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Budget Crunch Hits Radcliffe, HDS

Endowment-dependent divisions cut back in wake of unprecedented losses

By Nini S. Moorhead, Crimson Staff Writer

As the effects of the nation’s financial crisis hit Harvard’s schools and divisions, it has prompted a retrenchment by the two schools whose budgets are most dependent on revenues from the endowment. The Radcliffe Institute of Advanced Study and the Harvard Divinity School recently confirmed to The Crimson that they are scaling back their growth plans and making selected expense reductions.

Harvard’s annual report for fiscal year 2008, which ended on June 30, disclosed that Radcliffe and the Divinity School relied on endowment income for 83 percent and 71 percent of their operating budgets, respectively. The University-wide average for endowment dependence was 34 percent for fiscal year 2008.

Harvard’s endowment—valued at $36.9 billion at of June 30—tumbled 22 percent in the ensuing four months, University officials announced last month. As of June 30, 2007, the Radcliffe Institute had $587 million and the Divinity School had $620 million.

“When Harvard’s endowment value suffers significant setbacks, the Divinity School’s chief source of revenue is vulnerable to uncertainty, and we need to plan accordingly,” said Jonathan G. Beasley, a Divinity School spokesman.


Helen T. Ouellette, Radcliffe’s administrative dean, said the institute is undergoing a budgeting process aimed at “trimming at the margins.”

The institute is currently reducing its expenditures by one to two percent from an expected spending level of $24 million, and plans to reduce by an additional four percent in fiscal year 2010, Radcliffe Dean Barbara J. Grosz reported. Radcliffe spent $19.7 million in fiscal year 2008, ending the year with a surplus in unrestricted funds, according to its last annual report.
Grosz said Radcliffe was on a growth curve when the initial spending level for fiscal year 2009 was set.

“Even as recently as last summer the economic situation looked very different, the Corporation was encouraging us and all of Harvard to grow,” said Grosz, referring to the University’s governing board.
Ouellette said the institute is looking to “fairly painlessly slow down this growth.”

According to Ouellette and Grosz, this process will include capping the number of scholars accepted to Radcliffe’s fellowship program—closer to 48 fellows than the current 52—and limiting the number of acquisitions made by the Schlesinger Library, which plans to focus on reducing its cataloging backlog this year.

The deans said the University also asked the institute to postpone for at least two years its plans to renovate Fay House, its main administrative building, which included making the building more environmentally sustainable.

“While this means we have to put off these improvements, including the investment in energy efficiency, we will be saving operating expense in the short-term, and we think the trade-off is a good one,” Ouellette said.

According to Grosz, the institute expects to continue to rely on endowment revenue for about 80 percent of its operating budget.

“The second source of funds—annual giving—is likely to decline at the same time as endowment income declines,” Grosz said.

Ouellette added that the institute is “very hopeful” that it will not have to make personnel cuts.

Grosz also discussed Radcliffe’s new academic engagement program, which was inaugurated in November when the institute appointed six “faculty leaders” from across the University to assist in its cross-disciplinary outreach.
“The academic engagement program will adapt the whole range of lectures and meetings we’ve convened into a more programmatic set of endeavors,” Grosz said. “So it’s a case of substitution, not growth.”


Divinity School Dean William A. Graham said in an e-mail that the school is planning for “significant, but in no way crippling, budget reductions.”

“We are trying to realize economies on all fronts, in all parts of the School, but not on a one-size-reduction-fits-all basis,” Graham said.

He outlined cutbacks aimed at similar budgetary reductions pursued at Radcliffe—at least one percent during fiscal year 2009, and an additional three to five percent for fiscal year 2010.

“We will be postponing some new initiatives, taking a hiatus with some ongoing programs that are not essential to our core academic degree programs, and trying substantially to reduce visiting-professor and some adjunct appointments,” Graham said.

Beasley, the Divinity School spokesperson, said he could not share details on which programs would be affected because of the ongoing nature of the financial crisis. But he said that the school is considering “anything from cutting back on food and refreshments at meetings to freezing salaries of faculty and exempt staff for [fiscal year 2010].”

Graham said that the Divinity School would continue its ongoing search for seven new faculty members and hopes to make at least five of those hires. He added that the school would also maintain the same levels of financial aid to its students—90 percent of whom receive some form of aid.

“We are also striving to avoid any staff layoffs if we possibly can,” Graham said.

The Divinity School’s second source of revenue behind the endowment is tuition revenue at 21 percent. Beasley said the applicant pool remains strong, and tuition income is expected to stay steady.

—Staff writer Nini S. Moorhead can be reached at

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