Booking In Advance

DEAN ROSOVSKY said this week the managerial decisions that have allowed him to balance the Faculty budget for the last three years "run from the sublime to the ridiculous." Undoubtedly there's both sublimity and ridiculousness in the Faculty's books, out, most surprisingly, it is disorder and chance that sometimes make the budget work.

Take, for example, one unusual item on the expense side of this year's budget. The Faculty is paying the Kennedy School of Government $250,000 over three years to buy out the K-School's half of the library in Littauer. The K-School shared the library with the Economics and Government Departments until it moved to its new building last year.

It seems Kennedy School planners made space for a library in its new building but forgot to figure out what to do with the books it already owned. Sorting and moving the books from Littauer to the new building, it turned out, would cost more than the school wanted to spend, and the books in Littauer weren't ideal for the K-School, anyway. But, of course, the K-School couldn't just leave its books as a windfall for the Ec and Gov Departments; the fabled "every tub on its own bottom" dictum that segregates budgets across the University saw to that. Thus, the $250,000, which got folded into the Faculty budget this year under the nebulous "all other expenses" category.

"It's not a waste of money in any sense, but it is a disorderly way of budgeting it," says Robert E. Kaufmann '62, associate dean of the Faculty for finance and administration, who oversees budget-making every year. There's more guesswork in the preparation of the Faculty budget than you might expect if you judged from the neat tables and rows of figures that emerge at year's end.

Every year at about this time Faculty officials, armed with last year's income and spending figures, as well as information on the first quarter of this year, begin to estimate how much money each department and office in the College and the Graduate School of Arts and Sciences will need for the following year. The 1979-80 budget, in other words, began to take form a year ago, and right now 1980-81 is already on budget-makers' minds.

The need for an early decision on tuition charges demands this fiscal prescience. Most businesses budget on a "rolling quarterly basis," changing estimates and adjusting prices as they monitor the flow of cash. A university can't change the price of its product in the middle of the year, and so Faculty budget-makers are locked into an annual budget. They have to make crucial financial decisions based on fuzzy guesses about the inflation rate a year and a half from now. "I sit here in September with a budget of $50 million and I have very little control over that budget--all I can do is monitor and manage crises," Kaufmann says.

ATTEMPTS AT PREDICTING the future aren't the only imprecision in the budget, however. Every budget table has items in it that don't seem to mean very much--things like "miscellaneous income" and "all other expenses." Officials can break such categories down to their individual elements, but they can't carefully predict how these grab-bags will change each year--their miscellaneity precludes any overall guesses. More often than not, officials simply plug in figures based on instinct and past experience and watch with anxious eyes during the next year to see how accurate they were.

This year, these miscellaneous groupings-- and other budget categories, which exist more concretely in budgetary tables than anywhere else--made possible a $223,000 surplus in the Faculty budget. That money looks insignificant next to the gargantuan $50 million overall Faculty budget, and you shouldn't expect it to help moderate next year's tuition increase. The $223,000 will disappear into the Faculty's Fund for Instruction, a $4 million account which has absorbed past surpluses and from which the Faculty covers any deficit it runs.

More significant than the size of the surplus is the simple fact that Rosovsky and his University Hall accounting team have balanced the budget again. From 1968 to 1977 the Faculty found its budget over-extended across new programs and expanded services begun in the prosperous '60s, and it ran a deficit in most of those years. The 1976-77 budget was the first to show a surplus in almost a decade.

Rosovsky has managed to return the Faculty to solvency through straightforward conservative management, not slashing any major programs but narrowing the flow of funds at miscellaneous points. In 1976 he saved $60,000 by reducing the number of office phones. More recently, cutbacks in the hours of William James Hall saved about $125,000. This year, Faculty members who take out interest-free educational loans for their children will file forms to allow the Faculty to recover that interest from the federal government--a change that will mean about $100,000 more for the Faculty within about four years.

Kaufmann says the savings that have balanced the budget occurred in "marginal" areas, and potential savings were always weighed against the inconveniences to students and professors. A plan to end hot breakfasts in all but a few Houses last year, for example, created such an uproar it was withdrawn. "I don't think students are as interested in the marginal $20 or $50 savings on an $8000 bill as they are in the quality of life," Kaufmann says. So officials have so far avoided introducing money-saving measures like requiring pre-registration for courses or abolishing second servings at meals.

These marginal economies, though unquestionably significant in balancing the Faculty's budget, are not the only money-saving measures introduced in the past few years. Rosovsky has insisted that no department has suffered a reduction in size, but for several years before 1977 the rate of hiring new senior professors slowed down--no appointments got the axe, but some were delayed. Recent budgets have also skimped on some building maintenance.

One administrative improvement that has helped in the fight to eliminate deficits was a change in the way departments request new personnel. Five years ago, each department head would tramp into Rosovsky's office with strong arguments for small increases in staffing, arguments that were hard to refute or refuse. There was no way to pit them against each other or to put the proverbial big picture together. Under the revised system, each year at this time the department heads meet with Kaufmann and other financial officials, and plead their cases. Kaufmann says this set-up means that Rosovsky will be able to calculate how much extra tuition departmental requests would require, and thus choose how to increase or cut personnel allocations more informedly.

IN THE SHORT RANGE, the Faculty has "crawled out of a financial hole," as Kaufmann puts it. But inflation, as always, darkens the horizon, and the future looks worse, not better. "We assumed that if we worked hard to save money for four or five years we could begin to recover with the help of the national economy," Kaufmann says. "But here we sit looking at a 13 per cent inflation rate." He compares his position to a doctor who keeps running tests on a sick patient to discover what's wrong, and each new test fails to work, until he begins to run out of tests altogether.

The only test left for the Faculty--and one that officials have looked to with ever greater hope--is the five-year, $250 million capital campaign, set to "kick-off" in October. Most of the money from the campaign will go directly into the Faculty's endowment. But Kaufmann cautions, "people can't look at the capital campaign as a panacea. In fact, if inflation keeps up we may find ourselves in 1985 in the same constricted circumstances we were in in 1975."

That's a grimmer prediction than most people at Harvard want to hear, but the rough figures bear it out. If the Faculty leaves the campaign with $150 million earned, and makes five per cent interest on that money, it will earn about $7.5 million annually from the new money. But five years from now, by the campaign's end, the Faculty budget will most likely have reached a whopping $100 million. If inflation remains 13 per cent, the extra $7.5 million will have cushioned the Faculty surprisingly little. In fact, the years of administrative planning and fund-raising work will have equalled only about seven months worth of inflation.

Of course, the fickle economic cycle may turn again, reducing inflation and allowing the capital campaign to leave a more solid achievement. And, on the other hand, if inflation holds steady at 13 per cent for the next five years, worse problems across the nation may overshadow the plight of the Harvard Faculty of Arts and Sciences. But the College has weathered many gales over three and a half centuries, and no matter what happens in the world outside, its leaders intend it to survive and maintain its standards. Only right now, they're not sure how.