In his annual budget letter, sent to the Faculty on Feb. 4, Dean of the Faculty Jeremy R. Knowles reported that the College's finances should "evince only mild concern," in contrast to the tone of "deep alarm" that characterized the letter five years ago.

Although the Faculty of Arts and Sciences (FAS) completed the last fiscal year with a deficit of just over $1 million, members of the Faculty Council said yesterday they were not concerned and praised Knowles for controlling costs effectively.

"The budget is balanced to one quarter of 1 percent and that's a very small number," said Mallinckrodt Professor of Applied Physics William Paul.

However, council members said they are apprehensive about several issues, including the rising cost of tuition, cutbacks in the University's custodial and security staff, the low number of tenure appointments to junior faculty, lagging funding for the University's libraries and the growing cost of information technology.

Tuition

Student tuition for the 1997 fiscal year is expected to rise by 4.9 percent, according to the letter.

The percentage tuition increase has dropped each of the past five years, but still exceeds the growth rate of median family income in the U.S.

"Even a reasonably short extrapolation brings one to tuition rates that would be unsustainable," Knowles wrote.

Tuition, which is the largest single source of income in the Faculty's budget, "cannot continue to rise even at the lower rates of the recent past," he warned.

Council members said the University is focusing on raising funds from other sources and controlling expenditures in order to curb tuition hikes.

"[The tuition increase] would be more serious if Harvard didn't have an extremely meritocratic financial aid system, but it does," said Theda Skocpol, professor of government and sociology. "It is committed to making it possible for people to come here regardless of family income."

Staff Cutbacks

Another issue of concern cited by members of the council was Harvard's treatment of its wage-employees. According to the letter, the present costs of custodial and security services to the University are "substantially above market."

"We must reshape the way these services are provided so as to bring the costs more into line with those outside, while being careful to treat our existing employees respectfully," Knowles wrote.

According to the letter, custodians employed by the University have recently ratified a new three-year contract, under which a significant number of custodians took voluntary severance packages.

Employees who did not ratify the contract may continue in their present positions but their rate of pay increase will be slowed, according to the letter.