Harvard's Faculty of Arts and Sciences (FAS) is facing a significant financial challenge, with an estimated structural deficit of approximately $350 million. This substantial shortfall, equivalent to around 20% of the school's annual operating budget, has been attributed to the recent increase in the federal endowment tax and rising long-term operating costs. The deficit does not account for potential uncertainties in federal funding, including possible decreases in agency budgets, fluctuations in grant numbers, and reduced reimbursement rates for research costs. Dean Hopi E. Hoekstra emphasized the dire situation in an email to FAS faculty and staff, stating that the current imbalance severely limits the ability to absorb financial shocks or strategically invest in academic priorities. The scale of the problem necessitates decisive, long-term actions to ensure the FAS's continued health and vitality.
This announcement comes amidst an ongoing cost-cutting effort at the FAS. The school has already paused non-essential capital projects, significantly reduced Ph.D. admissions, halted staff hiring, and maintained a flat budget for the current year due to concerns about the Trump administration's policies affecting the school's finances. The $350 million estimate was derived by the Faculty Resources Committee, which previously advised the FAS during the 2008 financial crisis and was reconvened in the spring. The committee will present detailed findings during the FAS's monthly meeting, scheduled for Tuesday afternoon.
Hoekstra outlined a focus on building long-term sustainability, with the Task Force on Workforce Planning proposing a more efficient administrative model. While specific details on staffing overhauls remain unclear, the task force's recommendations may include staff reorganizations and reductions. The design phase of this administrative model will commence this winter and continue through the spring. Dean Hoekstra emphasized that this is a critical moment for the FAS to implement lasting structural changes that strengthen its foundation, rather than just short-term belt-tightening.
The FAS ended the 2025 fiscal year with an $8 million deficit, despite not having an annual deficit since 2020. Historically, the FAS has faced a structural deficit, where costs have been growing faster than revenues. In fiscal year 2023, the FAS had a budget surplus of $62 million, but this shrank to just $3 million a year later. Dean Hoekstra highlighted the importance of early resource realignment to facilitate deliberate, thoughtful changes that preserve the FAS's core academic mission, acknowledging that lasting change will take time.
