Harvard's endowment drops 22 percent

Harvard officials are “taking a hard look at hiring, staffing levels and compensation to consider ways to cut spending,” Harvard president Drew Faust and executive vice president Edward Forst said in a letter posted on Harvard’s website Tuesday.

The largest U.S. education fund, Harvard’s endowment pays for more than one-third of the university’s operating costs. In fiscal year 2008, Harvard’s endowment increased 8.6 percent, reaching $36.9 billion at the end of June and covering $1.6 billion of operating expenses.

Last week, Harvard’s Faculty of Arts and Sciences, which receives more than 50 percent of its funds from the endowment, announced a freeze on most staff hiring, according to bloomberg.com. In addition, Harvard may reduce “the scale and pace” of planned projects, such as the expansion of its Allston campus, according to the letter.

Harvard is also considering selling about $1.5 billion of limited-partnership holdings and leveraged-buyout funds, Bloomberg reported. In addition, it will convert short-term tax-exempt debt Uniinto bonds with longer maturities, Faust and Forst said, adding that the move is designed to protect the university against swings in credit markets and to increase the stability of funding.