NEW YORK (GenomeWeb News) - Howard Hughes Medical Institute warned it could make additional budget cuts above those carried out in the year ending Aug. 31, after ending the fiscal year with a $3.5 billion, or 20 percent, drop in its endowment, according to its 2009 Annual Report — the first time the institute has published its full yearly report on the Internet.
The value of HHMI's endowment fund sunk to nearly $13.9 million from $17.4 million in the previous fiscal year ended Aug. 31, 2008. The drop largely reflected a $4 billion plunge in the value of its investments, and a $2 billion fall in investment and currency receivables — both resulting from the Wall Street meltdown that touched off the current recession more than a year ago.
"Although our investments performed well on a relative basis, the economic downturn means that Hughes has less money to support programmatic activities," HHMI President Robert Tjian wrote in his "Letter from the President" accompanying the annual report.
"As a matter of prudence, we have reduced spending in all areas and made operational changes; the future may require further adjustments," added Tjian, a biochemist who in April succeeded Thomas Cech, who stepped down to pursue full-time research and teaching at the University of Colorado at Boulder.
One consequence of the recession disclosed by HHMI: On Aug. 12, it issued $600 million in taxable bonds to create a spending reserve for funding the institute's research program. Proceeds from those bonds accounted for most of its $725 million in cash and cash equivalents as of Aug. 31, according to previously-issued consolidated financial statement that also disclosed the institute paid $800,000 in interest on those bonds during FY '09.
HHMI spent $730 million on scientific research in the year ended Aug, 31, up 7 percent from the $681 million it spent the previous fiscal year.
That funding comes from the endowment, which is also the source of the $101 million spent by the institute on grants for science education and international research scholars in FY '09, up 22 percent from $83 million in FY '08.
But the grants supported the activities of 488 grantees in 29 countries during fiscal year 2009, HHMI said in the report — compared with 585 grantees in 29 countries supported in the previous year, according to a 2008 report issued by the institute.
The endowment is HHMI's principal source of funding. The institute must spend at least 3.5 percent of its endowment on direct medical research activities and related overhead, exclusive of grants and investment management expenses.
The endowment dip did not lower HHMI's personnel count, though. As of Aug. 31, according to the annual report, the institute employed 375 scientists at more than 70 academic medical centers and Janelia Farm, up from 335 investigators at 66 academic med centers a year earlier.
Also rising was the institute's investment in laboratory space, equipment, and other property, from $1.4 million in the 2008 fiscal year to nearly $1.5 million this past fiscal year. Replacement value also rose, to $1.9 million from $1.8 million.
Despite the downturn, HHMI said in its annual report, it is proceeding with plans announced in June to build 60 one-bedroom apartments within its Janelia Farm Research Campus in Ashburn, Va., some 30 miles northwest of Washington, DC. The units are intended to boost recruitment of graduate students, postdoctoral researchers, and other early-career scientists by providing temporary on-campus housing for them.
On Oct. 2, the institute issued $23 million in tax-exempt bonds for the project, which consists of a three-story residential structure over an elevated podium containing parking and common areas. The 30-year bonds were financed through the Loudoun County (Va.) Industrial Development Authority following approval by the county Board of Supervisors in July.
WDG Architecture of Washington, DC, and Dietze Construction Group of Ashburn, Va., have been selected to design and build the 80,000-square-foot project, set to rise southeast of Janelia Farm's main research or "Landscape" building, near the campus' main entrance. It is the first expansion of Janelia Farm, since the $500 million campus opened in 2006.
The current workforce includes about 240 permanent and visiting scientists, HHMI said in paperwork submitted to the board of supervisors.
"The Janelia Farm Research Campus expects to employ approximately 289 employees during the 2009-2010 period, and expects to employ as many as 500 employees when the campus is at full capacity," Howard Michael Day, director of facilities for Janelia Farms, said in prepared remarks to the IDA included within the paperwork.