Faculty of Arts and Sciences Details Initial Budget Cuts

The Faculty of Arts and Sciences gave some details of initial efficiency measures—one-third of the savings it must effect.

The Faculty of Arts and Sciences (FAS) today unveiled a website with information on $77 million in cost-saving measures it is implementing now and in the fiscal year beginning July 1: www.fas.harvard.edu/home/planning. Dean Michael D. Smith told a "town hall" meeting on April 14 that this resource would be forthcoming; he disclosed then that FAS's total budget gap was $220 million, leaving more significant and difficult cuts to come. The website and Smith's message today do not address what he then called the larger "reshaping" of how the faculty performs its core academic mission to realize those additional savings in programs and people during the next two years (see the full text of his message, below).

In announcing the website, Smith wrote to the community, "We anticipate that most of these measures will be staffing neutral. In implementing them, we will eliminate some positions and cease their associated activities. This will result in the reallocation or redeployment of staff where possible. However, as I have said before, the size of the financial challenge before us makes it increasingly likely that staff reductions will eventually be necessary."

Separately, the University announced that 534 of 1,628 staff members eligible for an early-retirement incentive--about 33 percent--had accepted the offer. (FAS made offers to 521 staff members, of whom approximately 30 percent accepted early retirement.) The early retirements will ease, but likely not eliminate, the need for layoffs, as Smith's statement suggests. Indeed, Marilyn Hausammann, vice president for human resources, wrote to the community that "Although Harvard's schools and departments are now analyzing the impact of the pending retirements on their budgets, and for many schools further reductions in force will likely be necessary to meet budget targets, we remain hopeful that this program will help to reduce the need for adjustments to our workforce."

As of October 2007 (the latest date for which figures have been published), the University employed about 12,500 non-faculty staff members (full-time equivalents), a number that likely grew further as research funding was received and programs were launched with endowment support. For the year ended June 30, 2008, compensation accounted for 48 percent of Harvard's expenses ($1.7 billion); given budget reductions likely as a result of the Corporation's decision to reduce distributions from the endowment for the next two fiscal years, personnel cuts are widely expected. (So far, no retirement-incentive program for faculty members has been announced. The staff program is funded by excess assets in the staff pension plan; faculty members are covered by a different plan, with different financial characteristics.)

Among the changes being implemented in FAS now--including reductions in the use of outside planning firms to prepare for building projects, reduced travel and entertainment, and lessened reliance on consultants--the website details the following (but provides no dollar figures of cost savings):

Athletics: Malkin Athletic Center is closed this summer; the junior-varsity teams in hockey, basketball, and baseball are being changed to club status; and travel budgets are reduced.

Dining services: Beginning in September, Houses will no longer offer hot breakfasts on weekdays; full breakfasts will be served in Annenberg Hall.

Energy: Thermostats are being reduced to 68 degrees in winter and raised to 75 degrees in summer, cutting heating and cooling costs 3 percent.

Exam proctors: Beginning this fall, faculty, graduate students, and staff will proctor exams, eliminating the need to hire additional staff.

Graduate enrollment: As previously announced, the Graduate School of Arts and Sciences has reduced its entering Ph.D. class size for this fall.

Libraries: Print journal subscriptions are being reduced, in favor of on-line subscriptions. The Quad Library, in Hilles, is being closed.

Salaries: As previously announced, faculty and non-union staff salaries are frozen for the next fiscal year; nor will any bonuses accrue during the fiscal year.

Smith's complete statement reads:

Dear Faculty, Staff and Students,

I am writing today to announce the creation of a new web resource to provide faculty, staff, and students with up-to-date information on many of the cost-saving measures being implemented in the Faculty of Arts and Sciences. At www.fas.harvard.edu/home/planning, you will find detailed information about specific changes in services and programs, as well as cross-cutting administrative changes. This resource will be enhanced with additional features in the coming months, and will be updated as new measures and strategies are approved and implemented.

The Current List of Service and Program Changes
Last fall, departments and administrative units in the Faculty of Arts and Sciences began a planning process to identify a range of possible cost-savings to bring short-term and long-term budgets in line with our new economic reality. Of the more than $90 million of possible savings identified, $77 million were chosen for implementation.

The planning website does not present all of the cost-saving measures that we will begin implementing immediately. We have focused here on changes (in hours, offerings, and services) that will be visible to our community, as well as broad administrative changes that will affect units and departments across the FAS.

Individual departments, centers, and units have made other difficult trade-offs in support of the FAS's cost-saving goals. Though the majority of those more local changes are not listed here, I want to acknowledge the critical importance of these efforts.

We anticipate that most of these measures will be staffing neutral. In implementing them, we will eliminate some positions and cease their associated activities. This will result in the reallocation or redeployment of staff where possible. However, as I have said before, the size of the financial challenge before us makes it increasingly likely that staff reductions will eventually be necessary. We are engaged in thoughtful and deliberative consideration of these actions and their potential impact.

A Two-Phase Process: Resize and Reshape
These measures represent the completion of the first phase of a two-phase process. In this first phase, administrators, faculty, and others expended enormous time, effort, and energy in finding innovative ways to resize their activities, i.e., to reduce costs through better use of resources and increased efficiencies. I am extremely grateful to everyone who worked so hard on this difficult, but critical resizing effort.

As our plans for resizing are implemented and the $77 million in cost-savings are realized, we as a community must now move forward with the second phase. As I described in the Town Hall Meeting on April 14, $77 million represents only 35 percent of the total $220 million annual deficit we face in academic year 2010-2011. It is not possible for us to rely solely on further resizing of our activities to eliminate the remaining annual deficit, and we clearly cannot operate indefinitely spending $143 million more each year in expenses than we receive in income. To address the rest of the looming annual deficit, I have called for a reshaping of the FAS in support of our teaching and research mission through a careful consideration of our academic and programmatic priorities.

The Next Phase: Targeted Working Groups
The nature of this second phase is quite different from the first, and will result in significant and visible changes to the way we pursue our teaching and research mission. Our approach to this second phase, therefore, will also be meaningfully different and will thoroughly and thoughtfully include input from our entire community. I have formed targeted working groups in each of the three academic divisions (Arts and Humanities, Science, and Social Science), two in the College, and one in the School of Engineering and Applied Sciences. These groups will produce proposals which I will consider between now and the spring semester of 2010.

Students, both graduate and undergraduate, will play an important role in the activities of these working groups. Harvard College Dean Evelynn Hammonds, Graduate School of Arts and Sciences Dean Allan Brandt and I will develop mechanisms to engage the broader student community throughout the next year in considering the proposed visions for the future of our institution that emerge from our efforts. As always, we welcome your thoughts and suggestions at priorities@fas.harvard.edu.

Contact and Questions
Each of the measures posted on www.fas.harvard.edu/home/planning is accompanied by contact information and links to unit or program websites and resources.

The Future
New ideas and visions of the future have always been our strength. With all of your help, I remain convinced that we can use this financial crisis to build a stronger, healthier, and more vibrant institution. We cannot stand still, and, as dean, I refuse to let this crisis diminish our unsurpassed commitment to academic excellence, innovation, and discovery. 



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