Dealing with a Deficit

The Faculty of Arts and Sciences’ (FAS) future looks very red—not crimson. That’s the gist of Interim Dean of the Faculty Jeremy R. Knowles’ recent letter to professors on FAS’ financial outlook. Although FAS—the umbrella organization that funds the College and the Graduate School of Arts and Sciences—currently has a small surplus on its $950 million budget, it is expected to have a significant deficit starting next year. In his letter, Knowles sounded an ominous alarm, writing, “[I]nstitutional interventions will help, to be sure, but they must also be accompanied by individual efforts. Each of us can help…by a willingness to accept that some costcutting measures will be necessary for the health and progress of the Faculty as a whole.” But the College’s successful investments in new academic initiatives and student life shouldn’t be on the chopping block.

The Faculty’s budget deficit—which in the past was cited as a temporary result of increased construction—is now, according to Knowles, a structural deficit, meaning that it is a result of permanent (not temporary) spending. This is largely the result of an increase in the size of the Faculty, which has grown by 84 professors to 719 in the past four years, and the maintenance costs of Harvard’s new buildings. As a result, Knowles projects that FAS will have a growing budget deficit in the next four years. In the year 2010, FAS will run a deficit in the neighborhood of $75 million.

Balancing FAS’ budget will require more than just turning to Harvard’s endowment. Although FAS does control a $13.2 billion chunk of the University’s $29.2 billion endowment, spending more of the endowment is not feasible. Nearly 85 percent of FAS’ endowment is restricted, meaning it was donated only to be spent for specific purposes, and 40 percent is controlled by individual departments. That leaves a little over $1 billion as a nest egg at the dean’s discretion—hardly enough to cover an annual $75 million deficit.

Cutting funding for the College’s recent student-focused initiatives, however, would be unwise. From renovations of student space to increased investment in peer advising, students have secured big gains in recent years. But that depends entirely on the continued flow of cash. For example, the wages of a dean of advising, a fun czar, and 180 peer advisors are not trivial costs, but they must not be cut. Knowles, the next president, and the next dean of the Faculty—all of whom control the College’s budget and have a considerable amount of additional money at their disposal—should recognize the importance of these student initiatives and protect them. Furthermore, they should work to fund future College projects as they arise.

Meanwhile, the College should look for novel ways of fundraising in order to protect these sorts of programs. We believe, for example, that the College should continue raising money for student initiatives through alumni.

Finally, it may be wise for FAS to slow its hiring blitz. The Faculty’s original goal, set in 2000, was to have about 700 members by 2010. It surpassed that goal several years early. While we have supported faculty growth in the past on the grounds that it would improve teaching and student-faculty contact, we were unaware until now of just how high the accompanying costs would be.

There is no question that budget-slashing in the next few years will be unpleasant, but for the time being it appears unavoidable. The Faculty must move to address the deficit, but it should not do so at the expense of the College.