Managing the Economic Impact of Covid-19

May 5, 2020

Dear Members of the Harvard Community,

As we continue to manage the impacts of this public health crisis, I write once again to thank you for your commitment and work over these last several weeks. Your collective action, guided by the goal to ensure the safety and wellbeing of each member of our community, is both unprecedented and remarkable. Your demonstrated adaptability to our changing environment, coupled with a steadfast focus on ensuring our students are able to complete their academic work, is nothing short of inspiring.

This crisis has disrupted every aspect of the University’s operations, as well as the lives and work of every member of our community. And, we are uncertain as to what the next several weeks and months will bring. As Provost Garber wrote last week, the University will be open for the upcoming Fall semester; however, due to the COVID-19 situation, we cannot be certain that it will be safe to resume normal activities on campus at that time.

Given this unpredictability, we previously announced a financial commitment that we would guarantee pay and benefits through May 28th to our directly employed staff and contract workers, including those who provide dining, custodial, and security services, who are able to work, but experienced the disruption of idle work since the decision to reduce the population living on campus. Today, I want to share that we have decided to extend that guarantee of pay and benefits to those workers covered under this May 28th policy for an additional month, until June 28th.

As we look forward to the late summer and fall, I am compelled to underscore that the University is facing significant financial challenges which will require difficult decisions in the coming months. In our April 13th letter to the community, President Bacow, Provost Garber, and I stated that our institution has not been spared the economic consequences of this pandemic. We now estimate the University’s revenue for this fiscal year to be $415 million less due to the COVID-19 crisis. This figure includes, among other things, refunding room and board for the last half of the semester and providing moving, travel, and other financial assistance to students who were required to depart campus. It also includes the necessary step of cancelling in-person Continuing and Executive Education courses and programs, and the loss of funding from federal and non-federal sources due to the closure of labs. Additionally, for fiscal year 2021, which begins July 1, we are now projecting a revenue shortfall of $750 million compared to the original budget plans for the year.

These significant losses will require difficult cost saving measures to ensure that the University can continue to advance its core mission of teaching and research. Last month, we announced several initial steps that are already being implemented. These include salary freezes for all faculty and exempt staff, a University-wide hiring freeze, deferring or cancelling all discretionary spending, a review of all capital projects to determine which ones can be deferred, and voluntary salary reductions for senior leadership. As we stated last month, given the magnitude of the financial losses the University has sustained and the projected loss of revenues, it is clear that additional cost saving measures will be needed in the coming months including the possibility of furloughs and layoffs of some members of our workforce.

Decisions regarding furloughs, layoffs, and other cost saving measures are not ones we would make lightly, and we recognize will only add to the uncertainty and difficulty this public health crisis is causing for every member of our community. While no decision has been made at this time, we will make every effort to limit the extent of any workforce actions. However, faced with the significant disruptions to normal activities, we have a responsibility to act to preserve our core mission of teaching and scholarship. We are trying to understand the extent to which some of our revenue loss is temporary versus permanent. While we have some capacity to absorb temporary losses, we must take the necessary steps in some areas to adjust to what is likely to be a new normal. We will continue to communicate with you as our future comes into sharper focus.

We recognize that Harvard is its people. We are grateful for the countless ways each of you contributes to the important work of this institution. In all we do, we will be guided by our goal to protect the wellbeing and security of our workforce as we manage through these unprecedented times.

Sincerely,

Katie Lapp
Executive Vice President, Harvard University