Budget Cutting for Dummies

At his town hall meeting last week, Dean of the Faculty of Arts and Sciences Michael D. Smith said that he had identified some reductions in discretionary spending but that these only accounted for about a third of the unprecedented $220 million deficit. Though the faculty is edging toward layoffs and has already mothballed construction projects, it is unlikely that these will be enough to plug the deficit. Instead of obfuscating and offering platitudes, university administrators ought to get serious about fiscal reform. To that end, Harvard’s leaders must lead by example and call for more shared sacrifices from faculty and students.

For starters, Harvard’s top brass should reduce their own salaries. This goes for the president, the provost, the deans of the faculty and College, and all of their top managers. During his last year as president, Lawrence H. Summers earned just under $600,000. In general, deans make good money too: according to her federal disclosure forms, former Harvard Law School Dean Elena Kagan earned $437,000 last year. Pay cuts of $50,000 to $100,000 for each senior manager would show that they too are feeling the pain of the downturn and could save well over a million dollars if implemented broadly.

Second, Harvard should ask its faculty to take temporary pay reductions—perhaps through furlough days—to bring their salaries in line with those of our peer institutions. This academic year, Harvard paid its full professors an average of $192,600, according to the American Association of University Professors. By contrast, Stanford paid its professors $181,900, Princeton paid $180,300, and Yale paid $174,700. Asking our professors to accept the same salaries as their counterparts at Stanford seems fair, especially considering that, just two years ago, the average salary at Harvard was $177,400. The faculty has about 450 full professors, and paying at Stanford levels would save about $10,000 per head, a total savings of about $4.5 million.

As Harvard asks its faculty to pitch in, it should call for similar sacrifice from students and parents who can afford to pay a bit more. While pulling back on financial aid—just as Smith’s predecessor, the late Jeremy R. Knowles, did during an earlier fiscal crisis—would generate bad press, doing so is necessary and, ultimately, fair. Such a reduction should be confined to the newest aid initiative—the one that benefits those families earning up to $180,000—and not the previous programs for those earning less than $60,000.

Under the current 10-percent plan, families earning $180,000 pay just $18,000 per year. For the next few years, we can justifiably ask these upper-income families to kick in a bit more—say, $22,000 or 12 percent. Scaling back half of the newest initiative, which was projected to cost $22 million but will likely cost significantly more, would leave our financial aid program between where it was at the end of the Summers presidency (very good) and where it is now (extraordinarily generous).

Finally, Harvard should cut its wasteful internal public relations division. The Harvard Gazette and the other fluff put out by the Harvard Office of Communications, like The Yard, ought to be axed on both financial and environmental grounds. The publications and their staffs cost a few million dollars each year. Externally, they do nothing to strengthen Harvard’s brand. Internally, they are rightfully regarded as propaganda.

Harvard’s leaders are right in focusing our limited resources on our core missions: research and teaching. Staff layoffs, construction slowdowns, and faculty recruitment freezes will be necessary. But the magnitude of the endowment decline makes it unlikely that the budget can be balanced without more shared sacrifice.

Given the political realities of the university, it may be tempting to just either float debt or ask for more money from the endowment. But kicking this ball down the road, either by mortgaging the university or drawing down its savings, simply leaves the problem for our successors to clean up. All of us—administrators, faculty, and students—will simply have to make do without some of what we’re used to.

Paras D. Bhayani ’09, a former Crimson managing editor, is an economics concentrator in Pforzheimer House.