Smith Asks for Budget Cuts

Anticipating an economic shortfall of at least $100 million for the Faculty of Arts and Sciences next year, FAS Dean Michael D. Smith asked professors yesterday to consider how they could cut 10 to 15 percent of their departmental budgets.

Speaking before a meeting of the full Faculty, Smith said the percentage was a target for the next couple years, but that he did not expect FAS to make up the full $100 million—representing about 8 percent of the entire FAS budget of $1.2 billion—before next year’s budget is due in March.

The eventual cuts will not adhere to an across-the-board percentage figure, but will come from a careful consideration of the priorities of each department, Smith said.

“What we have to do is plan for expense reduction,” Smith said. “Everyone look at their budgets and tell me what they can possibly do.”

Professors stood three-deep at the doors on both sides of the room and some sat on the floor at a meeting held just one day after the Faculty’s top deans sent a letter to department chairs freezing the salaries of all FAS professors and announcing a hold on the majority of the searches for new Faculty.

Smith offered more details yesterday on the recently announced policy concerning Faculty hiring, saying that the 50 authorized searches that had been underway for new faculty have been cut to 15 this weekend.

Eight new senior faculty and seven new junior faculty will join FAS if the pared-down searches all prove successful. [CORRECTION APPENDED]

Despite its intention to provide guidance for departments unsure about where cuts should be made, the meeting left many professors without clear plans of action.

“I don’t have one—let’s be honest,” said Anthropology department chair Theodore C. Bestor, when asked if he had a clear idea of how to move forward with budgetary planning within his department. “If, at this point, we’re being given ranges and overalls with no specifics, how do you write a budget with clean numbers?”

Projecting his pen-and-paper tabulations on two screens in either corner of the room, Smith outlined the Faculty’s precarious financial situation. With University estimates of an annual endowment loss hovering at 30 percent in the midst of an unprecedented financial crisis, Smith said it was unlikely that FAS will see an increase on the $650 million of endowment payout it received last year.

That leaves FAS administrators with far fewer resources to combat a deficit for the upcoming fiscal year, which will see increased costs from debt and energy payments on new buildings, increased demands from financial aid, and a $25 million shortfall on the current year’s expenditures.

Any part of the gap that the Faculty is unable to make up will come out of the FAS reserves, which stood at $138 million on July 1, but are largely invested in the now-deflated endowment.

Repeating concerns voiced at last month’s Faculty meeting, some professors suggested yesterday that the University’s ambitious plan to expand its campus into Allston may be one of the areas most ripe for cuts.

Asked by a professor during yesterday’s meeting to comment on the status of the Strategic Infrastructure Fund—a 0.5 percent annual levy on the endowment that has traditionally funded Allston development—University President Drew G. Faust suggested that the money could be put towards other projects in present circumstances.

“To date, these funds have been directed to the Allston project,” Faust said. “But depending on our decision about the planning and pacing of Allston over the next period of time, we may decide that here are other necessary uses for those monies given the financial challenges we are facing at all levels.”

Smith’s targets for reductions came only a few days after officials at Harvard Medical School confirmed that they were taking similar action, asking departments to plan for 10 percent decreases in their budgets, but acknowledging that actual cuts were unlikely to reach those levels.

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

CORRECTION: The Dec. 10 article, "Smith Asks for Budget Cuts" incorrectly calculated that eight new senior faculty and seven new junior faculty will join FAS if the pared-down searches all prove successful. In fact, seven new senior faculty positions and eight new junior faculty positions are currently being considered.