The Mail PERSISTING DEFICITS

To the Editors of the CRIMSON:

May 1 add a note of local financial history to your article of November 6th, which was headlined: "Dean Ford Forecasts Large Faculty Deficit?" It has been true in recent years that the budgeted income for an academic year has turned out to be under-estimated and the budgeted expenditures have turned out to be over-estimated, when compared with the actual year-end results. While it is of current interest to know how the budget estimates compared with actual results in any single year, it may be helpful also to review the trend of actual results over a period of years (and ignore for a moment the budget estimates).

Following is a summary of year-end actual income in the Main Operating Budget of the Faculty of Arts and Sciences for the past six years, when unrestricted and restricted gift and endowment income is compared with expenses from those sources. Deficits are indicated by parentheses.

Year. End Surplus/(Deficit)

1963/64 $2,630.785

1964/65 3,642.228

1965/66 2,033.969

1966/67 (18.109)

1967/68 1,885.852

1968/69 391.404

While the trend is downward, and thus perhaps worrisome for the future, surpluses occurred in five years out of six, and the one deficit was a relatively small one. For most purposes, however, the inclusion of restricted endowment and gift income and expense in this summary is misleading. The uses for which this money can be spent often are not those for which our greatest need now exists. In 1969/70, for example, the largest single increase in budgeted expenditure is for scholarships. Most of that increase must come from unrestricted funds. If one care to appraise the Faculty's ability to take on new commitments immediately as the need arises, then the trend in unrestricted surpluses and deficits is probably a more accurate indicator-although any one single gross index cannot represent full appraisal. Here is the six-year summary of unrestricted surpluses and deficits.

Year. End Unrestricted Surplus/(Deficit)

1963/64 $1,982.253

1964/65 2,435.374

1965/66 1,372.045

1966/67 (323,366)

1967/68 783,230

1968/69 (959,873)

During the years when the Main Operating Budget generated unrestricted year-end surpluses, the Faculty of Arts and Sciences Instruction Fund benefited from them, and by July 1, 1968 had grown into an unrestricted endowment of $9,073,846. It has been considered to be a strategic reserve which would permit taking on major educational commitments when the need arises and when no other major source of funds can be found. At the end of the past academic year, however, $520.845 had to be drawn out of the Fund to meet a major portion of the year's unrestricted operating deficit.

If unrestricted deficits persist, and increase in size, the Instruction Fund will be used up in a few years-and not for major new educational programs, but for bailing out the old ones.

Observers at other private colleges and universities might well read this letter, which to me is a gloomy one, and say that they would give a great deal to have problems such as this. After all, we still do have a strategic reserve when many similar institutions, and other faculties at Harvard, do not. On the other hand, it does seem clear to me that the legitimate pressures that increase our expenses seem stronger than our ability to produce offsetting income, and that this condition will persist at least for the next few years. If this is correct, then the erosion of the Instruction Fund to meet unrestricted operating deficits means the erosion of flexibility to meet educational challenge in the years just ahead.

I believe that this historical perspective, along with the recent report of a budgeted unrestricted deficit for 1969/70, lends much of the cautionary tone to the current discussion of the Faculty's financial prospects.