Harvard Runs on Deficit Yet Ends Year With $288,590 Surplus; Retrenchment is Planned

Although it operated on a deficit of $58,605.15 last year the University added $288,590.08 to its reserves when it closed its books in June. How the University can run under a deficit and still show a surplus at the end of the year is but one of the many complexities of Harvard's book keeping system.

According to William H. Claflin Jr. '15, the Treasurer of the University, the deficit merely indicates that for the first time in recent years Harvard ran over its budget. The deficit was payed out of special department reserves.

Every February when he prepares the budget for the next year, Claflin, with other University officials, estimates the amount of money which Harvard will receive from its capital investment. The budget is based upon this figure. Last year the University received $288,590.08 more from its investments than it had expected, but next year, if the war disrupts the American business, the University may receive much less.

In order to provide for unexpected upsets through out the country, Harvard has accumulated a special "kitty" of $1,645,817.91 with which to meet expenses if the interest on investments declines. According to some officials, a plan is now being worked out to finance Harvard almost entirely upon tuition, so that it can weather financial storms.

The University can not afford to continue to show an operating deficit, and plans are now being considered for retrenchment. One of the principal reasons given by President Conant for his new tenure system was to reduce teaching expenses. Last year, the Service Departments of the University reduced their costs by a sizable amount.

For several years the College has had an increasing deficit, and, according to Clafflin, has become Harvard's main financial worry. Next year officials will have to cope with a decrease in tuition due to conscription. The graduate schools, especially, should have a sharp drop next fall in their enrollment.

One of the Corporation's chief worries is that most of Harvard's income is from restricted endowments. Of the total income of $5,203,000 accruing to University activities from invested endowments, there is an income, wholly unrestricted, of only $1,088,000.