Faculty of Arts and Sciences Will Furlough Some ‘Fully or Partially Idled’ Workers Due to Financial Challenges, Gay Says

Harvard’s Faculty of Arts and Sciences plans to take a number of additional measures — including furloughing some employees — to generate revenue and cut its budget in the face of hundreds of millions in projected financial impact due to the coronavirus pandemic, FAS Dean Claudine Gay wrote in a Tuesday email to faculty and staff.

FAS expects to conclude the current fiscal year, which ends on June 30, with an operating deficit of $42 million due to the costs of campus de-densification, the pivot to remote instruction, and the cancellation of continuing education programs, Gay wrote.

In the next fiscal year, FAS’s net funding from the endowment — which constitutes nearly half the FAS’s budget — will be down by 6 percent, per Gay’s email. It will receive about $48 million less than it expected from its endowment distribution due to the Harvard Corporation’s decision to reduce the distribution across all Harvard schools.

As part of a one-time special assessment, however, the Corporation will also give FAS around $23 million from restricted funds. Gay wrote that FAS will use the sum to finance “some essential elements” of FAS’s pandemic response — including masks and personal protective equipment and emergency funds for graduate students.

“The full financial impact of the pandemic on the FAS will be significant, in the hundreds of millions of dollars, on par with that of the 2008 financial crisis, if not greater,” Gay wrote. “And those impacts will not be limited to one year; we are on a changed trajectory that will persist for some time.”

“Though the full extent is not yet known, the global recession is likely to have deep impacts on endowment performance, as well as other revenue sources including philanthropy,” she added. “It will also impact student aid needs, as mounting job losses affect families’ ability to pay for college.”

The FAS is now “leaning into the growth potential” of the Division of Continuing Education to generate new revenue, engaging alumni and donors, and reducing construction spending, Gay wrote. The measures come in addition to the FAS’s April announcement that it would suspend capital projects and faculty searches and comply with a University-wide hiring and salary freeze.

But she added that FAS will furlough some “fully or partially idled” workers.

“Compensation is our largest expense category, at nearly 50% of the FAS expense budget,” she wrote. “We have already taken the step, consistent with University policy, to freeze salaries and this action will provide $15M in savings next year. But given reduced activities on campus, furloughs for fully or partially idled workers will also be necessary.”

Gay instructed all FAS units to reduce or eliminate non-essential spending, including travel, entertainment, supplies, equipment, and furniture. She noted that in Fiscal Year 2019, the FAS spent nearly $100 million on these activities, with one-third on travel and entertainment alone.

She also asked faculty to “pace and prioritize” spending to begin new research, and to make teaching plans that allow departments to hire fewer visiting instructors. She also wrote that faculty and staff should approach budgeting with a focus on “mission-critical activities,” promising additional budget guidance.

Gay also encouraged faculty to support Harvard affiliates by contributing to the Harvard College Fund, the Graduate School Fund, and the Harvard COVID-19 Employee Emergency Relief Fund, which respectively support undergraduates, graduate students, and employees facing economic hardship due to the pandemic. She wrote that she will contribute 15 percent of her salary to the three funds, and members of the FAS Academic Planning Group will each contribute at least 5 percent of their salaries.

Now that Commencement and the academic year have concluded, the FAS is focusing on charting a plan for students to safely return to campus, but does so “without a full view of the resources” at its disposal, Gay wrote.

“Our collective focus is trained on one goal—finding a path to safely return our students to campus and transforming the FAS for the long term to pursue excellence within our changed context,” Gay wrote. “To accomplish this, we will need to draw on all of our resources, including our community’s ingenuity and insight, which is happening now through a fall planning process that engages more than 100 faculty and staff across eleven workstreams. We also must marshal our financial resources.”

—Staff writer Kevin R. Chen can be reached at kevin.chen@thecrimson.com. Follow him on Twitter @kchenx.