The University's highest governing board yesterday upheld a controversial decision to reduce Harvard's contribution to faculty pension plans, alter the structure of post-retirement health care and establish a University wide benefits committee.

The Harvard Corporation completed its review of a Faculty of Arts and Sciences (FAS) committee report recommending changes to last June's benefits cuts that have outraged FAS and rocked the University over the past year.

In a statement issued yesterday to some faculty members, the Corporation announced that it will maintain the one percent reduction made last June in the University's contribution to faculty pensions, overlooking the objections of a faculty committee.

But the Corporation agreed to impose a "soft cap" which will link the University's contribution to post-retirement health-care coverage with rises in health care costs, in compliance with the faculty committee's recommendations.

The report was still being printed last yesterday afternoon, according to Provost Albert Carnesale, so only a few faculty members had seen a copy of it last night. But many who read the memo expressed outrage at the Corporation's decision.

"I'm sorry to see the Corporation take this attitude," said Professor of the History of Science Everett I. Mendelsohn. "I think this will indeed further strain administrative-faculty relations."

The Corporation's report attributes the decision to the fiscal constraints faced by Harvard.

"[T]he dilemma that has confronted each Faculty or School, as well as the Corporation, has been how to provide strong and competitive benefits while also containing expenditures that have been growing at an unsustainable rate, and have the capacity to impinge on the strength of other essential programs which are also dependent upon unrestricted funds," the report reads.

The FAS Standing Committee on Benefits, convened in the fall following an uproar over benefits cuts, recommended this spring that pension contributions be restored and paid for by a one percent reduction in the growth of FAS faculty salary increases.

But members of the Corporation argued that those adjustments could not have been made without upsetting the University's graduate schools.

"Everyone recognized that no single `package' could be accommodated equally well by all units, but the effort to strike a balance was extremely important," the report reads.

For many other faculties, "stability and even ameasure of growth in the rate of salary increases,rather than a reduction, is a high priority,"according to the report.

The Corporation cited the School of PublicHealth as an example of why it could not approvethe faculty committee's recommendations; thatschool has currently enacted a salary freeze whichwould prevent the implementation of a salaryreduction.

The report also questioned whether a salaryreduction could even be sustained in the long run.

"We are inclined to think that a Faculty orSchool that made such a decision...would probablysoon have to reassess, and would find it necessaryto make up the salary differential in order toremain competitive," according to the report."

The Upside for FAS