Faculty of Arts and Sciences (FAS) dean Michael D. Smith e-mailed a pre-holiday message to faculty and staff members today, announcing that compensation could increase in fiscal year 2011, beginning July 1; that the number of graduate students admitted next year would be held constant, and that their stipends would increase; and that anticipated cost reductions in the Harvard College Library (HCL) system would be moderated. He wrote, "I hope that these decisions provide some reassurance—to both our community and the outside world—that the FAS is beginning to emerge from the effects of the global financial crisis and to define a robust path forward."
Although not in themselves a sign of large changes in financial circumstances and outlook, the three decisions are meant to convey a sense of stability in areas of major concern to faculty and staff members, as FAS continues working to reduce a budget gap for fiscal 2011 projected to be as large as $110 million.
In the current fiscal year, FAS--and Harvard as a whole--froze salary increases and eliminated performance bonuses for nonunion staff and faculty members. In fiscal 2009, according to Smith’s recent annual report, FAS spent $442 million on salaries and wages, including unionized employees. The ranks have since been increased by the hiring of new grant-supported researchers and professorial appointments, and reduced by retirements and layoffs. Nonetheless, the 2 percent merit increase for “strong performance” that Smith has now authorized would, at a cost of less than $10 million, ease some of the financial pressure that FAS faculty and staff members have felt. The faculty’s budget planning for fiscal 2011 had made provision for some salary and wage increases, so this decision does not affect the deficit forecast.
(The University had salary and wage expenses of $1.38 billion in fiscal 2009, and total compensation costs, including benefits, of $1.8 billion, or 49 percent of total operating expenses. Controlling compensation costs looms large in balancing its budget; those costs grew 7 percent last year, excluding one-time retirement-incentive and severance costs. The FAS provision for 2 percent increases is in line with guidance that apparently applies throughout Harvard.)
After reducing the entering graduate-student cohort by 15 percent last fall, Smith has now determined that further cuts need not be made, so the Graduate School of Arts and Sciences can authorize departmental admissions decisions for the class entering in August 2011. Stipends are to be increased 3 percent.
Finally, faculty members have been very concerned about the financial pressures on the library system. Smith has heard those concerns—about staff reductions, reduced and more thinly stretched acquisitions budgets, and so on—in private and at faculty meetings. A faculty letter circulated on December 3 made those concerns explicit. Smith’s announcement today indicates that further cuts in HCL’s budget anticipated for fiscal 2011 have been deferred; instead, the libraries are being encouraged to focus on the larger, University-wide library challenges and administrative efficiencies identified in a task force report recently released by the provost.
Smith promised a late January review of FAS’s financial situation: "I will share an updated financial picture, the outcomes of the Priorities Working Group process, and preliminary thoughts on a vision for fiscal year 2011 and beyond. The resulting discussion will also help inform the guidance our departments and units will use to prepare their budgets for the coming fiscal year." The faculty will be looking for a status report on efforts to reduce this year’s projected deficit ($20 million) to zero, if possible; a fresh look at the $110 million gap projected for fiscal 2011; and an initial response to the reports of six FAS working groups which have been taking a longer-term view of FAS's priorities and intellectual opportunities, in an effort to adapt the academic mission to the resources likely to be available in the future. Smith last projected these deficits in a meeting with the FAS community on September 15.
