As Harvard wraps up fiscal year 2005 at the end of this month, many of the same financial hurdles it has faced in recent years—such as compensation and federal funding levels for research—still figure prominently into the University’s concerns.

Even so, the year has been a “solid, stable” one for the University’s finances, Vice President for Finance Ann E. Berman told The Crimson in a March interview.

And in an e-mail late last month, Berman wrote that she wasn’t aware of any significant problems for fiscal year 2005.

In 2004, the University’s revenues and expenses both rose about 5 percent to $2.6 billion, producing an operating surplus of $37 million.

But this year, the University is still concerned about federal sponsorship levels for research, and Berman said the funding for many agencies is increasing slower than the rate of inflation.

The Faculty of Arts and Sciences (FAS) too is grappling with its own financial concerns, tightening its own belt even as it pursues costly priorities, such as expanding the faculty and instituting curricular changes.

While Harvard’s federal funding increased in fiscal 2004, most funding cycles run over several years—meaning that the negative effects of slow funding growth will not be visible until current grants are replaced with new ones.

“We suspect that we just haven’t seen the impact of that yet,” she said. “We continue to be very worried.”

Space and occupancy costs are “probably up,” Berman said in March, attributing the increase to a “tough winter” that drove up energy expenses. Other costs increase with square footage as Harvard’s physical plant grows.

Compensation costs have also been on Harvard’s radar, but while salary and wage costs have increased—exceeding $1 billion in 2004 for the first time—Berman said that benefits are the University’s chief concern.

“Harvard is no different from any other business in the United States; health costs are going up,” Berman said in March. “And none of us have great solutions to the problem.”

Construction expenditures will factor into Harvard’s finances for fiscal year 2005 as well. Construction and planning for two new science buildings for FAS and planning for major construction work at Harvard Law School will also figure into Harvard’s capital costs.

FOCUSING ON THE COLLEGE

In Dean of the Faculty William C. Kirby’s annual letter in February, he wrote that as FAS concentrates on investing in financial aid, curricular changes, salaries, and expanding its ranks, it will also try to rein in spending with careful monitoring of general expenses, maintaining its years-long “soft freeze” on staff hiring and conserving energy.

A portion of the University’s income is supplied by student tuition. At the College, annual tuition and fees will increase 4.5 percent next year, exceeding $40,000 for the first time in its history. The overall cost of $41,567 will be offset by a 5.8 percent rise in total scholarship dollars.