Tuesday, April 14, 2020
Harvard Announces Salary And Hiring Freezes, Discretionary Spending Reductions, Potential Deferral Of Capital Projects, And Leadership Salary Cuts
Harvard Crimson, Harvard Announces Salary and Hiring Freezes, Discretionary Spending Reductions, Potential Deferral of Capital Projects, and Leadership Salary Cuts:
Facing dire economic straits brought on by the global COVID-19 pandemic, Harvard is instituting an immediate University-wide salary and hiring freeze, cancelling or deferring discretionary spending, and considering deferring all capital projects, University President Lawrence S. Bacow, Executive Vice President Katherine N. Lapp, and University Provost Alan M. Garber ’76 announced in a Monday email to Harvard affiliates.
Bacow, Lapp, and Garber will each cut their salaries by 25 percent, per the email. Senior school administrators, including the deans of Harvard’s 12 schools, their vice presidents, and their vice provosts, will also either reduce their salaries or contribute to a support fund for employees experiencing hardship.
In the email, Bacow, Lapp, and Garber also addressed the possibility of layoffs or furloughs. The wrote that Harvard is still working to “gain a more complete picture” before deciding whether to take such action.
“We will be scrutinizing the FY21 budget to determine what other steps are necessary to respond to the financial impact of the pandemic on our operations. We will communicate with you when more information is available,” they wrote.
For complete TaxProf Blog coverage of the coronavirus, see here.
https://taxprof.typepad.com/taxprof_blog/2020/04/harvard-announces-salary-and-hiring-freezes-discretionary-spending-reductions-potential-deferral-of-.html
Comments
So, are the students up in arms? Are they going to cut classes to demonstrate and then say they should get credit? Oh, online doesn't enable that?
Posted by: Jim | Apr 23, 2020 6:09:08 AM
Dig into the endowment? No! Harvard is a hedge fund with a school attached.
Posted by: Jim | Apr 23, 2020 6:05:05 AM
Looks like Harvard got a bit of the stimulus, about $10 million, pretty small drop in their bucket. They can clearly absorb a few months disruption with their endowment. And they don't need taxpayer money, either.
Posted by: MM | Apr 20, 2020 7:04:59 PM
Harvard's lack of Pell grant-eligible students hurts it in terms of receiving federal CARES Act aid. Harvard's share is only $$8,655,748, of which 50 percent, of $4,327,874, must be spent on "emergency student aid."
Posted by: Michael L. Wyland | Apr 20, 2020 6:47:46 AM
"However, there is a common misconception that endowments, including Harvard’s, can be accessed like bank accounts, used for anything at any time as long as funds are available. In reality, Harvard’s flexibility in spending from the endowment is limited by the fact that it must be maintained in perpetuity and that it is largely restricted.... In addition, many donors also designate a specific purpose for which their fund can be spent. For Harvard, roughly 80 percent of endowed funds are subject to these restrictions." https://www.harvard.edu/about-harvard/harvard-glance/endowment, which is available at your own link, ironically.
Right back at you, MM. It's cute to see you think that the endowment returns is just totally unencumbered and not already accounted and spoken for in their budget planning. Maybe root around in their 990 and educated yourself.
Posted by: Unemployed Northeastern | Apr 18, 2020 12:50:05 PM
Unemployed: "Harvard's 'accessible' endowment is about $8 billion."
https://finance.harvard.edu/financial-overview
The endowment distributed $1.9 billion last year vs. total expenses of $5.3 billion. I'm sure Harvard can weather this self-imposed financial storm through the summer, even without cost-cutting, which, by the way, every business in America is doing right now.
I give you credit, though, you continue to live up to your reputation as a financially-illiterate troll around here...
Posted by: MM | Apr 17, 2020 7:16:00 PM
Sigh.
I have little love for Harvard or the types of people it tends to create, but Harvard does not have a bank account with $40 billion sitting in it. 80% of Harvard's endowment is restricted, meaning the university, by law, can only use that money for the purposes laid out by the donor(s) of that money. Harvard's "accessible" endowment is about $8 billion, and that's before we get into issues like "A lot of this endowment is tied up in illiquid investments, or financial instruments hemorrhaging value, or is already earmarked to pay for X, Y, Z institutional expense."
I mean, does anyone look at Macy's current existential financial woes and say "But they made $25 billion last year why don't they just use that money to stay afloat?"
Posted by: Unemployed Northeastern | Apr 17, 2020 10:10:31 AM
Quote: "Facing dire economic straits brought on by the global COVID-19 pandemic, Harvard is..."
Harvard's administration seems rather 'math-challenged.' Somewhere in their $40 billion dollars of endowments there should be enough money to keep their university going for a few months.
Posted by: Mike Perry | Apr 15, 2020 6:07:49 AM
This makes zero sense. The only financial exigency at Harvard would be from the self-inflicted wound of shuttering residence halls when the academy went to online education and the hit the endowment will take based on the stock market. I suspect that tuition dollars and donor funds will still roll in at sufficient levels to keep the lights on.
Posted by: Anon | Apr 14, 2020 1:38:13 PM
Unemployed, Uneducated: "Right back at you."
I'd accept if you bothered to even provide anything to respond to. As it stands, nothing you've said or quoted in any way contradicted the information I cited from Harvard itself. Last year, they distributed almost 40% of their TOTAL EXPENSES from their endowment.
You lack of understanding of basic finance, coupled with your unqualified comments about the education of others, merely confirm your status here as leftist troll with nothing valuable to offer.
Thanks!
Posted by: MM | Apr 26, 2020 3:23:06 PM