1966/67 (323,366)

1967/68 783,230

1968/69 (959,873)

During the years when the Main Operating Budget generated unrestricted year-end surpluses, the Faculty of Arts and Sciences Instruction Fund benefited from them, and by July 1, 1968 had grown into an unrestricted endowment of $9,073,846. It has been considered to be a strategic reserve which would permit taking on major educational commitments when the need arises and when no other major source of funds can be found. At the end of the past academic year, however, $520.845 had to be drawn out of the Fund to meet a major portion of the year's unrestricted operating deficit.

If unrestricted deficits persist, and increase in size, the Instruction Fund will be used up in a few years-and not for major new educational programs, but for bailing out the old ones.

Observers at other private colleges and universities might well read this letter, which to me is a gloomy one, and say that they would give a great deal to have problems such as this. After all, we still do have a strategic reserve when many similar institutions, and other faculties at Harvard, do not. On the other hand, it does seem clear to me that the legitimate pressures that increase our expenses seem stronger than our ability to produce offsetting income, and that this condition will persist at least for the next few years. If this is correct, then the erosion of the Instruction Fund to meet unrestricted operating deficits means the erosion of flexibility to meet educational challenge in the years just ahead.

I believe that this historical perspective, along with the recent report of a budgeted unrestricted deficit for 1969/70, lends much of the cautionary tone to the current discussion of the Faculty's financial prospects.