Update on University Finances and Planning
Dear Members of the Harvard Community,
With the help of extensive planning, along with the determination and unceasing efforts of the Harvard community, the first weeks of the fall semester have gone well. Let us begin with thanks to all of you who have helped us clear hurdles that seemed insurmountable earlier in the year.
We have been able to adapt rapidly to changing circumstances, aided by consistently strong fiscal management across the University’s Schools and Units. As Vice President for Finance and Chief Financial Officer Tom Hollister discussed with the Gazette last week, we have continued to be guided by three principles: ensuring the safety of our community, delivering on our mission of teaching and research, and supporting our people. Since March, we have taken intentional steps on each of those fronts and directed our financial resources accordingly. We have invested heavily in remote learning and work capacities; put in place robust COVID screening, safety, and monitoring procedures; and continued to adapt our human resources policies to support the evolving needs of our students, faculty, staff, and other academic personnel. We write now with updates and a look toward the future.
Update on University Finances
The Harvard Management Company (HMC) today released the annual earnings report for the endowment. Following several months of uncertainty about endowment performance, a reflection of ongoing market volatility, HMC reported today that the endowment was up 7.3 percent from a year earlier. This good news is particularly welcome at a time when the University projects revenue losses and budget shortfalls due to the cancellation of many activities, as well as additional outlays related to management of the pandemic. Our ability to absorb those revenue losses and unanticipated costs is greatly strengthened by the substantial steps Harvard has taken since the financial crisis of 2008 to prepare for such contingencies.
In order to further address continued financial challenges and shortfalls, we are making an additional $20 million from central funds available to the Schools. We are able to do so in part due to the unexpectedly strong performance of the endowment this year. We hope these funds will help each School take measures to protect the health of our community, including testing, contact tracing, and facility modification, as it responds to the unique challenges that it faces as a consequence of the pandemic.
We know that Harvard, like all colleges and universities, will continue to face uncertainty as this global public health crisis persists. Next month, the University will release its Annual Financial Report, which will offer a more comprehensive look at our final numbers for FY20. We can report, however, that revenues for last year were down substantially from FY19—just the second decline of Harvard’s revenues since World War II, the first being during the Great Recession of 2008-09. Harvard is well-resourced, but that does not mean we can sustain long-term deficit spending. We will need to make tough decisions in the future if we hope to sustain and advance priorities related to our core academic mission.
The unpredictable path of the pandemic will require flexibility on the part of the University and each of the Schools in the months ahead. Across Harvard, planning for the spring semester is well under way. As with announcements earlier this year regarding the fall, each School will make determinations based on its own considerations, and will share plans with students, faculty, staff, and other academic personnel as decisions are finalized.
Most University staff will continue to work remotely through the end of the calendar year. As plans for the spring semester are finalized, we will continue to share updates on work status, as well as any potential workforce actions we may need to take. In the meantime, we will continue to assess and update our human resources policies, including the recently announced Dependent Well Care benefit, which offers up to 10 days of paid time off through December to care for well dependents whose schooling or care arrangements may have been disrupted by COVID-19.
Several voluntary workforce programs were announced in June in conjunction with our efforts to manage the financial impacts of the pandemic. Nearly 700 eligible staff members have chosen to contribute to Harvard’s financial sustainability through the 2020 Voluntary Early Retirement Incentive Program. We are deeply grateful for their many efforts to support and advance our mission through their work across our Schools and Units.
Each of us has been affected by the pandemic in different ways, but we have all worked together to keep our community safe and healthy while contending with complex and often wrenching decisions. In the face of uncertainty, we have treated one another with kindness and patience, and we have pulled together to move Harvard forward. Your hard work and continued commitment will see this institution through to better days ahead. We are grateful for your service and your support.
Alan M. Garber
Executive Vice President