Boston Blog

Harvard’s financial struggles

Things are not looking good over at Harvard. The endowment has taken an unprecedented hit and because the university depends so heavily on its endowment to pay for basic operations, administrators are still looking for more ways to cut costs. While Harvard is aiming to get its spending down to the levels of just four years ago, the university has expanded so much during that time, especially in the sciences, that cost cutting is turning out to be quite painful.

The latest casualty: faculty. According to this Boston Globe article, retiring professors and those being lured away by other universities likely won’t be replaced. The article quotes the chair of the physics department saying that five of his professors have been approached by other schools. Classes and seminars are also being cut and one library has been closed.

How did this happen? Forbes magazine came out a few months ago with this article detailing how Harvard’s endowment managers engaged in some risky practices to milk more money out of the school’s investments. It describes, for example, how Harvard’s chief money manager in the 1990s ran his operation almost like a hedge fund.

As banks and other corporations are reeling and (hopefully) adjusting the way they do business, it will be interesting to see if universities—many of which have seen their endowments plunge—will also re-examine how they finance future construction projects and program expansions.

For now, Harvard’s financial struggles are symbolized by the large construction site in Allston, where building has slowed recently. It was supposed to become a large science complex. For now, it’s a hole in the ground—and a question mark. This article from the Crimson, examining how the Allston expansion is faring in this financial mess, quotes the COO of Harvard’s Allston Development Group saying that it’s “extremely unlikely” that construction of the science complex will stop forever. But the article goes on to say that “he would not say for certain.”

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    Robert Pinsonneault said:

    Yikes. What are they going to do? Raise tuition? I wonder to what extent Harvard’s woes are due to over-hiring during the NIH boom years? Perhaps that is now combining with the current economic situation to form this unfortunate turn of events.

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    Corie Lok said:

    Update: Harvard is laying off 275 staff members—mostly clerical/administrative and technical positions, according to the Boston Globe.

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