Harvard College is exploring ways to limit spending in preparation for a future fiscal downturn more than ten years after the 2008 financial crisis hit the University, College Dean for Administration Sheila C. Thimba said in an April 30 interview.
“I think we're all concerned about a recession,” Thimba said. “And so we're all concerned about being very judicious about costs and thinking really carefully about cost growth even outside of a recession.”
Thimba said the College is looking into limiting the amount of student programming it puts on in order to reduce its overall spending.
“One of the things I'm always eager to hear from students are ideas about how we can program less,” she said. “There's ten things happening on any given night, and you can't figure out which one to go to, because you've got five that you really want to go to. So we're sort of cannibalizing ourselves in terms of your attention and interest. And that isn't costless, right? It costs staff time. It costs bagels and cookies, or whatever it is we're putting out.”
Thimba’s statements come months after University President Lawrence S. Bacow said he is examining the University’s finances more broadly in anticipation of an economic slowdown. At the time, he said he had asked each of Harvard’s schools to conduct “scenario planning” for how they would respond to a fiscal crisis.
Former University President Drew G. Faust began her tenure just as Harvard’s endowment plunged $11 billion in value during the 2008 recession.
In response, the University axed hot breakfast in the 12 upperclassmen Houses, delayed the start of its eventually record-breaking capital campaign, and froze faculty salaries and hiring. In 2016, the endowment shrank by almost $2 billion.
The College’s finances are particularly responsive to the national economy because thirty percent of the College’s $60 million budget comes from Harvard’s nearly $40 billion endowment. The College’s revenue is a subset of the Faculty of Arts and Sciences’, 51 percent of which was derived from the University’s endowment in fiscal year 2018.
Over the past three years Harvard’s endowment returned to and then surpassed its pre-crisis size, though endowment returns still lag behind those at other Ivy League schools. Harvard Management Company, which oversees the endowment, has continued to report lower percentage growth than every other Ivy League school.
Thimba said donations to the College also make up a substantial portion of its revenue, though they are inconsistent and require College administrators to continually seek out new gifts.
She also said the College often sees a flurry of donations after the appointment of new deans. Because Dean of the College Rakesh Khurana took the post nearly five years ago, administrators may need to seek out new revenue sources if some donations are not renewed.
“If that flush of donor support comes as gifts, those gifts last three to five years,” she said. “Rakesh has been dean for five years, so we're probably coming up on some gifts that were given in his first year that are now going to lapse. And we need to do some work to assess how to re-up those gifts or replace them with other gifts.”