Harvard will slash budget by $220 million

Princeton’s endowment losses, also projected at 30 percent, have forced the University’s administration to cut $170 million from its budget for the next two years, President Tilghman announced in a message to the University community on April 6.

Faced with these losses, both Princeton and Harvard will likely spend a larger percentage of their endowment next year than they have this year. Tilghman announced that the University’s endowment-spending rate would likely increase to 6.7 percent next year, well outside the desired spending rate of between 4 and 5.75 percent.

According to The Harvard Crimson, Smith said at a town hall meeting on Tuesday that Harvard has already cut $4 million from the FAS budget this year and proposes to cut another $73 million for the next fiscal year.

To help make these cuts, Smith said he plans to appoint six working groups to suggest cost-cutting measures in their respective areas.

“I’m looking for these groups to get together and think creatively, outside the box, with respect to how we can do things differently from an intellectual and academic point of view,” Smith explained at the meeting.

He added that maintaining the high quality of education would be a top priority for the administration when choosing what areas to cut.

Harvard, like Princeton, is likely to lay off some of its staff over the course of the coming years, in light of the school’s “huge” deficit, Smith said.

“I have no desire to do layoffs, but it’s increasingly likely as we work to reshape the environment, that we will not have a need for as many faculty or staff as we do today,” Smith said.

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Harvard has frozen faculty and staff salaries for next year, while Princeton will shrink the size of its salary-increase pool.

Unlike Princeton, Harvard has already begun offering workers early retirement incentive packages, and 153 of 521 eligible FAS staff members, roughly 30 percent, have already accepted these packages, Smith announced.

Princeton is currently considering the possibility of offering similar early retirement packages, Vice President for Human Resources Lianne Sullivan-Crowley announced at a finance-focused town hall meeting last month.

Smith said it would be difficult for Harvard to make such drastic cuts in its funding.