Although the budget of the Faculty of Arts and Sciences (FAS) is almost in balance, the situation for the coming year is still precarious, Dean of the Faculty Jeremy R. Knowles wrote in his annual budget letter, released last Thursday.

The operating deficit for fiscal year 1995 was reduced to about $530,000, which is less than 0.3 percent of the budget, Knowles wrote.

"The situation is a dramatic improvement" over the 1990 fiscal year, when the deficit was $12 million, which was 7.5 percent of the budget, according to the letter. 1990 was the year Knowles became dean.

He also wrote that the numbers were a substantial improvement over last year, when the deficit was $1.9 million or one percent of the budget.

Despite these promising signs, however, Knowles wrote that "our continued financial health will require a cooperative vigilance by both faculty and staff, since the prognosis for the current year (FY96) is not so cheerful."

According to Knowles' letter, one of the most important financial problems facing the College is that tuition is increasing faster than inflation.

"Over the past several years, we have managed to maintain a monotonic downward trend in tuition rate increases, even though these increases continue to be higher than those in the consumer price index or in median family income," Knowles wrote.

"It is obvious that tuition rate increases much higher than inflation could not continue in perpetuum," he wrote. "This tension results in significant uncertainty in our long-range financial plans."

In the letter, Knowles suggested that the current period of financial security be used to strengthen the faculty against such continuing concerns.

"We must recognize the problem of tuition growth rates that continue to outstrip inflation," he wrote. "We must accept that the cost of recruiting the best faculty will remain high, in an increasingly competitive world of institutional 'star wars.'"

"These circumstances call for sustained discussion about our priorities and needs, as we emerge from an era of unacceptably high operating deficits into a period when we have the opportunity to reshape the Faculty," Knowles wrote.

While one member of the FAS, who declined to be identified, commended Knowles for his containment of the budget, the same professor suggested that the financial problems of the University lie with the central administration.

"I think that the FAS under Dean Knowles is very aware of the need to contain the budget and the need to prevent a vast increase in administrative personnel," the professor said. "Any problem with the University budget is not with the FAS but with Mass. Hall and Holyoke Center."

In the letter, Knowles suggested frugality in financial matters for the upcoming year.

"For the immediate future we must recognize that new programs and new activities will have to be funded through reallocations within our current operating budget," he wrote. "If we are to reduce the size of teaching sections, we shall have to increase the instructional budget, with a consequential reduction somewhere else."

In a section entitled, "Women Faculty," Knowles wrote that many statistics relating Harvard's percentage of tenured women are misleading because the University's system of granting tenure only to full professors is not taken into consideration.