Faculty Finance Frustrations
The last regular Faculty of Arts and Sciences (FAS) meeting of the academic year, on May 1, docketed to focus on routine business (approving future courses, authorizing two new College engineering concentrations), instead veered in another direction entirely. The prior Friday, faculty members had received a message forwarded by Dean Michael D. Smith from the provost, Alan Garber, matter-of-factly advising of “The University’s recent decision to discontinue its relationship with the Financial Planning Group (FPG) at the end of the fiscal year,” because “[n]ew federal regulations…do not allow the University” to pay FPG directly for services provided to faculty, particularly any “investment advice.” In place of personal financial-planning sessions, the provost’s memo suggested, faculty members could use the 800 numbers of Fidelity, TIAA-CREF, and Vanguard (Harvard’s retirement-and thrift-plan investment managers), and those companies’ wealth-management units; or maintain their relationship with their FPG advisers (at their own expense). Similar notes went to the deans of other Harvard schools. With that, a financial-planning service available to all benefits-eligible Harvard faculty members was ended.
Both the substance and manner of the announcement seemed to infuriate faculty members, who submitted multiple questions in advance and engaged in a contentious debate moderated by President Drew Faust (she presides at FAS meetings), who referred queries to Garber. Alexander Rehding, Peabody professor of music and chair of the department, presented a letter signed by 48 professors who noted the value of the planning services “in a great variety of situations” (including financial decisions after relocating from another university, purchasing a house, raising a family, and retirement). Some of those situations—figuring out how to live in a high-cost area like Boston, when to assume emeritus status—obviously bear on faculty recruitment and renewal. Others cut close to the bone personally: Rehding announced that he was on leave to care for infant twins—and needed to figure out how to cover more than $50,000 for Harvard-affiliated daycare. If the change was not a cost-cutting measure, he asked, why not adjust salaries to cover the fees faculty members would now have to pay to FPG advisers? He also inquired about the feasibility of a waiver, clarifying the faculty member-adviser relationship, that would resolve legal objections to continuing the FPG service.
Francke professor of German art and culture Jeffrey F. Hamburger, who signed the letter, expressed concern that terminating the advisory services without an adequate replacement would harm recruiting efforts. Professor of German Peter Burgard, another signer, began his statement by noting, playfully, “It is perhaps appropriate that today is May 1st, given that what we have here is something like a conflict between work force and management.” He sought clarification of the regulations Garber alluded to; questioned whether FPG actually provided the “investment advice” it was said to offer; challenged the withdrawal of a faculty benefit without consultation; recounted unsatisfactory, superficial prior interactions with the service representatives of the retirement-account vendors to whom faculty are now being directed; raised concern about the adverse effect on retirements of withdrawing advisory services; and asked for a delay in the termination of FPG so that faculty members could be consulted.
Garber answered the questions only in general terms—for example, without citing the regulations on which Harvard was relying, or addressing any alternatives to funding faculty use of FPG’s advisory services. President Faust tried to move the meeting along, but further questions were raised. Ultimately, during the new-business portion of the meeting, Burgard moved that the termination of FPG services be deferred six months and subjected to study by a committee including faculty members. Although his motion received strong majority support from those present and voting, it failed to reach the 80 percent threshold necessary for new business to be considered, so the motion was not taken up for discussion—and the faculty turned to its formal agenda.
On one hand, the faculty sentiments come as no surprise. FAS only recently introduced better planning for retirement, and incentives for some faculty members to set firm plans to retire. Salary growth was compressed in the wake of the 2008 financial crisis (and the faculty’s growth overall has essentially come to a halt). In 1994, during the administration of President Neil L. Rudenstine, when the University was running persistent deficits and imposed changes in benefits, the faculty’s reaction was swift and sharp, and relationships were strained in significant ways. Then, as now, faculty members like to be consulted—and consider a memo forwarded just before the last faculty meeting of the year far short of that standard.
On the other hand, the reaction may reflect other, underlying concerns. Garber directs the restructuring of the library system (a subject on which he reported briefly at the end of the May 1 meeting); many faculty members are dismayed by the late-January news of downsizing in library-staff ranks, and the early-retirement package offered to senior librarians on relatively short notice (see “The Libraries’ Rocky Transition”). About a month before the meeting, it became known that Faust would stand for election to the board of Staples, Inc., perhaps becoming the first sitting Harvard president to join a corporate board. (She would earn about $300,oo0 per year for her service; her 2010 Harvard salary totaled $714,000, plus $161,000 of other compensation, according to the University’s tax return.) And the faculty has not had any general report on either the University goals for the forthcoming capital campaign, nor FAS’s specific objectives, the sums involved, or when they might be realized.
The FPG dispute thus was doubly illuminating. It reminded all present of the eternal professor-administrator differences of perspective in a university. And it suggested how those tensions might be heightened and focused in the contemporary setting of unfamiliar financial constraint and concern (individual and institutional) and more emphatic administrative efforts to tighten procedures, control costs, and, generally, install managerial disciplines in ways unfamiliar in academia.