UPDATED: April 12, 2017 at 5:38 p.m.

Members of Harvard’s faculty and non-unionized staff will see their salaries increase by 1.5 percent for fiscal year 2018, an atypically low increase outpaced by the current rate of inflation.

Dean of the Faculty of Arts and Sciences Michael D. Smith attributed the small pay raise—salaries rose 2.5 percent in fiscal year 2017, by contrast—to budgetary challenges in FAS, including its nonexistent reserves and the University’s underperforming endowment.

The current rate of inflation hovers around 2 percent, meaning that the salary change in real terms—when adjusted for inflation—could be negative.

“We are having to make tough tradeoffs given our significant financial constraints,” Smith wrote in an email. “In this instance, it means running a deficit in order to provide modest compensation increases for faculty and staff. It’s a balance between the reality of our finances and the needs of our community, and it’s very challenging.”

{shortcode-203890b6b73bec5598970d060f6e243e94552223} In 2014, the average salary of a full-time Harvard professor—including faculty at Harvard's graduate schools—was $214,857, while the average salary of a Harvard associate professor was $125,775, according to data from the Chronicle of Higher Education.

Faculty are not the only ones feeling the tightening of the Faculty's belt: last month, Dean of the Graduate School of Arts and Sciences Xiao-Li Meng announced that student stipends would increase by 1.5 percent, down from last year’s 3 percent increase. Meng attributed the unusually low increase to poor returns on the endowment, which dropped by almost $2 billion in fiscal year 2016.

Smith said in an interview in March that FAS will run a “reasonably small” budget deficit—in part to fund faculty pay raises—in the coming year, albeit a smaller one than initially projected. FAS will also take out debt to fund its ongoing House renewal project, a goal of the University’s capital campaign that has lagged behind other priorities.

FAS controls the salaries of members of the faculty and staff, but does not for employees like Harvard University Dining Services or the Harvard University Police Department—these employees collectively bargain through a union. Following their historic 22-day strike last year, full-time HUDS workers were guaranteed a minimum salary of $35,000. Earlier this month, members of HUPD walked away from contract negotiations with a 3 percent wage increase.

FAS solicits budget proposals from different areas within the division in its annual budgetary process. In his email, Smith praised faculty and staff members for submitting “incredibly thoughtful budgets.”

“Thanks to their hard work and vigilance, and despite the financial constraints we are facing in the FAS, we have proposed a 1.5% salary increase for faculty and staff in FY18 as part of our budget submission to the University,” Smith wrote.

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

–Staff writer Mia C. Karr can be reached at mia.karr@thecrimson.com. Follow her on Twitter @miackarr.