Harvard is instituting an immediate University-wide salary and hiring freeze, cancelling or deferring discretionary spending, and considering deferring all capital projects, University President Lawrence S. Bacow, Executive Vice President Katherine N. Lapp, and University Provost Alan M. Garber ’76 announced in a Monday email to Harvard affiliates.
Bacow, Lapp, and Garber will each cut their salaries by 25 percent, per the email. Senior school administrators, including the deans of Harvard’s 12 schools, their vice presidents, and their vice provosts, will also either reduce their salaries or contribute to a support fund for employees experiencing hardship.
In the email, Bacow, Lapp, and Garber also addressed the possibility of layoffs or furloughs. The wrote that Harvard is still working to “gain a more complete picture” before deciding whether to take such action.
“We will be scrutinizing the FY21 budget to determine what other steps are necessary to respond to the financial impact of the pandemic on our operations. We will communicate with you when more information is available,” they wrote.
The coronavirus pandemic has thrown the University into financial turmoil in recent months, incurring unexpected expenses while also cutting revenue sources. Bacow said in an April interview with the Harvard Gazette — a University-run news publication — that the immediate financial effects are “significant.”
Harvard has a $41 billion endowment. Most of it is tied up by various legal restrictions on how the money can be spent, but still . . .
A few numbers:
Harvard total operating revenue, FY2004: $2.6 billion ($3.53 billion in 2019 dollars.)
Harvard total operating revenue, FY2019: $5.2 billion. This is a 47% increase in constant dollars since 2004.
Harvard’s finances are characteristic in this regard when it comes to hyper-elite hyper-wealthy American universities. For example, Stanford’s operating budget has increased from $1.62 billion in FY1999 ($2.55 billion in 2020 dollars), to $6.8 billion this year.
These schools have increased their revenues at mind-boggling rates, but they still spend almost everything they bring in almost every year, meaning that any kind of serious financial downturn means immediate serious cuts to ongoing operations. In this respect hyper-elite schools resemble the rest of American higher education, except everybody else has, shall we say, quite a bit less money to burn.
It’s going to be a bumpy ride, especially since the great unanswered question remains: how many undergraduates will pay for a residential college experience this fall that doesn’t include the residency part?