VPF Finance Team: Putting Financial Decisions to the Test

Determining the implications of any financial decision can be difficult, but consider the countless variables connected to financial decisions for a large and complex organization like MIT. The VPF Finance team spends its time doing just that: analyzing financial variables and contingencies while developing and applying complex analytical tools to help inform the Institute’s financial decision making.

One component of VPF’s Budget, Finance and Treasury (BF&T) group, the Finance team often works behind the scenes, with little fanfare, weighing interrelated factors -- including the General Institute Budget, the endowment, economic indicators, and the mission of MIT -- in order to provide guidance on strategic decisions.

“We are an objective partner for those developing strategic initiatives across the campus," says Allen Marcum, who has led the BF&T group since 2008. "People come to us with an idea and we help develop scenarios for how it could unfold. … We are here to advise with the best, fact-based, impartial information that we can provide.”

The relatively small team of analysts consists of Sarah Brady, Jeff Blundell, Eileen DesRosiers, and Allison Parisi. Jeff, the newest member of the team, is concentrating on learning MIT’s financial data systems, developing financial models and taking on some Budget duties. Sarah, Eileen, and Allison combine many years of experience to amplify the team’s proficiency at servicing the MIT community.

“This team has a wealth of experience and they are an important knowledge base for me and the Institute,” says Allen.“… With this team, I come to the office and say, 'what am I going to learn today?'”

The Finance team played a major role in MIT's recent sale of $750 million of 100 year taxable bonds to finance future infrastructure projects. The bonds’ exceptionally low interest rate of 5.623%, the lowest rate in history for this type of bond, was made possible by MIT’s stellar credit rating and history of sound operating performance.

“This gives MIT the utmost flexibility for the future as we address the upkeep on our existing infrastructure and plan for additional research facilities over the coming years,” says Allen.

While members of the Finance team are often engaged in complex financial analysis, perhaps the team's true value is in distilling complex financial information into the salient points upon which strategic decisions are based. The group frequently develops reports and presentations for MIT senior leadership -- emphasizing important variables and summarizing potential outcomes of options at hand.

This ability to condense and transfer information was very much on display at the beginning of the global financial crisis in the fall of 2008. Early in the crisis, MIT’s senior leaders requested information on the possible impacts from the financial collapse. The Finance team, working with Budget, responded with detailed analysis underscoring the difficult economic realities facing MIT. Armed with the range of financial scenarios, senior leaders were able to address the situation head-on, putting MIT on a track to weather unprecedented financial challenges.

The Finance team also worked directly to minimize the effects of the financial crisis on the Institute’s continuing development. When the traditional means of borrowing appeared to face an uncertain future, ongoing campus development could have been curtailed. As the financial crisis unfolded, MIT had three major construction projects underway: the new buildings for the Sloan School, the Media Lab, and the Koch Institute. To avoid potential project impacts, the Finance team acted quickly to ensure that the projects were insulated from the global crisis by borrowing ahead of schedule to fully-fund the projects. It is a testament to the team’s tactical capabilities that all of those projects were completed despite the challenges of the economic environment in 2008 and 2009.

Most recently, in support of the MIT 2030 development framework, the Finance Team has contributed to the vision of MIT over the next two decades. The team has been instrumental in implementing project financing that will provide the best long-term benefits to the Institute. The comprehensive planning includes renovations to and renewal of MIT’s existing infrastructure, new research facilities, and additional capital developments. Through direct collaborations with many groups across campus, VPF Finance has provided the strategic analysis to inform the innovative plans of the future.