Facing a 30 percent drop in the University’s endowment, cookies at Faculty Meetings had became a luxury.
Faculty of Arts and Sciences administrators removed the cookies—as a symbolic gesture that garnered heavy media attention—from the meeting as one part of sweeping cuts to the school’s expenses that included laying off 77 FAS employees and trimming departmental budgets.
For FAS, the largest school in the University, the endowment’s collapse caused a $220 million deficit—of an operating budget of $1.2 billion.
In Dec. 2008, FAS Dean Michael D. Smith announced to a packed Faculty meeting salary freezes for faculty and staff and asked department administrators to trim 10 to 15 percent of their budgets.
But recently, the financial outlook is improving.
In Sept., the Harvard Management Company, which oversees the University endowment’s investments, announced an 11 percent investment return. This increase not only beat the HMC’s target of 8.25 percent but also allowed for an increase in the FAS distribution—the amount of money allocated to the school from the endowment—for the 2012 fiscal year.
But compared to peer institutions like Yale and Princeton, FAS has reduced its deficit, which today stands around $35 million, more efficiently than other universities, many of which are still examining additional areas for cost reduction.
“I think the FAS administration has done an astonishingly careful job in making cuts and I think they’ve done an astonishingly amazing job in reducing the deficit from $220 million to $35 million,” English Department Chair W. James Simpson said. “In that way, we might have been able to perform better than some of our competitors.”
Three months after Lehman Brothers collapsed into bankruptcy, sparking the 2008 financial crisis, University President Drew G. Faust sought to combat one of the most precarious financial situations in Harvard’s history by imploring deans to cut costs.
“To ensure that we are in the best position to respond to this new set of financial realities, we are working with each School to focus on a range of capital and operating budget-reduction,” Faust wrote in a letter to the deans.
Her statement came on the heels of a 22 percent decrease in the endowment’s nominal value from July 1 through Oct 31, with losses in nearly every single of its asset classes.
As the endowment dropped, so did the distributions to the University’s individual schools: In the fiscal year ending in June 2010, FAS would see its distribution drop 8 percent. It would drop another 12 percent the next year.
During those two years, departments across FAS struggled to meet Smith’s target of 10 to 15 percent reductions. Some departments eliminated staff positions, while others saw staff depart with an early retirement buyout option.
The History and History of Science departments adopted a centralized, off-site staff support system to cut costs.
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