Leaders of the Faculty of Arts and Sciences (FAS) painted a grim picture of the financial state of Harvard’s largest division this week, outlining a structural deficit of about $350 million—roughly 20 percent of the FAS annual budget—and setting in motion a plan to seek out long-term savings.
At the second faculty meeting of the academic year on Tuesday, FAS Dean Hopi Hoekstra said the FAS needs to change its administrative structure in order to make operations more sustainable.
“What we’re facing is not a short-term budget gap that can be solved with temporary cuts,” Hoekstra told assembled faculty in University Hall. “Instead, we face a structural problem that demands structural solutions.”
Some of the financial challenges, Hoekstra and other FAS leaders said, reflect the federal government’s recent assaults on higher education—from the uncertainty around future research grants to a hike in the tax rate on endowment returns that is expected to cost Harvard $100 million per year when it takes effect in fiscal year 2027. (An endowment tax hits the FAS especially hard, since 52 percent of its annual revenue comes from endowment funds.)
But some of the financial headwinds were present well before the current administration took office in Washington, D.C., FAS leaders said. Indeed, a 2021 report from the FAS Study Group—a working group convened by former President Claudine Gay, then serving as the FAS dean—described an unsustainable financial state and suggested the need for administrative changes.
“We can no longer respond to financial challenges with the status quo management approach of constant across-the-board belt-tightening and constrained aspirations within individual units,” that report read. It went on: “There are many ways in which the current make-up and structure of the FAS no longer reflects society or addresses societal needs.”
At Tuesday’s faculty meeting, FAS chief financial officer Kofi Ofori outlined the roughly $1.8 billion annual FAS budget for the fiscal year that ended last June—which, he noted, did not incorporate some recent cost-cutting measures or the effects of new government policies. Revenues were driven by an increase in donations for both the endowment and current-use gifts, and by an increase in tuition revenue, driven largely by the Division of Continuing Education (previously known as the Harvard Extension School). Expenses were partly driven by inflation, wage increases, and the rising costs of benefits—though tempered by a faculty and staff hiring freeze that was announced in March 2025.
The budget noted an annual deficit of $8 million. But Safra professor of economics Jeremy Stein, who serves on the FAS’s Faculty Resource Committee and who also co-chaired the 2021 study group, said standard accounting practices don’t fully reflect a set of significant challenges and uncertainties—most notably, deferred maintenance for more than 250 aging buildings. He projected that the FAS will need to spend an average of $400 million per year over the next 15 years on “keeping the buildings we have from falling down.”
Costs range from the need to retrofit buildings with specific and expensive lab equipment to regular upkeep that can carry unexpectedly high costs, FAS leaders said. Goldman professor of economics David Laibson, another member of the resources committee, described a single project to replace outdated fire alarms in one of the Leverett House residential towers, at a cost of $5.4 million, which included sensors, wires, panels, new fire alarms, conduit panels, junction boxes, antenna amplifiers, and labor.
“It’s an amazing undertaking to keep our very, very old buildings operational, and we have one of the oldest sets of buildings of any organization in the U.S.,” Laibson said.
If Harvard continues to defer those building needs, Stein predicted, construction costs will rise faster than inflation, “so you’ve just made your problems worse down the road.”
The FAS has managed to “skate by” financially in recent years largely due to borrowing and high market returns on the endowment, Stein said. But, based on historical trends, he added, a stock market downturn is likely in coming years, which could reduce the endowment revenue the FAS receives.
Tuesday’s financial news came weeks after FAS leaders informed faculty that it would drastically decrease the number of Ph.D. candidates admitted over the next two years—by as much as 75 percent in the sciences and 60 percent in the humanities, according to emails obtained by the Crimson. Faculty members have complained that the cuts will jeopardize teaching and research in the short term and could diminish Harvard’s standing in the sciences.
In the FAS meeting, professor of physics Melissa Franklin questioned leaders’ dispassionate focus on issues like deferred maintenance in the wake of what she said were existential threats to Harvard’s teaching and research mission.
“Scientific research isn’t something like housing prices. It’s something magical, and we have a lot of magical people here,” Franklin said. “A lot of the faculty aren’t so certain that we’re not destroying something here that we can’t actually bring back.”
Hoekstra acknowledged Franklin’s concerns but reiterated the need to protect the FAS against future financial challenges.
“The way we operate today has left us exposed,” she said. “When we have such a structural deficit, it doesn’t allow us to absorb shocks from the outside…and that’s what’s forcing us to make some very, very difficult decisions.”
Earlier in the meeting, Hoekstra had pointed out the financial effects of the Ph.D. program, noting that there are 1,000 Ph.D. students currently enrolled at Harvard in the sciences alone, with much of the cost covered by federal grants.
On its website, the Griffin Graduate School of Arts and Sciences (GSAS) notes that Ph.D. students typically receive a five-year-commitment with a financial support package that covers tuition, fees, and basic living expenses. In 2023, the GSAS announced that, beginning in the 2024-25 academic year, the annual stipend for graduate students would be at least $50,000.
When the Trump administration terminated all of Harvard’s federal grants in the spring, Hoekstra noted, the FAS stepped up to guarantee their tuition and stipends for the year at a cost of “well over $20 million.” While those grants have been restored by a federal judge, she pointed out, the administration has stated its intention to appeal.
“What I’m asking of all of you is to take a pause,” Hoekstra said. “Take a pause for a year. Next year we’ll reassess where we are and if we’re on better financial footing, if our federal funding continues to flow, we can increase the number of graduate students.”
In an October email to FAS department chairs in the sciences, Hoekstra had described an exception process to the reductions in Ph.D. admissions—which could apply to scenarios where a faculty member secured funding from a source outside the federal government, or when a graduate student’s involvement is “essential to the success of a tenure-track faculty member’s research program.”
Stein told faculty that teaching and research have been priorities throughout his committee’s research and deliberations. “The mandate has been very clear that the guiding principle is to do everything we can to prioritize the core research and teaching mission,” he said, echoing language from the 2021 study group report.
Other potential administrative changes were discussed behind closed doors in an in-camera session on Tuesday.
The FAS has been deliberating for months over ways to streamline its operations and find cost savings. A Task Force on Workforce Planning, formed in April 2025, gathered information and solicited suggestions over the summer. In a September update, the committee described a bureaucracy filled with complex administrative systems and processes often spread across multiple departments.
The 2021 FAS Study Group report had also included recommendations, including revising the way the FAS handles its more than 2,700 endowment funds that are “restricted,” or reserved for a specific purpose; initiating conversations about retirement and equitable distribution of workload across faculty; and restructuring academic departments to reflect student interests and new areas of inquiry.
