the University’s
investments coincides with a fall in netcontributions to the University that are
linked to the end of former president
Ruth Simmons’ Campaign for Academic
Enrichment fundraising initiative. Netcontributions are counted as amounts
of money that have been pledged by do-
nors but have not yet been paid out to
the University, said Beppie Huidekoper,executive vice president for
nance andadministration.
Simmons’ capital campaign, which
began in 2002 and ended in 2010, raised
$1.6 billion, the largest-ever haul for a
Brown fundraising campaign.
ere have
been decreases in net contributions re-
ceived by the University in the two years
since the end of Simmons’ campaign,according to the University’s
is year, the University received
about $159 million in net contributions,an 18 percent fall from its 2010 total and
a dip from last year’s $161 million.
Huidekoper said she was not sur-
prised by the fall in net contributions
over the last couple years.
e University collected many of its donors’ most recent
fundraising pledges at the tail end of Sim-
mons’ capital campaign, accounting forthe recent fallo
in collections, she said.
e overall decrease in net assets isalso a
ected by the persistently strug-
gling U.S. economy.
e University’s total
investments declined in value from $2.88
billion at the end of 
scal year 2011 to
$2.79 billion at the end of 
scal year 2012.“It’s a very challenging capital market,”
Huidekoper said. “We certainly hope todo better this year.”
ough Huidekoper said she was
concerned about the dip in the market
 value of the University’s investments, she
emphasized that Brown is not alone in
dealing with a di
cult economic climate.
e University’s dip in endowment
 value and net assets comes on the heels of 
a report
U. sees drop in net assets, endowment value
University Net Assets Per Fiscal Year
    B    i    l    l    i   o   n    D   o    l    l   a   r   s
Fiscal Year
The University’s net assets fell by about 2 percent this year. A principal causewas the end of the Campaign for Academic Enrichment, administrators said.
Six months a
er the University settled
negotiations with Providence MayorAngel Taveras — through an agree-
ment that increased Brown’s voluntary 
contributions to the city in lieu of taxes,amid criticism from both students andcity residents — the administration re-
leased a comprehensive report last month
describing the University’s “economic
impact” on the city and state’s struggling
e report outlines Brown’s
involvement and in
uence in the greater
Rhode Island community, highlighting
data on University spending and hiring
and introducing the prospect of future
development within Providence. 
Knowledge economy
Providence has taken clear steps
toward becoming a less industry-de-
pendent economy, initiating the drive
toward a “knowledge economy,” which
would shi
the capital city’s focus to
technological development and in-
e report focuses on theUniversity’s position in a state with
nancial prospects and suggeststhat the University could further pro-
mote economic activity.
e University initiated the eco-nomic review process in the springof this year, enlisting the services of 
Appleseed Economic Development
Consultants, the same
rm that dra
similar reports for the University in
2005 and 2009.
e information pre-sented in the report is a re
ection of 
data submitted by Brown and indepen-dent research conducted by Appleseed,
said Hugh O’Neill, president of the
Report positions U. to aid Providence recovery 
A lawsuit
led by several Rhode Islandunions following state municipal pen-
sion reform last November goes beforeSuperior Court Judge Sarah Ta
e hearing provides Ta
Carter an opportunity to rule on a state
motion to dismiss the case, which, if 
upheld, would be a major step towardsolidifying the pension reform as state
law. But if the judge strikes down the
state’s motion, as most analysts expect,
litigation will continue until the par-
ties have expended all their options,
including a possible appeal to the StateSupreme Court.
e process may con-
tinue for several months or until the
parties negotiate an acceptable alterna-
tive settlement.“It’s a nine-inning game,” said ScottMackay, political analyst for Rhode Is-
land Public Radio. “We’re in the second
Prospects for a negotiated settle-
ment brightened Tuesday when Gov.
Lincoln Chafee ’75 P’14 expressed
willingness to return to the bargain-
ing table with George Nee, president of the Rhode Island AFL-CIO and Robert
Walsh, executive director of the Na-tional Education Association Rhode
Island, a prominent teachers’ union, the
Providence Journal reported. Walsh told
the Journal he wanted “to leave it up tothe judge to answer” the question of a
settlement, while Nee said he supported
negotiations with the state.
Rhode Island General TreasurerGina Raimondo, an architect of thepension reform and a possible con-
tender for the governorship in 2014,
criticized Chafee’s o
er to negotiate with
the unions. “It is not time for closed-
door meetings,” she wrote in a statementreleased yesterday. But Raimondo added
that “if at some point the court asks
the state to sit down to try and reach a
settlement, we will do so in good faith.Chafee said Raimondo was display-
ing “a real venture capitalist attitude”
— a criticism of her Wall Street back-ground, the Journal reported.
Speaker of the House Gordon Fox joined Raimondo in decrying the ne-
gotiations. “It is not appropriate for me
to negotiate legislation that was passed
by the General Assembly and signed by 
the governor,” he wrote in a statementreleased yesterday. “
is law is critical
to securing the state’s retirement system
and placing Rhode Island on sound
nancial footing now and into the future.
e matter is now in the hands of 
the judiciary, where it will be appropri-
ately decided,” Fox wrote.Raimondo has also argued that thegovernor cannot engage the unions in
negotiations without her, since state law excludes employees’ retirement systemsfrom the collective bargaining process.Christine Hunsinger, Chafee’s press sec-
retary, said that while Raimondo wasthe “chief architect and cheerleader”for pension reform, the governor hasthe authority to submit a deal to the
General Assembly for consideration.
Like many states across the country over the past few decades, Rhode Island
has neglected to fully fund its pension
system, allowing a signi
cant buildup of 
unfunded liability — the di
erence be-
tween the money the state has promisedand the money it has on hand to ful
ll its
obligations. Before the pension reform
legislation passed last year, reducing
the unfunded liability by $3 billion, the
state was behind by $7.3 billion.
esmaller unfunded liability means the
state pays about $200 million less in an-nual required contributions to the fund,
according to the non-partisan Rhode
Island Public Expenditure Council.
elaw achieves the cost reductions mostly by suspending the cost of living adjust-ments —
Landmark pension reform faces legal challenge
Across the country, the number of inter-
national students has increased signi
cantly in the last few years, contributing
additional revenue to colleges and state
economies, according to a November
report by the National Association forForeign Student A
airs. Rhode Island
was no exception — in the 2011-12
academic year, international students
and their families accounted for $191.2
million of the state’s economy, according
to the report. Last year, the number of international students in the state rose
to 5,054, marking an increase of 143between 2010 and 2012, according to
the Providence Business News.
Since federal funding cuts have
prompted public institutions to seek other sources of revenue, the rise in
international students who pay out-
of-state tuition has sparked questionsabout whether these institutions’ in-ternational recruitment is
driven. With decreasing public funding,
“the revenue potential of international
students takes on additional vigor,” ac-
cording to the report.
“International students for some
institutions have become a means tobroaden or diversify the institutions’revenue,” said John Hudzik, who co-authored the NAFSA report and cur-
rently serves as vice president for global
engagement and strategic projects at
Michigan State University. But Hudzik 
said that for institutions that have his-
torically admitted a large number of 
international students, increasing rev-
enue is not the principal motivation, he
An “economic impact” report released last month describes the University’s
contribution to the local economy through consumption and hiring./ / Endowment
page 2
/ / Report
page 4
/ / Pensions
page 2
/ / Internationals
page 4
Surging int’lenrollmentincreasesrevenue forR.I. schools
Brown’s economic impact (FY 2011)
$159 million
paid to Rhode Island vendorsand contractors
$68 million
paid towards purchases of goods and services
$171.8 million
spent on research
full-time construction jobscreated
$61.1 million
spent by students
$15.2 million
spent by visitors
$22.9 million
contributed and paid in taxesto the city and state
non-student employees oncampus
1 Sundsvall rollers6 Trickeries11 Pops14 Portion out15 Knightedconductor16 Took in17 Typically pink-flowered bloomer19 Paris pronoun20 Title wordspreceding“beneath themilky twilight,” in a1999 hit21 “So relaxing!”22 Worrisomeengine sound23 Gateway Archarchitect26 Set straight29 Hit, maybe30 Breeders’ Cupevent31 Loses on purpose34 Light touch37 Key Egyptianartifact unearthedin 179941 Coll. applicants42 Big name in beer43 Mindless process44 Manitoba tribe46 Blood sugarregulator49 Postwar reception53 Neutrogena rival54 Like “ifs” and“buts”: Abbr.55 Throw a feast for59 Back talk60 Tools of themischievous godhidden in 17-, 23-,37- and 49-Across62 Cézanne’ssummer63 Pad user64 Light wash65 Le counterpart, inLeipzig66 Like-minded gps.67 Guide
1 Grain holder2 Jai __3 Mass robes4 Raspy-voiced“Like a Rock”singer5 Where the antheris6 Dallas-to-Houstondir.7 Wedding dances8 HI hi9 Highest peak inthe Calif.Cascades10 “Sprechen __Deutsch?”11 Single-and-looking group12 Do a makeup job?13 Stoop18 “Unfaithful” co-star22 One that standsto prevent astrike24 More strange25 Soft-spokenpainter Bob26 Liberal subject?27 1939 Garland co-star28 Defrosteralternative32 “Who am __say?”33 Moral principle35 Con36 Summer intern,often38 Plural medicalsuffix39 Stock holders?40 John Wayneclassic45 Campanella ofCooperstown47 North of Paris48 Mascaramishaps49 Sank, in a way50 High class51 Cary of “ThePrincess Bride”52 Blond comic stripteenager56 Secretary ofEducationDuncan57 Get whipped58 Fancy pitcher60 Org. with Eagles61 Hardly shows ofsupport
By C.C. Burnikel(c)2012 Tribune Media Services, Inc.
2:30 P.M.
Poet Ray RagostaMcCormack Family Theater
8 P.M.
SPEC Presents: CandylandSayles Hall
7 P.M.
Shades of Brown ConcertMetcalf 101, Friedman Auditorium
9:30 P.M.
IMPROVidence: The Last ShowSalomon, Room 001
Marinated Beef with Au Jus, Pesto
Tortellini Salad, Red Potato Frittata,Herb Turnips, Garlic Bread Sticks
Cajun Pasta with Chicken, Vegan
Paella, Yellow Beets Roasted with Red
Onion, Green Beans with Tomatoes
Hot Turkey Sandwich with Gravy,Mashed Mustard Potatoes, Fresh
Broccoli, Vegetable Bean Stew
BBQ Beef Sandwich, Butternut
Squash Ravioli, Sage Cream Sauce,Zucchini and Summer Squash
Claire Peracchio, PresidentRebecca Ballhaus, Vice PresidentDanielle Marshak, TreasurerSiena DeLisser, Secretary 
e Brown Daily Herald (USPS 067.740) is an independent newspaper serving theBrown University community daily since 1891. It is published Monday through Friday during the academic year, excluding vacations, once during Commencement and onceduring Orientation by 
e Brown Daily Herald, Inc. Single copy free for each memberof the community.POSTMASTER please send corrections to P.O. Box 2538, Providence, RI 02906.Periodicals postage paid at Providence, R.I.Subscription prices: $280 one year daily, $140 one semester daily.Copyright 2012 by 
e Brown Daily Herald, Inc. All rights reserved.
www.browndailyherald.com195 Angell St., Providence, R.I.
(401) 351-3372herald@browndailyherald.com
(401) 351-3260gm@browndailyherald.com
released in July by Bain and Company,
a consulting
rm, and Sterling Partners,a private equity 
rm, warning that many 
elite institutions including Brown were
on a “
nancially unsustainable” economic
Bain and Sterling pointed to the
22 percent increase in the University’sexpense ratio, a measure of its costs to
earnings, as an indicator of high
e report highlighted the di
ties that higher education institutions
face in tough economic times, especially 
when faced with higher expense ratios.
“Everybody realizes that higher
education has got to look at its business
model,” Huidekoper said. “We can’t keep
increasing expenditures over revenues.”
University Provost Mark Schlissel
P’15 cautioned against drawing too many 
conclusions from the Bain and Sterlingreport, saying he believed the
rms re-leased the study mainly for the purposeof 
nding new customers.
ey already have a business whenthey consult with universities,” Schlissel
said, adding that the University’s peer
institutions experienced varied
performance in the past year. He cited
Harvard and the Massachusetts Institute
of Technology as two institutions with
 varied investment performances last year— Harvard’s net assets fell while the MIT
posted a large increase.But Schlissel added that the Univer-
sity will face tough times ahead if invest-
ment yields from the endowment remain
as low as in
scal year 2012 and if thefederal government does not increase
its funding grants for the University’s
research projects. “In a di
cult economy,
I don’t think universities are going to beable to grow their budgets like they didin the past decade,” he said.
Net contributions typically fall at theend of a large capital campaign, Schlissel
said. He predicted that President Chris-
tina Paxson’s new capital campaign,
which is currently in planning stages, will
precipitate an increase in donations in
coming years, as the University’s donorsbecome reengaged in a new fundraising
campaign.Huidekoper said there were no sub-
stantial changes in the past year in the
type of donations given to the University’s
Annual Fund. Donations to the Univer-
sity come in the form of cash gi
s, as
well as “gi
s of securities,” which includeindividual stock and mutual fund shares.
The largest proportion of Brown’s net revenue comes from tuition andfees, according to the data most recently released by the University.
which have in recent years increased the
 value of pensions faster than the rate of 
ation — until the plan is healthier.
Raimondo told WPRI in April that if the courts reject the pension reform law,
the state, cities and towns will all face
“devastation.” John Simmons, executive
director of RIPEC, said if the courts
overturn the law “the economic impact
would be severe.” He also stressed that
the state’s municipalities would be hard
hit — the reform saved them a sub-
stantial amount of money, and the statewould have to cut aid and raise taxes to
pay for its increased pension burden.
Walsh wrote in a June NEARI pressrelease that the pension reform violates
the state’s “legal and … moral obligation
to the active and retired teacher, state
and municipal workers.” He added thatChafee’s decision to honor the debt the
state incurred a
er 38 Studios, which
defaulted on its $75 million loan, went
bankrupt while ignoring its promises
to its employees reflects misplaced
e dispute will eventually be re-solved through negotiations, and the
current posturing only sets the ground-work for bargaining positions, Mackay 
e unions recognize that winning
the case would devastate the state, andthey do not want to be responsible for
increased taxes, he noted. But unionmembers — particularly the teachers
and retirees — are angry about the pen-
sion cuts, forcing the legal challenge,
he said.“I think (the unions) are looking to
save face — to chip away at what the
legislature took away,” Mackay said.
ey would like to get a little bit back.
David Boies, an esteemed litigator of 
Boies, Schiller and Flexner who argued
for presidential candidate Al Gore in the
2000 George Bush vs. Al Gore SupremeCourt case, recently joined Raimondo’s
legal team, potentially boosting the
treasurer’s willingness “to go anotherround,” Mackay said. Boies’ involve-
ment demonstrates the extent to whichother states are watching Rhode Island’s
reform e
ort to better understand the
implications of modifying their own
pension systems.
When news broke that the gover-
nor was willing to negotiate, Raimondo
was in Chicago Tuesday night to at-tend a fundraiser before heading to
New York to receive an award honor-
ing her leadership in the state’s pension
reform. Chafee called the coincidence“ironic,” since Tuesday’s news showed
the treasurer has far from solidi
ed this
signature accomplishment, the Projo
e political side of this
ght has
lurked just below the surface as Chafee
and Raimondo begin to draw battle lines
for an eventual campaign. “Everyoneknows Raimondo is running for gov-ernor … and Chafee’s approval rating
is 29 percent,” Mackay said, the second-
lowest gubernatorial approval rating
in the country. “You cannot know how 
much smoke and how much
re is here.
e case has also received atten-
tion due to allegations that Ta
-Carter,whose brother and mother both receive
state pensions, cannot rule objectively,
according to the New York Times. Ta
-Carter’s mother receives about $22,000
a year from her state pension and stands
to have her cost-of-living-adjustments— which raise the value of the pension
between three and six percent annually 
based on factors like in
ation — sus-
pended under the new law, the Timesreported.
Taft-Carter has sided with theunions on pensions in the past.
attempts of former Governor Donald
Carcieri ’65 attempt to reform the pen-
sion system in 2009, Ta
-Carter ruled
that the pension agreements countedas contracts between the state and its
workers and were thus inviolable.
Carcieri-era changes were less extensivethan the alterations under the 2011 law,
which a
ect more people and save thestate more money.
State pension reform has followed
a path similar to Providence’s pensionreform. Facing untenable payments to
the pension fund following years of mis-
management, Providence Mayor Angel
Taveras worked with the city council
to pass a law that rewrote the pension
system for city retirees in April. Butwhen the unions challenged the ordi-
nance in court, the mayor negotiated anew agreement with local unions andretirees, announced a month a
er theordinance passed.
Cities and towns across Rhode Is-land are following the state’s lead and
attempting to reform their pension
systems instead of increasing taxes or
cutting services.
e municipalities
en run into the same kinds of legal
challenges that the state is currently 
confronting. “
e eventual end of this
legal case will set the precedent for how 
cities and towns can move forward,”
Mackay said. “If the state can end (cost-of-living adjustments) legally, every city 
will try to do it.”
/ / Endowment
page 1
/ / Endowment
page 3
/ / Pensions
page 1
chairs of the Annual Fund, Andrea
Baum ’83 P’15 and Samuel Menco
P’11 P’15, could not be reached for com-ment. Richard Spies, interim senior vice
president for advancement, declined tocomment.
Donors o
en are able to avoid paying
capital gains taxes on stock gi
s, mak-
ing them an attractive option for giving.
“People do what’s best for them with their
own tax data,” Huidekoper said.
Marisa Quinn, vice president for Uni-
 versity relations, wrote in an email to
Herald that a record number of donors
participated in the Annual Fund last year.
“While the amount raised is impor-
tant because of the range of valuable
programs the annual fund supports …
participation also matters, regardless of giving level, because we know that col-
lectively so much more can be achieved,”
Quinn wrote.
Schlissel said the University continues
to count on the support of its donor net-
work for critical funding. “
e University 
wouldn’t be anywhere near as good as itis without the enthusiastic support of itsalumni,” he said.
e University collected $238 mil-
lion in net tuition in
scal year 2012, a 3percent gain from last year’s net total of $226 million. Net tuition has increased
as a percentage of the University’s overallrevenue stream in recent years, account-
ing for about 38 percent of budget rev-enues in
scal year 2013, up from about
32 percent in
scal year 2007, accordingto the University Resources Committee.
Lower total contributions raised by 
the Annual Fund and a
attened payout
from the University’s endowment havecorresponded with the greater reliance
on tuition revenue to cover expenses inrecent years.
e University ranks
rst among Ivy League institutions for the percentage of 
its net revenue that comes from tuition,
while Penn comes in second with just
under 30 percent of its net revenue com-ing from tuition. Harvard and Princeton
rely on tuition the least among Ivy League
institutions, with each having under 10
percent of net revenue coming from
tuition, according to the URC report.
Harvard and Princeton have the
rst- and
third-largest endowments, respectively,in the nation.Despite the lower net contributions,the University has maintained its com-
mitment to funding a substantial number
of scholarships.
e University spent 34
percent of the money raised from tuition
and fees in
scal year 2012 on scholar-
ships to students, amounting to about
$123 million.
e University devoted
the same percentage to scholarships in
scal year 2011.
“We’ve done a lot to maintain our
commitment to
nancial aid,” Huideko-
per said, adding that the 34 percent schol-
arships-to-overall-tuition ratio was not
a “stated target” ratio. She said rather
than set a
xed amount for scholarships,
the University seeks to ful
ll all of its
nancial aid obligations, given that it
has a need-blind admission policy for
domestic applicants.
But Huidekoper warned that the Uni-
nancial aid program, which has
been growing at an average annual rate
of 6 percent, has the potential to outpace
revenue growth. With the endowment’s
decreased value from the recent
crisis, the University has had to slash
salaries and initiate layo
s in recent
years in order to maintain its
nancial aid
commitments, she said.
Outside experts expressed skepti-
cism that the University is in as dire of a
nancial situation as the Bain and Sterling
report suggested.
“I wouldn’t say that places like Brown
are stuck in a rut,” said Tom Parker, se-nior associate at the Institute for Higher
Education Policy. “I just don’t see Brown
in the category of those institutions thatBain is most concerned about.”
e 34 percent share of tuition and
fees going to scholarships falls within the
norm for wealthier universities, Parker
said. He added that he doubted the Uni-
 versitys dip in its net assets value was
due to any management problem, sayingthat the University has a strong
management team.
“Expensive private schools like Brown
are like hospitals,” Parker said, disagree-
ing with assessments warning that the
University is not on a steady long-term
course. “It’s a little like saying Mass Gen-
eral Hospital is going out of business.”Howard Bunsis, chair of the Ameri-
can Association of University Professors’collective bargaining congress, disputedBain’s characterization of the University’s
nancial outlook.
e conclusion is completely erro-
neous,” Bunsis said. “A bad year in the
endowment for them really has very little
ect on their long-term health.
But Bunsis noted that he believesmany universities, including Brown
and other elite institutions, face a sharp
nancial challenge from the growth in
the number of administrators. He said his
review of the University’s
nancial state-
ments indicated that too much money is apportioned to administrators when
it should instead be going to more aca-
demic functions, such as the hiring of 
new faculty.
ey seem like they are incredibly 
top-heavy with administrative costs,”Bunsis said. “
ere are too many ad-
ministrators making too much money.”
Bunsis said many universities need to
consider the costs and bene
ts of hiring
more administrators as opposed to more
faculty members, pointing to research
as a key to bringing in more money foruniversities.
At 38 percent in
scal year 2013, Brown receives a higher percentage
of its net revenue from tuition than any other Ivy League institution.
/ / Endowment
page 2

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