HBS invested $92 million in fiscal 2007 to support the faculty's work in research and course development, and spending in this area will continue to be a strategic priority in fiscal 2008. In addition to providing faculty with the resources they need to remain close to practice on an increasingly global scale, these investments will be designed to enhance research productivity across the School by further strengthening the research infrastructure and support staff services available to faculty on campus. The School's investment in faculty research is budgeted to grow in excess of 13 percent in fiscal 2008 to more than $104 million.
Our capital budget for fiscal 2008 is $45 million—an increase of $25 million from capital expenses last year. In addition to the facilities upkeep necessary to prevent the accumulation of deferred maintenance, about $21 million of the fiscal 2008 capital budget is earmarked for the renovation of MBA residence space in Gallatin Hall. One of the School's original McKim, Mead & White buildings, Gallatin has not been the focus of significant renovation since its construction in the 1920s.
Other large renewal projects planned for fiscal 2008 include the second phase of executive program classroom modernization in McCollum Hall and renovations to Morris Hall, an MBA residence facility. The fiscal 2008 capital budget also includes the completion of the Technology Operations Center and HVAC system upgrades that began in fiscal 2007; ongoing replacement of IT equipment across the campus; and more than $6 million in routine facilities maintenance.
Longer term, the School's capital investment strategy will be shaped by the comprehensive campus plan undertaken this past year. The plan establishes a development framework consistent with the School's evolving and emerging strategic priorities, including fostering an increasingly team-based and technology-infused MBA learning experience; environmental stewardship; and a desire to strengthen the integrity, quality, and residential character of the School's unique campus. The University's Allston development strategy provides the long-term backdrop for the HBS campus plan—and an unprecedented opportunity to advance the mission of the School.
We have translated the School's strategic objectives into a capital investment plan for the next few years. Our MBA Program priorities are residence hall construction and renovation, and the creation of new spaces for team-based learning. The plan also focuses on adding Executive Education housing and dining capacity. New office facilities will be required to accommodate growth in the size of the faculty. In addition, we are planning to address the School's chronic shortage of assembly spaces—from small seminar rooms to large auditoriums.
The expanding community of HBS alumni and friends continues its tradition of exceptional generosity, providing the School with a strong financial foundation upon which to build. Our obligation is to be responsible and effective stewards of this legacy, and we remain dedicated to fulfilling it.
Richard P. Melnick, MBA '92
Chief Financial Officer
September 30, 2007