FAS Cuts $220M Deficit in Half

FAS saves extra $36 million with donations, lower utility costs

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Melody Y. Hu

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CORRECTION APPENDED

Faculty of Arts and Sciences Dean Michael D. Smith announced that the University’s largest school has closed half of its two-year $220 million budgetary gap at an open forum yesterday.

Armed with the message that FAS has reached a milestone in its grueling process of downsizing, Smith sought to turn around a prevailing pessimism among faculty and staff.

In addition to the $75 million worth of reductions already identified in the spring, Smith announced yesterday that FAS has achieved an additional $36 million in saving though a combination of cutbacks and increase revenue, creating what Smith referred to as a “cushion” that effectively buys the school more time to develop a comprehensive plan for the budget.

The current $20 million deficit for this fiscal year is significantly less than the $130 million that Smith had projected in April.

“Twenty million dollars is not where I expect us to end up at the end of the year. I think we can do tremendously better—in fact, I think we can come back to a balanced budget in fiscal year ’10,” Smith said. “We started out tremendously well here, but we aren’t out of the woods yet. There’s still more work to be done. But I wouldn’t want to be anywhere else.”

Most of the $36 million figure resulted from cost reductions in utilities, operations and maintenance, faculty expenses, and funds given to FAS units. Smith said that the school also raised $12 million in additional revenue culled from research grants, tuition revenue from the Harvard Extension School due to higher enrollment, and alumni donations.

Though overall University donations decreased by 8 percent in the past fiscal year, FAS saw a windfall 7 percent increase in donation revenue—thanks in large part to two anonymous unrestricted gifts that add up to approximately $32 million, according to Smith.

“Every three or so years we see one of those kinds of gifts,” Smith said. “We saw two of those gifts this year—so that came at an incredibly opportune time for us.”

In March, the Harvard Corporation announced an eight-percent reduction in the endowment payout to Harvard’s schools—which contributed 56 percent of the FAS budget last year.

The following month, Smith called for a comprehensive “reshaping” of FAS to close the two-year $220 million deficit, $130 million of which would need to be addressed in the current fiscal year.

But at the same meeting, Smith projected that the 2011 fiscal year budget would see an additional 12 percent decrease in endowment payments to the school.

“The bigger issue is a looming gap in fiscal year ’11,” Smith said yesterday, adding that he has entrusted FAS’ six working groups with the task of recommending budget cuts for the two-year period.

“A $220 million deficit in a few years is a huge challenge for any huge institution, even ours,” Smith said at yesterday’s forum. “Anything we can get in the early years will leave more room for us in the later years, as well as provide a cushion so we can make larger changes...and give us time to thoughtfully adapt.”

Though faculty, staff, and students who took to the mic during the question-and-answer session following Smith’s presentation responded positively to the news, they also voiced apprehension about the budgetary actions that remained.

Stephanie H. Kenen, associate dean of undergraduate education, expressed frustration with the task of devising cuts without fully understanding their “sense of scale,” or actual effects on the budget, and requested that Smith provide a guideline to help administrators better correlate cuts with numbers.
Near Eastern Languages and Civilizations Professor Peter B. Machinist ’66, who expressed concern about the fate of “smaller humanistic fields” that may be in “some peril,” asked Smith to iterate his intellectual priorities.

Though Smith avoided talking about his “own personal favorite priorities,” he noted that “it’s an unfortunate truth” that FAS would have to prioritize certain academic initiatives over others: “We can’t do it all under the current financial constraints we have,” he conceded.

For some—especially staffers—the layoffs of the past year remained a sore spot. Jane Collins, a staff assistant in the Harvard College Dean’s Office, asked Smith if it seemed “fair” that over a hundred custodians were laid off without instituting cuts in the salaries of the highest paid employees in the University. [SEE CORRECTION BELOW]

“Does it seem fair?” Smith said. “I’m not just going to stand up here and say ‘this person’s work, that person’s work’...Everyone, as far as I’m concerned, across the FAS is working harder these days because of the situation we find ourselves in. [I could not] compare one person’s situation to another person’s situation.”

In an interview after the meeting, Smith said he is “pushing very hard” for a voluntary early retirement program for faculty. Smith said he will likely make an official announcement regarding the program by the end of the calendar year.

—Staff writer Bonnie J. Kavoussi can be reached at kavoussi@fas.harvard.edu.

—Staff writer Esther I. Yi can be reached at estheryi@fas.harvard.edu.

CORRECTION

The Sept. 16 article "FAS Cuts $220M Deficit in Half" incorrectly quoted Jane Collins, a staff assistant at the College, as saying that over 100 custodians had been laid off at Harvard. In fact, Collins said over 100 custodians had seen their hours or pay reduced.

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