Facing a bleak national economy and projected fundraising delays, the Faculty of Arts and Sciences (FAS) must cut almost $3 million from this year's budget, Acting Dean Henry Rosovsky announced yesterday.

In his annual budget letter, Rosovsky said across-the-board spending reductions of up to 6 percent will be needed to lessen a runaway deficit. Only instructional salaries will be excluded, he said.

Given an annual inflation rate of more than 5 percent, University Hall officials said the revised budgets for FAS departments--academic and non-academic--will no longer take cost-of-living increases into account.

"In essence it means asking departments to act as if inflation didn't occur," said Associate Dean for Finance Candace R. Corvey, who helped prepare Rosovsky's report. "It isn't easy, but we believe it's doable."

The reductions are intended to contain a rapidly growing financial deficit, which Rosovsky said would likely reach $13.4 million by the end of the year. The cuts would bring the deficit down to the amount approved by the Harvard Corporation last spring, when it endorsed this year's $355 million FAS budget.

"Things are tighter than they have been in recent years," said Dean of the College L. Fred Jewett '57. "There are additions and projects we may have to not do or delay doing."

Although this is the first time since the early 1970s that Harvard has faced such a substantial financial crunch, the University is not alone in its dilemma. Other major research institutions, like Columbia and Stanford, have also announced their own plans for cutbacks.

"We can take some small comfort in the fact that we are not alone in facing serious financial pressure," Rosovsky told the Faculty. "The economic and competitive environment in which universities are now operating is extremely difficult."

The extent that these budget cuts will affect FAS departments will vary according to each program's size and scope, said Corvey.

Financial allotments for every area from equipment buying to building maintenance to library expansion will be examined and possibly trimmed, Corvey said. But teaching and areas directly related to undergraduate education will not be affected at this time, she added.

"It would be one of our last resorts to cut in areas involved with basic teaching," the associate dean said. "We want to reach efficiencies with the least impact on services."

Corvey said budget reductions, at least for this year, will not touch currently-authorized faculty searches or the College's need-blind financial aid policy.

"We're not looking at the financial aid formulas as it cuts right now," Corvey said.

Under former Dean A. Michael Spence, who left for a post at Stanford University this fall, the Faculty used deficit spending to help build various programs. These costs included $3.5 million in facilities renovations, $2 million for the clerical and technical workers' union settlement and about $4 million in fundraising, financial aid and housing expenditures.

But now, Rosovsky said, new circumstances require a new strategy. "I find I come to a different conclusion that that reached by Dean Spence," Rosovsky said.

In the past, the Faculty has drawn on reserves to help finance spending increases, looking to a planned multi- billion dollar fundraising campaign to helpsoften debt burdens in the near future. Lastyear's deficit reached about $11.9 million, Corveysaid.

But two unexpected changes in Universitygovernance--the upcoming departure of PresidentDerek C. Bok and Spence's resignation--havedelayed the fund drive by at least a year. Assuch, Rosovsky said the Faculty can no longerafford to depend on rainy-day dollars to pay forcurrent expenditures.

"Each year the deficit has been managed bydrawing on reserves to cover the shortfall,"Rosovsky said. "This is a common practice, but oneon which we cannot rely indefinitely."

Although Rosovsky will present his report tothe full Faculty on October 16, department chairssaid last night that they and theirrepresentatives met with the dean Monday todiscuss the upcoming budget cuts