In the 15 years I've served on the board of trustees finance committee, Lehigh has always enjoyed an operating surplus. But in several of those years, we made it by the skin of our teeth and only after cost-containment measures were implemented.
That has changed dramatically under Greg Farrington. Our endowment is now approaching $1 billion, while revenues generated by research and graduate tuition are on the rise. Across the board, Lehigh today is on a rock-solid financial footing. And a lot of the credit for that goes to the revenue streams budgeting approach that Greg brought to the university.
It may not sound all that exciting, but it has changed the underpinning of Lehigh's financial performance. Simply put, Greg empowered the deans to create new revenue streams and to share in the rewards they generate. At other universities, and at Lehigh before Greg's arrival, there wasn't the same sense of ownership because you didn't get credit for your surpluses, nor were you held accountable for any revenue shortfalls.
Giving the deans incentives to increase revenues--a move that obviously helps in balancing the budget--is just one example of the entrepreneurial spirit that Greg brought to university finances. Perhaps the most celebrated example of that new spirit is Lehigh 2020, a $75 million venture capital fund launched in October 2000 that provides start-up money for innovative new programs and research initiatives. Lehigh 2020 represents a novel approach to providing incentives and opportunities to make strategic investments and to really have them pay off big. The investments have helped create a number of bold new undergraduate and graduate programs, new interdisciplinary research programs, such as the Bioscience initiative, and even the creation of new centers for the university, including the Humanities Center and the Center for Optical Technologies.
These initiatives have helped us strengthen our academic reputation and made us even more competitive in recruiting the very best faculty and students. The fact that Lehigh is willing to put its money where its mouth is sends a strong signal that we are committed to moving forward and not just giving lip service to trying to increase our academic reputation.
The third financial area where Greg has really had a major impact has been in indirect cost recovery, the term that refers to the reimbursement to the university for use of institutional facilities and administrative costs associated with conducting research and development, training, and other work performed under grants, contracts, and agreements. It's no secret that indirect cost recovery revenues went through a period of decline starting in the mid-1990s. But in recent years, they have risen to an all-time high of $7.7 million, an increase of 97 percent since 1999.
There are two main reasons why indirect cost recovery is important. In the short term, large research grants help pick up overhead costs, which has a significant impact on the budget. From the longer term perspective, we are a research university and support from major foundations, institutions, and corporate and government partners goes a long way toward establishing academic reputation. The two go hand in hand.
Attracting the best graduate students is another benefit of indirect cost recovery, and our success on that front can be seen in the increase in graduate tuition in recent years. Since 1999, graduate tuition is up almost 25 percent, to nearly $8 million.
From the outset, Greg was willing to roll up his sleeves and make the tough calls. And he wasn't afraid to change things pretty dramatically. Greg certainly has a good business sense for how an academic enterprise should be managed and organized, with much less dysfunction than I've seen in other academic entities.
He knows where we need to be and he's never been willing to settle for second best. I've been very impressed with that. He set high standards, knew what he wanted from a quality perspective, and took steps to get it.
Karen Stuckey '75 is a partner at PricewaterhouseCoopers LLP and has been a member of Lehigh's board of trustees since 1992.
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Lehigh Alumni Bulletin