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Harvard’s Faculty of Arts and Sciences is unable to cover its budget for Fiscal Year 2020 after incurring more than $30 million in “unforeseen expenses and lost revenue” due to the coronavirus pandemic, FAS Dean Claudine Gay wrote in an email to faculty and staff Friday.
“The financial impact of the pandemic on the FAS was immediate, is growing, and will be significant,” Gay wrote. “With the decision to de-densify the campus and support our students through the transition, the FAS incurred over $30M in unforeseen expenses and lost revenue, resulting in the inability to fully cover our FY20 budget. We anticipate continuing pressure on revenue sources, even as new needs may present themselves in our community, including greater financial aid for students whose families have been affected by the global economic slowdown.”
“It is inevitable that as a community and as individuals we will be called on to make sacrifices, and we will bear them as equitably as possible, while continuing to invest in mission critical areas,” she added.
Financial and higher education experts have said COVID-19 will leave the University’s endowment in a “grave” financial situation. Though alumni have offered donations in support, experts say their generosity may not last.
FAS, meanwhile, was already operating on “infinitesimal” margins despite raking in a $13.6 million surplus during the 2019 fiscal year, FAS Dean of Finances Leslie A. Kirwan said at a September 2019 faculty meeting. The surplus represented less than 1 percent of FAS’s annual budget, which is close to $1.6 billion.
In that meeting — even before COVID-19 shuttered most of Harvard’s operations — Kirwan forecasted an “ominous” financial outlook for FAS, citing uncertain federal research funding and the endowment tax that took effect last year.
In her Friday email, Gay outlined four principles that will guide FAS’s decision-making as it weighs the “tradeoffs that will be necessary” in light of the pandemic: prioritizing health and safety, protecting the “academic enterprise,” leveraging breadth and diversity, and preserving access and affordability.
She wrote that, above all other goals, FAS will prioritize the protection of human life and follow the advice of medical experts and public health officials to manage the effects of the pandemic.
FAS’s next most important goal, Gay wrote, is to maintain the caliber of its teaching and research. FAS ordered all of its affiliated laboratories to ramp down research to only essential functions in early March.
“We must remain a research active community to the extent possible, and be ready to scale up research activities as soon as conditions allow,” she wrote.
Gay reiterated FAS’s commitment to diversity, writing that “the unparalleled breadth of disciplines, perspectives, questions, and approaches of our academic community cannot be a casualty of this virus.”
She also wrote that FAS would remain committed to providing competitive financial aid. FAS spent $200.9 million on the Harvard Financial Aid Initiative — its largest expense — in fiscal year 2019.
Gay told faculty and staff she will provide more specific information about how FAS will address the financial impacts of the pandemic in the coming days.
“In our long history, Harvard has never faced a challenge as all-encompassing as this one,” she wrote. “And yet, we must adapt.”
Correction: April 11, 2020
A previous version of this article incorrectly stated that FAS posted a surplus which represented less than 0.1 percent of its 2019 annual budget. In fact, the surplus represented less than 1 percent of the 2019 FAS annual budget.
— Staff writer Kevin R. Chen can be reached at firstname.lastname@example.org. Follow him on Twitter @kchenx.
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