CORRECTION APPENDED

Harvard Medical School officials said Friday that they have asked all of the school’s departments to plan to cut 10 percent of their academic and administrative budgets for the next 18 months in response to financial pressures resulting from a deteriorating fiscal picture for the University.

The actual level of spending reductions and the areas in which they will be made have not been determined yet, the school’s executive dean for administration, Daniel G. Ennis, said in an e-mailed statement.

In making those decisions, Ennis wrote, each department will be “guided by the school’s teaching and research mission,” as well as the priorities identified by the strategic planning report released in late November, concluding the first phase of a process launched last fall.

The cutbacks, announced in a recent town hall meeting, come amid an unprecedented decline in Harvard’s endowment, which fell 22 percent in the four months starting June 30. The Medical School held roughly 11.7 percent of the University endowment—valued at $4.32 billion as of last June, the last period for which data is available. A 22 percent decline would translate to a loss of just under $1 billion.

The Medical School joins the Faculty of Arts and Sciences as the only other of the University’s 12 schools to announce publicly across-the-board, belt-tightening measures. FAS administrators instituted a hiring freeze on all staff positions in late November.

Despite the challenges posed by the unprecedented loss, the Medical School still expects to meet its usual deadline, around March, for submitting its budget to the University, Ennis said. Interdepartmental working groups have also been formed to identify possible areas where spending can be reduced.

Ennis noted that the budget cuts do not apply to spending supported by research grants from federal or private sources, which total about 28 percent of the Medical School’s $798 million budget for fiscal year 2007. [SEE CORRECTION BELOW]

Additionally, the Medical School will not be able to slow spending on its fixed, non-discretionary expenditures, such as repayments on debt that was floated to fund the school’s capital projects for new construction and renovation.

Though the 10 percent budget cut is the rate requested for every academic and administrative department, Ennis anticipated instances in which some departments will not be able to “responsibly reduce spending” by the targeted amount for reasons of “academic priority or other critical issues like risk-compliance management.”

“We might even have areas where growth is necessary to support our mission,” Ennis said, “or we might have areas where reductions greater than 10 percent will need to occur.”

In assessing department budgets, many department chairs felt that spending for social events would be the first to go. For example, the genetics department will be scaling back costs for its annual faculty retreats.

Though a leaf-crunching walk through the woods may be a relaxing forum for exchanging ideas with other department members during a weekend retreat, booking hotel reservations for 300 people for three nights is an example of a cost the department could do without, said department chair Clifford J. Tabin, who added that this year’s retreat will be held in an auditorium on campus.

“We all realize that we’re in a crisis situation, but believe it’s manageable,” Tabin said. “I’m concerned that I’m going to spend a lot of hours working on this, but I’m not concerned that faculty and students are going to suffer.”

Other cost-cutting measures have yet to be determined, and the department will be grappling with decisions such as whether to purchase a new piece of imaging equipment and whether to hire new faculty members in the coming months, Tabin said.

For Marc W. Kirschner, head of the systems biology department, hiring junior faculty members is crucial to sustaining the school’s educational and research priorities.

The Medical School allocates “startup” funds to help younger faculty members jump-start their careers, and Kirschner said that limiting these funds would be “self-defeating and wrong.”

“We [would] discourage people, and not just the ones who are already here,” Kirschner said. “It will trickle down to people as young as middle schoolers thinking about careers in science.”

Kirschner added that maintaining the “not-so-simply-replaced” staff members is also critical to the department’s success. Specialists and technicians who operate complex equipment and administrative staff have been key to sustaining the new department created roughly five years ago, Kirschner said.

“We’re going to avoid staff reductions as much as possible,” he said.

The Harvard Union of Clerical and Technical Workers, which represents staff at the Medical School and other University divisions, published an open letter last week arguing that labor cuts should be a last resort and that each school should trim its consulting, travel, and catering budgets first.

But it is not clear whether cuts in entertainment and equipment purchases will be enough to meet the 10 percent target.

“We’re kind of looking at everything,” Kirschner said. “We haven’t come up with a complete assessment yet.”

—Staff writer June Q. Wu can be reached at junewu@fas.harvard.edu.

CORRECTION

Due to erroneous information released by Harvard Medical School, the Dec. 8 story, "HMS Plans To Cut Most Budgets," misstated the school's operating budget. For fiscal year 2007, it was $550 million, not $798 million.