Harvard University announced on Tuesday that it would freeze salaries, forgo new hires, cancel discretionary spending, delay some capital projects, and cut pay for its top administrators as it wrestles with the financial effects of COVID-19.
“Harvard, like other universities around the world, will not be spared the economic consequences of the pandemic,” Harvard’s top leaders said in a letter to the university community.
“Our major sources of revenue—tuition, the endowment, executive and continuing education, philanthropy, and research support—are threatened, and we expect to see increased demand for financial aid as the economic fallout from the pandemic hits family budgets,” the letter added.
Harvard President Lawrence Bacow said he would take a 25 percent cut to his salary, as will Executive Vice President Katherine Lapp and Provost Alan Garber. Other top administrators will also reduce their salaries or donate to a fund to support fellow university employees facing economic hardship due to the virus, the letter said.
Officials said they are also considering layoffs or furloughs, but have made no firm decisions.
“We are still working to gain a more complete picture of the financial conditions of the University," the letter said. It added that it is going over budgets "to determine what other steps are necessary to respond to the financial impact of the pandemic on our operations.”
The administrators wrote that they intend to use money from the university’s endowment ― the largest in the academic world ― but that there are many restrictions about endowment funds are used.
“We cannot legally take a restricted fund and simply repurpose it for another use to make up for shortfalls elsewhere in our budget,” they wrote.
Recent declines in the stock market have also caused the endowment to shrink.
“As it shrinks, it has less capacity to support our existing operations, especially as other shortfalls in revenue sources loom,” the letter said.
In September of 2019, Harvard’s endowment was $40.9 billion.
Administrators asked for patience and flexibility from community members as they work to plan their next steps.
“We recognize the strain and the disruption that COVID-19 has caused for every member of our community,” they wrote. “This institution has been tested in ways none of us could have anticipated, and challenges will continue to confront us in the days ahead. But we are confident that, together as a community, we will adapt to meet these new challenges as they arise.”