Arts and Sciences: Strong Finances, and an Aging Faculty

Highlights from the dean’s annual report  

FAS annual report

FAS annual report cover | screenshot by harvard magazine

The Faculty of Arts and Sciences’ dean’s annual report for the 2022-2023 academic year was the principal subject of the FAS meeting on November 7. Before presenting it, Hopi Hoekstra launched a meeting innovation—a faculty member’s “research minute” presentation—with a socko speaker: Lee professor of economics Claudia Goldin, the newly minted Nobel laureate, who discussed her scholarship on women in the workforce.

Dean Hoekstra also made two important academic announcements: that divisional deans Robin Kelsey (arts and humanities) and Christopher Stubbs (science) will conclude their service at the end of this academic year. In addition to overseeing searches and appointments within their disciplines, each leads a part of FAS’s strategic planning, not yet complete, so that makes their work during the balance of the year and the transitions especially important. Stubbs will remain as an adviser to Hoekstra on artificial intelligence.

Turning to the annual report, Hoekstra necessarily wrote, “Having begun my deanship on August 1, I am only a beneficiary of the considerable achievements outlined in this report”—but then added a warm note of gratitude “for the leadership of my predecessor, the wisdom and hard work of our faculty and researchers, for the insight and dedication of our staff, and the inspiring commitment of our alumni.”Her gratitude is no doubt grounded in part by the knowledge that, as she put it, “FAS is strong,” as the financial overview (see below) underscored. Hoekstra also emphasized that the faculty’s “mission is vibrant,” and defined it expansively:

Ours is a school of limitless possibility, where curiosity is rewarded with discovery and connections—between disciplines, between people, between questions old and new—open new opportunities, every day, for our academic mission to make the world better and for our understanding of it to deepen.

Following the form established last year, the presentations to the faculty focused on a report on faculty trends, presented by Nina Zipser, FAS’s dean for faculty affairs and planning, and one on finances, presented by Scott A. Jordan, dean of administration and finance.

The Faculty

The ladder faculty—tenured and tenure-track members—now numbers 730, up from 723 last year. Having risen from 657 members in 2004-2005 to 721 in 2008-2009, just as the financial crisis and Great Recession began, FAS’s ladder-faculty cohort has maintained essentially that level ever since. The peak year was 2017-2018, when Harvard Campaign proceeds were being put to work (739); the recent low point was 2021-2022, when the pandemic accelerated retirements and temporarily choked off searches and hiring (709). So, the story for the past decade and a half is essentially of a steady-state faculty.

That said, data provided separately by Zipser’s office show the gradual change in FAS’s disciplinary composition. Of 657 ladder-faculty members in 2004-2005, 199 were in arts and humanities; 239 in social sciences; 154 in science; and 65 in what is now the separate engineering and applied sciences school. In the current year, those cohorts number 195 (arts and humanities), 238 (social sciences), 203 (science), and 94 (engineering and applied sciences): unsurprisingly, all of the net growth (plus a couple of positions) is in science-related fields.

As in years past, the faculty trends report provides detailed data on the gender and race/ethnicity of the professoriate. Those profiles have changed little during the past year.

Of greater interest is the new narrative in this year’s report. The 2021-2022 report focused attention on the growth in non-ladder faculty (and emphasized FAS’s determination to increase ladder appointments). This year’s narrative pays particular attention to the faculty’s structure (tenured vs. tenure-track appointees) and its age profile and retirement pattern. Given that the tenure-track cohort is much more diverse in terms of gender and race/ethnicity characteristics than the tenured professors, it is significant to bear in mind that:

•Of the 730 ladder faculty members, 577 (79 percent) are tenured and just 153 (21 percent) are in the tenure-track ranks; in 2008-2009, the proportions were 71 percent and 29 percent, respectively.

•Although FAS introduced a faculty retirement incentive program in 2009-2010—boosting average annual retirements 50 percent, from eight to 12—faculty members are in fact retiring at progressively later ages. Looking back two decades, in the fall of 2003, about 18 percent of tenured faculty members were 65 years or older; in the current academic year, 37 percent of tenured faculty members were 65 years or older. And for the decade from 1994 (when mandatory retirement was abolished) to 2003, the proportion of faculty members taking retirement at ages 65 to 69 was 35.6 percent; at 70 to 74, 52.2 percent; and at 75-79, 3.3 percent. In the most recent decade, from 2013 to 2023, the distribution of retirement ages had shifted sharply, with 16.1 percent aged 65 to 69; 37.5 percent aged 70 to 74; 31.3 percent aged 75 to 79; and 12.5 percent aged 80 years and up.

Zipser’s report explains that:

Hiring, promotion, retirement, and departures affect the proportion of tenure-track faculty. After the Great Recession, the proportion fell due to a hiring slowdown from 2009 to 2013, during which time hiring did not keep pace with departures and internal appointments to tenure. Eighty-eight tenure-track faculty were hired compared with 147 who left the tenure-track ranks, including 76 departures from the University and 71 internal appointments to the tenured ranks.

From 2014 to 2023, when the fraction of tenure-track faculty remained roughly constant at an average of 21 percent, the FAS hired 218 tenure-track faculty and 214 left the tenure-track ranks, including 103 departures from the University and 111 appointments to the tenured ranks.

Thus the data suggest that on FAS’s present trajectory—given the heavily tenured composition of the faculty, and individual members’ significantly increased career longevity—realizing further, meaningful increases in FAS’s ladder-faculty diversity will be a generational effort, at least.

The Finances

Last year’s financial report demonstrated just how powerfully increased endowment distributions and current-use giving, combined with reduced pandemic expenses, could boost FAS’s position. On a cash basis, FAS realized a fiscal year 2022 operating surplus of $99 million ($69 million following Generally Accepted Accounting Principles). Some $71.8 million of those funds were added to the dean’s unrestricted reserves, bringing them to 10 percent of operating expenses that year, a first for the FAS: a considerable cushion for future academic investments or unforeseen contingencies.

In short, the good times continue to roll: for fiscal 2023, FAS realized a cash operating surplus of $108 million ($63 million on a GAAP basis), and a further $46 million were added to the dean’s unrestricted reserves, which now amount to $205 million, a sum that represents more than 13 percent of annual cash operating expenses.

During the year (on a cash basis, which excludes engineering and applied sciences), net tuition revenues increased 5.3 percent, to $347 million, as undergraduate enrollment remained swollen by students returning from leaves or matriculating after deferring admission during the pandemic; graduate enrollment declined as a result of decisions made to reduce admissions during the pandemic years. Endowment distributions increased $44 million, to $833 million (51 percent of revenues), and current-use gifts rose nearly 33 percent, to $153 million (although apparently $35 million of that is attributable to a one-time or accelerated payment). Another favorable factor was a $21-million transfer from the University for COVID-related relief (offset, in effect, by a $30-million decline in royalty income after a robust fiscal 2022).

In all, FAS’s cash revenues increased to $1.64 billion, and expenses rose $120 million, to $1.54 billion. The major drivers on the expense side were salaries and wages, up more than 10 percent, reflecting the contractual 5 percent increase in union employees’ compensation, and 4.8 percent for nonunion employees, plus deferred filling of vacancies during and after the pandemic (the workforce grew 6.4 percent, to 2,837 full-time equivalents, during the year). Other notable expense increases reflect full use of buildings, higher energy costs, and the resumption of travel and entertainment.

On a consolidated (including engineering and applied sciences), “modified GAAP” basis (reflecting adjustments from FAS’s cash accounting to University standards), total revenues for the year were $1.81 billion, up from $1.70 billion in fiscal 2022, and expenses were $1.74 billion, up from $1.61 billion in the prior fiscal year.

FAS spent a lot more on capital projects: $247 million in fiscal 2023, up from $174 million the year before. Major projects included Adams House renewal ($47 million), and the renovation and fitting up of 60 Oxford Street for the Harvard Quantum Initiative ($44 million).

Looking ahead, the College cohort (330 students larger than normal in 2022-2023) ought to gradually decrease in size, reducing tuition income. Depending on what decisions are made on graduate student admissions, that cohort may become larger in the next year or two. Those reimbursements for COVID-19 costs will disappear. It would take great luck to replicate the strong current-use giving just reported. Salary and wage rates will increase another 4 percent or so in the current academic year. And in the very long term, the current benefits ($35.4 million in fiscal 2023) from FAS’s restructuring of its debt with the University will be reversed.

But those are mostly distant clouds on the horizon. The endowment distribution, representing more than half of FAS’s revenues, will increase at least 4.5 percent this year. The unrestricted reserves give Dean Hoekstra running room of the sort FAS deans haven’t had since the first decade of this millennium.

Chief financial officers are, however, paid to be worrywarts, so Dean Jordan’s reflections at the end of his report strike a characteristic note of caution, warning of the “complicated planning environment,” uncertain external financial conditions (“elevated inflation levels, capital market fluctuations, and increasing competition for talent of all kinds”). In language similar to that of the University’s financial leaders in their annual report released on October 19,  Jordan observes, “Our expectation for future growth in endowment distributions is constrained by two recent years of muted returns,” before allowing himself a grudging admission that FAS enters “this period of uncertainty from a position of financial strength.” Sounds like the Crimson team have all mastered the same playbook.

Read more articles by: John S. Rosenberg

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