Harvard University announced Monday that it would place a freeze on salaries and hiring, cancel discretionary spending, and possibly defer all capital projects. Harvard president Lawrence Bacow, who recently recovered from the CCP (Chinese Communist Party) virus, wrote in an email that he will cut his salary by 25 percent. Several other senior administrators will either reduce their salaries or contribute to a support fund for employees experiencing hardship.
Despite the school’s $40.9 billion in endowment, Harvard officials claim that money has limited use in current situation.
“Some of you may be wondering why we can’t just dip into the endowment to support us through these difficult times. We do intend to distribute as much from the endowment as we responsibly can, but there are limitations to the endowment’s capacity,” they wrote, reported student newspaper Harvard Crimson. “Because of the recent declines in the markets, the endowment, while still large, is not as large as it was previously. As it shrinks, it has less capacity to support our existing operations, especially as other shortfalls in revenue sources loom.”
Bacow also noted that layoffs or furloughs are possible, as the university is going to analyze its budget for the fiscal year 2021 to determine if additional steps are required to deal with the economic impact of the pandemic.
Another member of the Ivy League, University of Pennsylvania (UPenn), is taking similar measures such as a university-wide halt on hiring, restricting overtime work, and eliminating mid-year salary adjustments.
In addition, UPenn is implementing a merit increase program, according to student newspaper The Pennsylvanian. For employees with salaries above $70,000, including officers, deans, and vice presidents, the limited merit increase program will prevent them from an annual wage or stipend increase for the upcoming fiscal year.
UPenn is also urging schools and centers to reduce spending that is not critical to their operation, including outside services, consulting, conferences, and meetings. Construction projects that are not considered “life-sustaining” will be shut down, unless they’re in design or construction and have a fully defined funding plan.
According to Business Insider, the Ivy League system has over $140 billion in endowment, ranging from Brown University’s $4.2 billion to Harvard University’s $40.9 billion.