More than 120 Harvard faculty signed a letter sent to University President Lawrence S. Bacow Thursday questioning the Harvard Corporation’s decision to cut this year’s endowment payout.
The Corporation — the University’s highest governing body — announced plans June 3 to reduce the endowment payout by 2 percent for Fiscal Year 2021 and draw a special assessment of restricted assets. The move came as Harvard projects a $750 million revenue shortfall from the coronavirus pandemic.
The faculty wrote that they were “told little” about the Corporation’s decision, which will result in the Faculty of Arts and Sciences receiving about $48 million less than it expected from its endowment distribution.
“This action is hard to understand,” the faculty wrote. “If there was ever a time in Harvard’s nearly 400 year history for emergency relief from the Corporation, this unprecedented global crisis would seem to be one.”
The faculty asked Bacow to provide “convincing reasons why this action is thought advisable at all now” — and a guarantee that the burden it poses would be shared equally during a time of record unemployment.
“We should be given some continuing assurance, backed up by evidence, that the hardships to come will be shared equitably across Harvard, and that the most vulnerable and least costly people at Harvard are not being sacrificed first and disproportionately,” their letter reads.
FAS Dean Claudine Gay wrote in a June 3 email that FAS would furlough some “fully or partially idled workers” due to the financial challenges of the pandemic. Executive Vice President Katherine N. Lapp announced Tuesday, however, that Harvard will not pursue layoffs or furloughs “at this time.”
University spokesperson Jason A. Newton declined to comment Friday beyond confirming that Bacow had received the letter.
Philosophy professors Richard Moran and Susanna C. Siegel wrote the faculty letter, which had garnered 129 signatures as of Saturday afternoon.
According to Moran, neither he nor Siegel are experts in Harvard’s finances, but they are asking for “greater transparency” and assurances for employees at risk of losing their jobs.
“No one is assuming that even a 40 billion dollar endowment is simply a pot of money that can make our problems go away,” Moran wrote in an email. “We are asking for greater transparency about this particular decision to reduce payout to the FAS in what is already an emergency situation, and we want there to be transparency throughout the difficult years to come.”
The faculty also sent the letter to Gay and Arts and Humanities Dean Robin E. Kelsey, according to Moran. They noted in the letter, however, that the “upper administration of FAS have had this decision simply imposed on them.”
“It is now up to them and the rest of us to work out how to respond to it,” they wrote.
In a standard year, the University draws around 5 percent of its endowment funds to cover roughly a third of its operating expenses.
Vice President for Finance and Chief Financial Officer Thomas J. Hollister told the Harvard Gazette, a University-run publication, that despite the reduction, the payout is likely to be the “largest in many years,” depending on how the stock market behaves, as a percentage of the endowment’s market value.
The Corporation’s decision comes in the wake of what administrators have called a “substantial” decline in the value of the endowment, previously valued at $40.9 billion.
In the next fiscal year, FAS’s net funding from the endowment — which constitutes nearly half the FAS’s budget — will be down by 6 percent, per Gay’s early June email.
Gay wrote that the restricted funds special assessment is welcome, “but not scaled to the challenge we face in responding to the pandemic.” FAS will use the roughly $23 million it receives from the special assessment to finance “some essential elements” of its pandemic response — including masks and personal protective equipment and emergency funds for graduate students.
The faculty wrote that transparency will be essential to Harvard’s ongoing response to the financial challenges posed by the pandemic.
“Without such answerability from the Corporation and the Administration, throughout this
period of austerity, calls for all of us to pull together in a time of crisis will ring hollow,” the faculty wrote. “If our response to the crisis is to truly be a collective effort, such justifications and assurances seem the minimum that is owed to us all.”
Correction: June 17, 2020
A previous version of this article incorrectly stated that given the 2 percent reduction, Harvard's endowment payout is likely to total roughly 3 percent for FY21. In fact, the two percent reduction is to the dollar value of the payout, not the total percentage.
—Staff writer James S. Bikales can be reached at firstname.lastname@example.org. Follow him on Twitter @jamepdx.