{shortcode-6c7b22196926ea4a8d7b1c80202a3bfbef26d0ae}The School of Engineering and Applied Sciences ran a $9.1 million deficit in fiscal year 2017, a shortfall that made up the vast majority of the Faculty of Arts and Sciences total $11.7 million deficit.

The Dean’s Annual Report, released by FAS Dean Michael D. Smith earlier this month, revealed that FAS, Harvard’s largest division, has managed to reduce its deficit from $23 million in fiscal year 2016.

The report notes, however, that SEAS—which recently received a $400 million gift and is the fastest-growing school at Harvard—is largely responsible for the deficit. Together, costs associated with FAS’s three other divisions—Arts and Humanities, Social Sciences and Sciences—along with other expenses totaled only $2.6 million.

According to SEAS Dean Francis J. Doyle III, the higher deficit is attributable to the unique effects of the 2008 financial crisis that coincided with the launch of Harvard’s newest school.

“We had the double whammy of the downturn right as we were starting as a school,” Doyle said. “So right when you’re in start-up mode and needing resources and getting going, revenues collapsed, in terms of our endowment base.”

Harvard’s endowment, which suffered another year of “disappointing” returns in fiscal year 2017 amid dramatic restructuring efforts, is the single largest form of revenue for SEAS, according to Doyle.

“The Corporation has recognized that the endowment distribution bouncing around, especially with low numbers, is actually not conducive to keeping the excellence in our academic program,” Smith said in an interview earlier this month.

The Harvard Corporation, the University’s highest governing body, voted earlier this year to change its endowment distribution model and ensure that schools receive a funding increase every year. But despite poor endowment returns, Doyle remains optimistic that SEAS will run a surplus by the time the new Allston campus opens in 2020.

“Resources are strained,” Doyle said. “But in the past two years since I’ve been here we have reduced the deficit each of those successive years. So we have turned the tide.”

Harvard has placed a growing emphasis on SEAS in the past decade. The school has seen a near tripling of declared concentrators and a 30 percent growth in its faculty in the past ten years. The focus on SEAS has allowed the school to play an outsized role in the deficit for the past few years.

“We will think about what’s the most important intellectual advances we need to make and find money to put to them,” Smith said of the budgeting process.

SEAS's efforts to climb out of what Doyle referred to as a “fairly deep well” will be aided in large part by distributions from a $400 million donation from hedge fund magnate John A. Paulson in 2015.

“The beauty of the Paulson gift is that it is completely unrestricted, but the Paulson gift is coming in in stages,” Doyle said. “So we haven’t appreciated the impact and for some years won’t appreciate the full impact. But it will absolutely be a piece of continuing to move the needle in the right direction.”

—Staff writer Joshua J. Florence can be reached at joshua.florence@thecrimson.com. Follow him on Twitter @JoshuaFlorence1.