FAS Budget Hits $168M; Faculty Pay Hiked by 6%

The Faculty of Arts and Sciences will spend $168 million in 1986-87, a 7.3 percent increase over last year's budget and a 3 percent hike above the expected inflation rate, University administrators said yesterday.

The Faculty funded an extra $1 million of graduate student aid and compensated for next year's 6.9 percent hike in undergraduate fees by raising student aid by 13 percent to $26.4 million, said Candace R. Corvey, associate dean for finance for the FAS.

The budget office, anticipating a 4 percent inflation rate, raised faculty salaries for both tenured and junior professors by 6.3 percent, said Corvey. Personnel paychecks comprise the biggest chunk of next year's budget, amounting to a total of $67.1 million.

Because faculty salaries declined by 20 percent in the 1970s as inflation nibbled away at real purchasing power,Financial Vice President Thomas O'Brien said he isconcerned that students will not be attracted tothe academic arena without higher compensation.

Although salaries may not increase as much inthe 1988 budget, a drop in inflation could stillmake for real growth in salaries, said Robert A.Rotner, director of the budget.

The recent $360 million five-year Campaign hashelped the budget office beef up faculty salaries,said Corvey. But the debt burden of the Campaignstill haunts the Faculty, with over $2 million indebt service to be payed next year. The total costfor fund drives, including the debt, will amountto $4.7 million.

Last year the cost of fundraising rose by 35percent as the development office revamped itsfundraising tactics in the wake of the Campaign.But now the FAS will only increase the amount ofmoney spent on raising money by the inflationrate, said Corvey. "The upfront investment createspressure on the budget, but more successfulfundraising will mean less pressure on tuition,"said Corvey.

The athletic department, library system,equipment, travel, and other miscellaneous costswill eat away another $43.7 million chunk of nextyear's budget.

A combination of fundraising, tuition, andincome from the endowment bankrolls the budget.The FAS endowment, invested by Harvard ManagementCompany along with the graduate school endowments,has skyrocketed over the last year past $1.4billion. But in the past decade, tuition andfundraising have had to provide for a greaterportion of the budget compared to profit from theendowment. The percentage that the endowment paysfor dropped to a low of 26 percent for next yearwhile tuition finances more than half of thebudget.

Although the FAS budgeted almost $10 millionmore than last year, University financiers "cutover $2 million" from the Faculty's coffers, saidRotner. A deficit in unrestricted funds, moneythat can be spent right away, led the budgetoffice to trim down requests for funding, saidCorvey.

"We are concerned about the unrestricted [fund]deficit," said Corvey. "We need to be conservativeand contain expense growth."

While more than two-thirds of the budget isunrestricted, $51.6 million is limited bydonations that trickle in over time or donorstipulations on how the money is to be spent, saidCorvey. This amount runs a $4.9 million surplus,compared to the unrestricted fund's $600,000deficit.

The $6 million pricetag for the debts onrenovation is also a thorn in the side of thebudget choppers. "The growing investment infacilities and renovations is a growing burden."The total facilities budget, which includes debtservice and building maintenance, climbed by 8.6percent to $18 million for next year.

"We have got to develop a long range financialplan that has a workable strategy to get us out ofdeficit," said Corvey. Corvey, who just completedher first budget in her new job, plans to set afive year budgetary goals that she said would"help us see and project and plan more than oneyear ahead of time.