FAS Pivots to Campaign Mode—Updated

Dean Michael D. Smith outlines financial gains, academic progress, and emerging ambitions as the pace of planning for University fundraising accelerates.

At the first Faculty of Arts and Sciences (FAS) meeting of the year, on October 5, Dean Michael D. Smith gave a brief overview of his annual report and the accompanying financial statement for the year ended June 30. Then he indicated just how rapidly the University is moving to plan Harvard's next capital campaign, and disclosed some of his likely fundraising priorities. He also announced that his report—expected to be released about October 20, after the University's annual financial disclosure—would henceforth be distributed only online, both to save resources and money, and to make use of more engaging ways of presenting the faculty's diverse activities. (A detailed analysis of the University's annual financial report, published October 15, is available here; the FAS annual report was made available October 20 here.)

Finances. Summarizing the faculty's financial progress, Smith said that it was "favorable" as a result of hard effort across the board. Compared to a projected $21-million deficit in unrestricted funds for the "core" activities (the faculty, the College, and the Graduate School of Arts and Sciences—about three-quarters of FAS's total operations), the year had ended with a $3.6-million surplus measured by those terms. He termed that outcome "incredibly impressive." Contributing factors included energy conservation (and favorable utility rates and weather); a change in Massachusetts law that enabled FAS to take distributions on "underwater" endowment funds (those whose value had declined below the gift principal)—a change that "helped out tremendously" (although Smith did not quantify the sum); appropriate use of restricted income, from endowments, to pay for allowable operating expenses for the faculty and departments and academic centers; donors' generosity, to the extent that FAS exceeded its goal for unrestricted, current-use gifts, as reported; favorable expenses (for University science initiatives and from retirements, reductions in force, unfilled vacancies, and last year's compensation freeze for faculty and nonunion staff members); and control of discretionary expenses (travel, dining, purchased goods and services). Further detail, including crucial data on the size of the endowment distribution, will presumably be forthcoming when Smith's report is published.

Smith also said that FAS had been able to pay for some urgent capital projects, as a result of one-time savings; debt financing, he said, is no longer an option (after a period when heavy investments in science facilities, particularly, raised FAS's debt burden to $1 billion).

Looking ahead, Smith said FAS still faced a core, unrestricted operating deficit of $35 million, and projected that that gap would be reduced to zero during this fiscal year and the next one, putting the faculty on a break-even basis by the end of fiscal 2012.

Academic developments. Smith cited as FAS successes the continued evolution of the undergraduate General Education curriculum (pedagogical improvements from which might be spread across the curriculum as a result of the forthcoming capital campaign); the "well received" January intersession, with emerging educational offerings in the College, the graduate school, and the School of Engineering and Applied Sciences, including off-campus experiences; continued strength in applications and admissions; 40-plus faculty searches conducted during the year; and the introduction of new secondary fields and concentrations in the College and graduate school.

The forthcoming campaign. Smith identified as priorities for FAS in a capital campaign a renewed focus on teaching and learning, since a 2007 faculty "compact" on the subject; and renovation of the undergraduate Houses, the"cornerstone" of the Harvard College experience, to make them physically and programmatically fit for twenty-first century education and life. Planning for House renewal continues; construction is "still several years away."

But the schedule for planning the campaign is far brisker. Smith said he was discussing with his deans, department and center chairs, the head of the libraries, and others what FAS priorities should be, and hoped that they would in turn engage their colleagues in similar conversations. He and his fellow University deans are working with President Drew Faust to shape the campaign's overarching themes. Harvard's diversity, he said, was a great strength academically, but also posed challenges in settling on the focus and themes for an institution-wide campaign—messages that have to be powerful, appealing, and true to the University's priorities.

FAS of course approaches a campaign with established needs and priorities, he noted. But they are just a starting point. Some recent initiatives required sustainable funding; others might go by the wayside; and new priorities would be identified through the planning effort this fall. Not every FAS priority would become a University priority. In the course of defining what it means to be a leading research university in the twenty-first century, Harvard would determine what will be the most inspiring directions to pursue.

Smith said he aimed to channel FAS's perspectives to Faust by early in the spring term, at which time the Academic Planning Group (Harvard deans and vice presidents) would work with her to refine the goals. But for FAS, these would surely contain elements touching on research; teaching and learning; the undergraduate experience and the Houses; undergraduate financial aid and graduate-student fellowships; and continued unrestricted, current-use giving through the College and graduate-school funds and the parents' fund.

When the floor was opened for questions and comments, the faculty members present—perhaps relieved that FAS's financial crises are apparently mostly resolved, perhaps encouraged by the prospect of a fundraising campaign—had none. Or perhaps, like Americans made anxious by the economy generally, they were saving their fire for the next item on the agenda, on changes in faculty and staff retirement investments under Harvard's pension and thrift programs—a subject that prompted a sustained, engaged debate.

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