Bulger had not broken any laws, and the board chose to keep him because of his distinguished record as the university's president, said Board of Trustees chairwoman Grace Fey after the six-hour meeting to discuss Bulger's future.
"In fact, the evidence is that the quality of our students, our fund-raising and research funding have all increased dramatically in recent years," she said.
The board did not take a formal vote and trustees declined to publicly say how many had dissented from the consensus decision.
Bulger, who declined an invitation to sit in on the meeting, said in a statement: "I deeply appreciate the board's expression of support and am grateful to all who judge me on my own merits."
Bulger has come under increasing criticism in recent weeks over his relationship with James "Whitey" Bulger, who is on the FBI's Ten Most Wanted list in connection with 21 murders, including the 1981 shooting death of Tulsa businessman Roger Wheeler, and has been on the lam since 1995.
In grand jury testimony two years ago, William Bulger - a former Democratic state Senate president hired to run the university in 1996 - said he had no idea where his brother was, and spoke to him only once while he was on the run. He has said he did not feel obligated to alert authorities to "a private conversation."
Bulger testified last week before a congressional committee under a grant of immunity and said that he did not his brother's whereabouts.
Afterward, Gov. Mitt Romney called for his resignation, saying the national spectacle of the university president testifying about the mob before Congress embarrassed the institution, its students and alumni.
Romney said Thursday he is disappointed with the board's decision not to oust Bulger and said he will begin replacing board members, one by one, until his appointees have a majority by 2006.
"It's totally inappropriate to consider a criminal standard when one looks at the president of a university," Romney said. "I personally have a much higher standard than (what) was described by the chairman of the board of the University of Massachusetts."
F. Lawrence Boyle last week became the first UMass trustee to publicly call on Bulger to resign, saying he was concerned about the school's reputation.
The Republican governor and Bulger, have been at odds since January, when Romney took office and vowed to eliminate the post of UMass president.
Under his contract, which expires in 2007, the trustees could fire him for "just cause" or for breaking a state, federal or university rule "where such misconduct clearly results in damage to the university."
By Jennifer Peter