Harvard University's Faculty of Arts and Sciences (FAS) is projecting a structural deficit of around USD 350 million, necessitating considerable modifications to its long-term budget.
The loss, reported by FAS Dean Hopi E Hoekstra in an email to faculty and staff, accounts for around 20 per cent of the faculty's yearly operating budget, according to The Harvard Crimson.
In her statement, Hoekstra stated that the shortfall reflected rising operating costs, an increase in the federal endowment tax, and uncertainty about future United States of America (USA) federal support.
The dean also stated that the financial imbalance limits the FAS's ability to absorb shocks or make strategic investments in academic objectives, according to The Harvard Crimson.
FAS currently faces a persistent structural imbalance where operating expenses exceed revenue year after year. The division ended fiscal year 2025 with a USD 8 million deficit, but analysts say the USD 350 million figure reflects deeper longterm issues rather than a one-off shortfall.
Cost-control steps are already underway. Non-essential capital projects have been suspended, the admission of PhD students has been sharply reduced, a hiring freeze has been imposed, and the current year’s budget has been held flat.
The root causes cited include rising salaries, escalating maintenance and research support costs, the impact of the federal endowment tax on funds available for core activities and the possibility of reduced reimbursement rates for indirect research costs from federal agencies.
A special Faculty Resources Committee, previously activated during the 2008 financial crisis, produced the USD 350 million estimate.
Meanwhile, a Task Force on Workforce Planning is designing a streamlined administrative and staffing model, with work slated to continue through spring.
