Updates on FAS Finances and Workforce Planning

Dear colleagues,

I write to share an update on the important work underway across the Faculty of Arts and Sciences (FAS) to build near-term financial capacity and ensure the long-term strength of our teaching and research mission.

Over the past few weeks, we’ve seen some positive development – most recently, Harvard has received payment for the vast majority of reinstated federally sponsored research awards. This is significant progress, and I’m deeply grateful to the many people, especially the Research Continuity Committee, whose steady work helped sustain our research enterprise through a time of extraordinary challenge.

The University also reported solid endowment returns for the past fiscal year. Yet even with those gains, the FAS continues to operate in deficit. In the FAS, our expenses have for many years outpaced our revenues, creating a substantial structural financial deficit. Simply put, it costs more to operate the FAS than we take in. While we ended FY25 with only a modest deficit of $8 million, the underlying gap between revenue and expenses continues to widen.

This is not a new problem. In 2021, a faculty committee – the FAS Study Group – identified the structural deficit as a fundamental risk to our long-term sustainability and urged immediate action. Unlike a short-term budget gap, a structural deficit reflects deeper, persistent imbalances between our costs (salaries, benefits, facilities, technology, maintenance) and our revenues. Temporary reduction in expenses during the pandemic and strong stock market returns provided short-term relief, but the underlying challenge remains.

Last spring, I reconstituted the Faculty Resources Committee and charged them with a full review of our budget to identify opportunities for durable, structural change. Their initial analysis projects a structural deficit of approximately $350 million – about 20% of our annual operating budget. The analysis reflects an increase from 1.4% to 8% in the federal tax on university endowments, which is particularly consequential for the FAS, where over half of our revenue comes from endowment income. Importantly, it does not account for the uncertainty of federal research funding, including potential declines in the number of new grants awarded, agency budgets, and lower indirect cost recovery. This imbalance leaves us with little ability to absorb financial shocks or invest strategically in our academic priorities.

Together, these realities underscore that this is a challenge we must now confront head-on. The scale of the problem requires decisive, long-term action to ensure the continued health and vitality of the FAS. While lasting change will take time, the earlier we begin to realign our resources with our academic mission, the more time we will have to make deliberate, thoughtful changes that preserve what matters most.

I am approaching this work with two connected goals: first, to reduce our structural deficit through lasting, mission-aligned change; and second, to create the financial flexibility we need to make new investments that sustain and strengthen our excellence in teaching and research.

We are not starting from scratch. Early actions last spring – pausing all non-essential capital projects, freezing staff and faculty hiring, and holding FY26 compensation flat for exempt staff and faculty – helped stabilize our position.

Now we are moving into the next phase of our work, focused on strategic redesign and long-term sustainability. A central effort is the Task Force on Workforce Planning, which I have appointed to reimagine our administrative structure. Their goal is to develop an administrative model that is more efficient and better aligned with the needs of our faculty and students.

Starting in early summer, the Task Force spent several months listening to our community and analyzing how our current administrative structure operates. Their findings showed that our existing model has become complex and difficult to navigate – marked by duplicative processes, decision-making ambiguity, and limited career growth opportunities for staff – creating frustrations and inefficiencies for both faculty and staff.

The Task Force has proposed an administrative model that keeps the benefits of local, dedicated support for faculty and students while adding stronger coordination, consistency, and oversight across the FAS, especially in functional roles such as finance. This design aims to create more efficient, effective administrative services for faculty and students, while also providing a simpler, more supportive environment for staff, with clearer career pathways. The design phase of this work will begin this winter and continue through the spring, with engagement from across our community.

This is not a moment for short-term belt-tightening, but for making lasting structural changes that strengthen the foundation of the FAS. Across the divisions, we will continue working closely with faculty and staff to set priorities and chart our path forward. While the work ahead will be challenging, with shared purpose and steady focus, we can emerge stronger, more resilient, and better positioned to serve our mission well into the future.

Thank you for your partnership and dedication to this vital work.

Sincerely,

Hopi

Hopi Hoekstra
Edgerley Family Dean of the Faculty of Arts and Sciences
C. Y. Chan Professor of Arts and Science
Xiaomeng Tong and Yu Chen Professor of Life Sciences