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Harvard seeking spending cuts to weather downturn
(File photo by Wendy Maeda/Globe staff)
Drew Faust: "We need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.”
By Tracy Jan, Globe Staff
The economic crisis is hitting the nation’s richest university.
Harvard University president Drew Faust said today the university is looking for ways to reduce spending, raising the prospect of cuts to programs and compensation. Harvard also is assessing all aspects of its sweeping plans to expand across the Charles River in Allston, she said.
“We must recognize that Harvard is not invulnerable to the seismic financial shocks in the larger world,” Faust wrote in an e-mail to faculty, staff, and students.
She did not specify what cuts were on the table.
Faust affirmed Harvard's commitment to recent initiatives to expand financial aid for low- and middle-income families. Students from families making below $60,000 a year will still get a free ride, she said. And families making up to $180,000 per year can expect to pay no more than 10 percent of their income.
Tuition increases during the tough economy should be kept modest, Faust said.
Harvard's move follows a range of belt-tightening at colleges and universities across the country.
Last month, Boston University instituted a hiring freeze and a moratorium on all construction that is not already underway. Today, Dartmouth College said it would reduce spending after its endowment lost $220 million during the recent downturn. The New Hampshire school's endowment had finished the fiscal year at $3.66 billion.
Harvard’s endowment before the financial crisis was $36.9 billion, the largest in the nation, and funded more than a third of the university’s annual operating budget. But it, like other college endowments, has taken a major hit, Faust said.
"While we can hope that markets will improve, we need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint,'' she said.
The university cannot expect continued generous contributions from donors and foundations, Faust said. The pool of federal grant money for research also is at risk of drying up.
"We need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint,” she said.
Faust said she has met with faculty deans in recent weeks as well as the Harvard Corporation, the body that oversees the university, to discuss ways to reduce spending for this school year and next.
“We have to think not just about what more we might wish to do, but what we might do at a different pace or do without,” she said. “Tradeoffs and hard choices that can be avoided in times of plenty cannot be averted now.”