A Message about Berklee’s Finances and the Value of a Berklee Education

Published December 17, 2018

Dear students,

At President Roger H. Brown’s recent State of the College and Conservatory address in November, he introduced a reframing of our current strategy called “Thrive.” The three focus areas of Thrive are to enable students to graduate at higher rates with less debt, to improve the experience students have while here, and to prepare them for sustainable and successful careers.

These strategic priorities have, and will continue to guide the deployment of Berklee’s resources in the years to come, continually enhancing the value of a Berklee education for our alumni, current students, and future students. As we consider our short-term and long-term financial planning, we strive to balance three primary factors—affordability, investing for the future, and financial sustainability—in order to ensure that Berklee will be a financially strong institution, well equipped to pursue our mission and priorities for Berklee students.

Recently, I had the opportunity to meet with the Student Government Association (SGA) to discuss Berklee’s finances and tuition. I thank the students involved for their leadership and involvement in making Berklee the best it can be. It was an excellent conversation and we all agreed that it might be helpful to share the presentation (view the slides) from the meeting as well as the following summary of the meeting’s discussion.

SGA November 2018 Executive Meeting Summary

  • Tuition and Fee Comparison: While attending Berklee requires a significant financial investment, compared to other institutions that our students consider, tuition at the College and the Conservatory ranks in the bottom third, below the average at those other schools. In addition, Berklee’s rate of increase is low compared to these other institutions. However, we understand that affordability continues to be a barrier for our students, and optimizing scholarship support remains a primary focus for Berklee and is an integral part of the Thrive initiative (see slide 6).
  • Operating Revenue: Berklee is a tuition-dependent institution, meaning that most of our revenue comes from tuition, rather than other sources (e.g., government grants). However, Berklee has growing revenue from other sources, including donations (primarily for scholarships) and earnings on our endowment, which are used to directly support our operations (for example, the Soundbreaking campaign has raised over $100 million for Berklee). These revenue sources support our ability to keep tuition increases as low as possible (see slide 7).
  • Operating Costs: In thinking about how tuition dollars are spent each year, it is important to recognize that Berklee is a private, nonprofit institution, where the funds we receive are invested in our institution to further our mission. Our revenue primarily goes to four main areas. For 2018, our revenues were allocated to student scholarships (19 percent), instruction and academic support (47 percent), and student services (11 percent). Institutional support (17 percent) accounts for most of the remainder, which can best be thought of as the infrastructure that supports Berklee’s ability to achieve our mission. Specifically, institutional support includes technology, security, facilities, alumni relations, fundraising, finance, human resources, etc., all of which are critical in enabling these areas’ efforts. Our costs, which are typical of peer higher education institutions, are closely monitored by our senior management and Board of Trustees and reviewed by our outside auditors. You can view our consolidated financial statements online (see slide 8).
  • Scholarships: As noted above, scholarship support remains a key focus. Just in the past 10 years, scholarship support has increased over 204 percent, from $22.3 million in 2009 to $67.9 million in 2019. We plan to add even more funding to scholarship support next year through a Thrive scholarship initiative that is currently being developed to assist upper-semester students who earn a cumulative GPA of at least 3.0, demonstrate financial need through the submission of the FAFSA, and are on track to graduate on time (see slide 9).
  • Student Employment: Similarly, our student employment expenses for Berklee College of Music students have increased from $3.2 million in 2009 to $6.7 million in 2019 (see slide 10).
  • Facilities Expansions and Improvements: It is important to note that our major facility-related projects (such as the 160 Massachusetts Avenue residence hall) are typically funded by long-term debt so that the costs of these projects are spread over multiple generations of Berklee students. Current students are benefiting from the more than $130 million we spent on expanding and improving our facilities in just the past five years. Looking to the future, our upcoming facilities projects are designed to maintain Berklee’s position as the preeminent institute of contemporary music and the performing arts, while meeting students’ need for more practice rooms. Over the next 12 to 24 months, we plan to add approximately 30 new practice rooms, including three rooms with grand pianos at 1120 Boylston Street. We also recently completed a new dance studio at 264 Commonwealth Avenue. Finally, we are just about to begin renovations of our facilities at BerkleeNYC, an initiative that is funded by donations and the City of New York (see slides 12–13).
  • Berklee Online: The online school is important to our affordability strategy. While it supports our financial sustainability, it also provides affordable learning pathways for students (see slide 14).

Our students’ success is central to Berklee’s vision. Through our focus on affordability and increasing graduation rates, improving the student experience by expanding and improving facilities and other initiatives, and preparing you for a sustainable and successful career, we seek to ensure that you thrive at Berklee and beyond. As we look to 2019, we will continue to make improvements that allow Berklee to remain competitive from a cost standpoint, while keeping us on track to be the world’s most comprehensive and dynamic training ground for music, dance, theater, and related professions.

We hope that you find this letter and the presentation materials (view the slides) useful, and we welcome any thoughts or questions you might have.

Richard M. Hisey
Chief Financial Officer
Senior Vice President for Administration and Finance