Harvard's money woes

1983-84 brought several plects of dramatic news. A new dean of the Faculty was selected, an event which happens only about once a over a decade. The results of a campus-wide survey on sexual harassment poked a hole in the air of complacency that has gripped Harvard on the issues. The publication of the Pl Esa Club's newsletter, which contained sexist and degrading language, galvansized campus outrage.

The following articles outline developments in some of the important campus issues this year.

For Harvard's financial managers, the past year was truly Dickensian--it was the best of times, it was the worst of times.

Certainly Harvard's investors enjoyed what was probably their best year ever. Riding the tail-end of the great bull market of 1982, the Harvard Management Company, which manages the University's endowment, boosted Harvard's bank account from $1.7 billion to $2.4 billion, the largest in American academia. Harvard plunged heavily into the stock market at one point almost 80 percent of the endowment was in equities. But the University in December shifted $300 million from stocks to bonds.

And yet the good news could not overshadow two important bits of bad information, which strike at issues fundamental to the long-term financial health of Harvard--governmental relations and fundraising. The resolution of a long-brewing dispute with the federal government over the management of research funds here and the slowing of Harvard's fundraising drive were ample reminder of the frailey of Harvard's wealth, even in these heady days of economic recovery.

The first piece of bad news was out in October. Harvard agreed to repay $4.6 million to the government, settling a year-long dispute over charges that the University had mishandled federal research funds at the Medical School and the School of Public Health. The charge arose out of two major audits conducted at the schools in the mid-1970s.

While officials on both sides characterized the agreement as fair. Harvard officials can't help but have smarted from the hurt. Not that the specific sum was much more than a drop in the bucket in Harvrd's vast financial reserves. But the agreement implicitly acknowledged the correctness of at least part of the bureaucrats' position in a long-standing government-academia argument over how to account for federal research monies.

Spurred by Congressional concern over University stewardship of research funds in the 1970s, federal auditors have taken an increasingly keen interest in the systems schools use for keeping track of the vast amount of money doled out by the government. In particular, they wanted universities to do a better job of keeping track of the multiple research projects a professor is often working on at one time.

The increased heat provoked anger in academia, where professors have objected to what they saw as a maze of unreasonable and overly bureaucratic regulations. University officials, like Harvard Financial Vice President Thomas O'Brien, argued that the government audits were conducted without regard for common academic accounting, staffing, and record-keeping procedures.

The final agreement in the fall, however, gave the government's position in the matter much more credibility than University officials had conceded in the past. Not only did Harvard agree to pay back the money, but it also agreed to accept a new standard of monitoring its research. The new system--which required an overhaul of Harvard's accounting procedures--will have wide implica- tions for the way professors here and elsewhere handle the millions of dollars in research conducted under federal auspices yearly.

The second piece of bad financial news had to do with an even more integral component of Harvard prosperity--fundraising. After far outstripping its goals for the first four years, the $350 million Harvard Campaign, which is going primarily to beefing up programs in the college, has begun to lose steam. The fund drive stood at just over $290 million in May with just seven months left to rustle up $70 million.

Massive fund drives on the order of the Campaign's often pick up the pace near their end, as alumni become more likely to chip in big bucks to meet a stated goal. And development officials here are hopeful that a newly announced matching scheme by 27 wealthy alumni and Harvard friends will ease the Campaign down the home stretch. Under the plan, they will give Harvard one dollar for every two dollars in new or increased contributions received--up to $25 million worth.

Still, the drag in the Campaign's efforts has had a noticeable effect on the Faculty's finances. This is in part due to the fact that the actual cash earned in the fund drive has been slower coming in than expected. The Faculty, which had expected to be able to draw on the endowment of $82 million worth of gifts, could only draw on $75 million when it came time to plan next year's budget. The shortfall put a damper on the happy faces around University Hall this spring because of the new tuition figure for next year of $14,140, which represents a 7.2 percent increase over the previous year's, the lowest in a decade