Harvard's New Crimson: Deficit Red
In the Globe, Marcella Bombardieri breaks some big news today: Harvard College is hemorrhaging cash.
FAS sources tell her that the Faculty of Arts and Sciences is facing annual deficits ranging from $40 million this year to $80 million in 2009-2010. Which, given the lack of veritas in current Harvard accounting, probably means that they're underestimated by 25-50 percent.
What's the explanation for this state of affairs? "Sluggish fundraising, the construction of buildings, and the costs associated with improving undergraduate education."
That last is conspicuously vague—what expenditure could not be crammed under the label, "improving undergraduate education"? If you bought a Mercedes for a professor that helped him/her get to class faster, would that be improving undergraduate education? The only large new expenditure in that realm that comes to mind is the $50 million-plus "faculty diversity initiative"—i.e., the Larry Summers' gaffe fund.
FAS dean Bill "What Do I Care, I'm Out of Here Anyway" Kirby pooh-poohed the deficits
by saying that the school has the money to cover them (obviously true) and that "It's our job, with as formidable an endowment as we have, to show we are using it."
This is the kind of quote that makes one question Kirby's truth-telling; it's so clearly PRBS. (You can figure that out.) Because by that logic, FAS should just spend its endowment into the ground. After all, if you have such a, ahem, formidable endowment, you'd better show you're using it.
In truth, of course, a preferable situation would be to display evidence of money well-spent without going into debt. Even for FAS, $80 million a year isn't chump change, and you'd better believe that this is going to hit the faculty where it lives—salary, benefits, department budgets and so on.
It is an irony of course that the former Treasury secretary of an administration which prided itself on running a government surplus is now presiding over the largest annual deficits in Harvard College history.
And another question: When will that capital campaign begin?
For five years now, Larry Summers has had to spend relatively little time fundraising—a fraction of the time devoted to that pursuit by his predecessor, Neil Rudenstine, who was criticized for the amount of time he spent raising cash.
Is it finally time for Summers to start pressing the flesh in earnest? And what will be the results if he does?
