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As Harvard grapples with the financial consequences of the coronavirus pandemic, Vice President for Finance and Chief Financial Officer Thomas J. Hollister said the University will focus its existing funds on teaching and research.
“The philosophy so far on spending is to stop — apply the tourniquet — and make sure we’re not spending anything for expansion, or for discretionary reasons,” Hollister said in an interview with The Crimson on Thursday.
In recent weeks, Harvard has faced a shrinking endowment and dwindling sources of revenue, which Hollister called “challenging.”
As a result, University President Lawrence S. Bacow, Executive Vice President Katherine N. Lapp, and University Provost Alan M. Garber ’76 announced in an email to University affiliates last Monday that Harvard was instituting an immediate University-wide salary and hiring freeze, canceling or deferring discretionary spending, and potentially deferring all capital projects.
Hollister said deciding what falls into the category of discretionary spending is “a matter of judgment on deciding what is essential spending to maintain the mission of teaching and research.”
“The key focus is making sure we’re spending whatever’s necessary to appropriately keep the mission going,” he said. “Any nice things should be either stopped or deferred.”
Hollister listed various categories of projects that have been halted, including “hiring consultants to study something.”
He also said that any planned capital spending projects — such as improvements to buildings — would be postponed.
“As nice as it would be to continue with capital improvements, that’s something that can be deferred,” Hollister said.
One of the largest capital projects Harvard has taken up in the last decade is its house renewal project. Administrators have announced plans to renovate eight of Harvard’s twelve undergraduate houses, the majority of which date back over 100 years.
As of this year, five of the eight — Leverett, Quincy, Dunster, Winthrop, and Lowell — have undergone full or partial renovations.
The sixth, Adams House, is currently in the middle of a four-year renovation, which began in June 2019. The House is divided into multiple buildings, which are undergoing construction separately.
Hollister said construction work that is currently unfinished “is likely to be restarted and finished” once Cambridge lifts its ban on construction. But the fate of renovations that have not yet begun is less certain.
“Much more likely to be cut is projects that have not yet begun,” he said. “The Faculty of Arts and Sciences needs to assess whether Adams House, for example — once the current building is finished — whether it’s wiser or not to continue to the next phase.”
Hollister declined to approximate a timeframe for decisions on cuts to capital spending, citing the “high degree of uncertainty” in the University’s plans for the fall.
“I think there’s a high degree of uncertainty affecting many activities, frankly, across the world. And this includes businesses, and colleges and universities. Harvard is in — and we’re not alone in this — not knowing what our operating environment will be in the fall, because there’s a great deal of uncertainty,” Hollister said.
Regardless of the situation, Hollister said administrators aim to minimize the impact spending cuts will have on Harvard’s faculty, staff and students.
“Whatever Harvard is, it’s because of its talented faculty and staff and promising students,” he said. “As we examine the different scenarios for the fall, in terms of cuts, the priority will be on non-people.”
Last month, Hollister told the Harvard Gazette that since the “depth and duration” of the coronavirus crisis is unclear, Harvard would “plan and prepare for the worst.”
When asked by The Crimson what the worst-case economic scenario would look like, Hollister paused.
“I’m going to have to think about that,” he said.
After a long silence, he continued.
“I think Harvard is planning for every conceivable scenario we can think of, and we can find a way to carry on with both teaching and research,” Hollister said. “I feel pretty confident we’ll find ways to do that.”
Correction: April 21, 2020
A previous version of this article incorrectly stated that Harvard will halt "grant" spending.
—Staff writer Ellen M. Burstein can be reached at ellen.burstein@thecrimson.com. Follow her on Twitter @ellenburstein.
—Staff writer Camille G. Caldera can be reached at camille.caldera@thecrimson.com. Follow her on Twitter @camille_caldera.
