Dwindling Reserves

At first glance the recently released University Financial Report might seem a rather comforting document. Not only did Harvard compile a $497,753 surplus in 1948-1949, but it was able to do so while many other colleges and universities were cutting courses and firing teachers in unsuccessful attempts to lick recurring deficits. However, the Report also shows up the big weakness in Harvard's apparently strong financial position--the University's unrestricted reserve is sharply declining, because there are certain sick departments inside the outwardly healthy body.

To come out on top financially last year, the parent University had to eat into previously built-up accounts to help balance the books of 18 departments which lost money in 1948-1949. Some of these departments had previous balances of their own with which to write off their debts, but in the other cases the University had to come to the rescue. As a result of continued resort to this expedient over the past few years, University reserves today are less than a third of what they were in 1945.

Prominent among the perennial financial headaches are the library and the HAA. The library's recent expansion has been too much for its limited income, and the HAA cannot finance freshman physical training, "athletics for all," and intercollegiate sports because football revenue doesn't go so far today as it once did.

Other big money losers in the Harvard family are graduate schools. The chief worries here are the Divinity School, which has almost always been in the red, and the Medical School, whose woe is increased by the high costs of its many research programs.

Added up, the total losses of last year's deficit departments ran over $800,000. Unfortunately, you cannot argue--even from a purely financial point of view--that one department's surplus might well be put to use cancelling out another's deficit. For instance one academic department did exceptionally well last year, the Faculty of Arts and Sciences, which embraces the College and Graduate School of Arts and Sciences. Although this department used some of its excess income in bailing out the library and HAA, it needs most of the remaining surplus to guard against possible ups-and-downs in the near future. Moreover, University policy is that each individual department should stand for itself and not serve as a crutch for others.

In other departments the surpluses were small and, in most cases, immediately needed for one thing or another. The $98,231 earned by the Houses goes to the Corporation to help pay for the initial construction outlay. The dining halls $17,079 surplus is but a small buffer, according to the University, against future food price fluctuations. And the Hygiene Department's $31,619 surplus could be wiped away by one big epidemic, officials claim.

Thus small, unpredictable surpluses and sick department deficits render the overall Harvard position an unsure one, despite the $497,753 "profit" for 1948-1949.

With the pronounced drop in the University's reserve balances, it becomes painfully evident that these weak departments must either raise more endowment for themselves or else cut their budgets. Should the first alternative fail, Harvard might someday have to decide that such things as "athletics for all," and the third biggest library in the country are shows too big to maintain.