Arts and Sciences Deficit Decreases

The Faculty of Arts and Sciences' (FAS) budget deficit, as a percentage of non-endowment expense, continued its four-year pattern of decrease this past fiscal year, reaching its lowest level in at least seven years.

During fiscal year 1993, the FAS deficit represented 2.1 percent of non-endowment expense, compared with 4.2 percent the previous year, according to figures released to the Faculty Council yesterday by Associate Dean of the FAS for Finance Candace Corvey.

This means that the FAS deficit fell from roughly $7.5 million for 1992 to less than $4 million for fiscal 1993.

Secretary of the Faculty Council John B. Fox Jr. '59 attributed the reduction to a 70-person cut in FAS administration since 1990, constrained operating budgets for departments, a refinancing of Harvard debt at lower interest rates and maintaining a constant proportion of self-help in student financial aid packages.

"A lot of cutting has been done to costs," said Professor of Chinese History Peter K. Bol. "Things are looking better than they have."

But the Council yesterday also discussed future budgetary problems facing the FAS, including potential cuts in government funding for research overhead expenses.

In November, Harvard and the federal government will renegotiate the present rate of the approximately 31 additional percent of all research funding set aside for overhead costs.

The overhead issue erupted in the late 1980's when federal investigators determined that Stanford spent government funds earmarked for overhead costs inappropriately. Since

The deficit as a percentage of unrestricted expense: 1987  2.5% 1988  2.6 1989  2.2 1990  7.5 1991  6.3 1992  4.2 1993  2.1

Source: John B. Fox, Faculty of Arts and Sciences then, the government has looked to cut theoverhead percentage to major researchuniversities.

"I think the pressure from the government is tolower the overhead," said Professor of PhysicsDaniel Fisher, a council member. "It is asubstantial amount of money," so small percentagereductions can be large dollar cuts, he said.

Another possible financial difficulty is theconstantly rising cost of fringe benefits,especially health care, the council was told.Harvard is not putting aside as much money as itspends on these benefits, Fox said.

"Health care is a tremendous worry," Bol said."What it means for Harvard and the student body,nobody knows."

A third financial concern is the upcoming $2billion capital campaign, Fox said. After thecampaign's construction and personnel goals,Harvard will still rely on $50 million in annualdonations for its operating expenses.

Finally, Fox said, the Faculty is engaged inthe expensive process of creating an advancedelectronic communications network. $2 million hasalready been spent on a computer network and costsare still adding up, he said

"I think the pressure from the government is tolower the overhead," said Professor of PhysicsDaniel Fisher, a council member. "It is asubstantial amount of money," so small percentagereductions can be large dollar cuts, he said.

Another possible financial difficulty is theconstantly rising cost of fringe benefits,especially health care, the council was told.Harvard is not putting aside as much money as itspends on these benefits, Fox said.

"Health care is a tremendous worry," Bol said."What it means for Harvard and the student body,nobody knows."

A third financial concern is the upcoming $2billion capital campaign, Fox said. After thecampaign's construction and personnel goals,Harvard will still rely on $50 million in annualdonations for its operating expenses.

Finally, Fox said, the Faculty is engaged inthe expensive process of creating an advancedelectronic communications network. $2 million hasalready been spent on a computer network and costsare still adding up, he said