email to FAS community, January 23, 2009

To FAS Faculty and Staff,

The last months have been very difficult ones for our community as we each
grapple personally and professionally with the local effects of the global
financial crisis. My letters to you over the fall outlined the size and the
nature of the considerable financial challenge we face. I am pleased to now be
able to share with you early markers of progress toward meeting that challenge
- progress that I hope will encourage a reemergence of the spirit of excitement
and optimism for the future that normally radiates from our campus.

As one of our perceptive faculty members commented to me recently, "The global
financial crisis put us, in simple but accurate terms, out of balance. Not only
out of balance in budget, but out of balance in not previously having faced such
a situation." With the New Year, our institutional balance begins a welcome
return. I see this in the carefully considered plans we have received from
departments, centers, and other units for rebalancing our budgets. I see this
even more clearly in the broad, creative, and coordinated thinking occurring
across all parts of the FAS.

Although it is never easy to reconfigure or disengage from worthwhile
activities, especially ones in which time and resources have been invested,
circumstances force us to do so, and we are doing this thoughtfully and well. I
appreciate the fortitude and dedication to the institution I have seen from the
FAS community in this effort over the past months.

A great many departments and other major units have taken immediate action to
reduce expenses and plan for the further savings needed to meet our FAS-wide
goal of reducing our total expenses by 15% over the next couple of years.
(Reaching this goal would allow us to live within the limits imposed by the
expected 30% investment losses in our endowment, given that slightly more than
50% of the total annual income to the FAS comes from the value of our
endowment.) Many members of our community have also proposed innovative ways to
address the $100-$130M shortfall in unrestricted funds projected for fiscal year
2010. For all of this painful work, I am truly grateful.

Based on the planning documents and other information being produced by the
departments, centers, and other units of the FAS, the deans are working closely
with me to develop by the end of January what I expect will be an "80% FAS-wide
plan" for reaching our cost-reduction goal. I refer to it as an 80% plan
because we will likely not have reached our total expense-reduction goal by the
end of January and because we will not have had time by then to vet all details
and implications of the unit-level plans. Still, a partial FAS-wide plan at
this point in time will help us to produce the FY 2010 budget. It will also
help us to draft a set of recommendations that the deans and I can vet with the
Priorities Committee, Caucus of Chairs, Faculty Council, and others. I expect
that we will produce a finalized FAS-wide plan later in the spring semester.

Beyond the immediate actions being taken locally within departments and other
FAS units, we are also moving forward on several FAS-wide initiatives, a number
of which were submitted as suggestions to priorities@fas.harvard.edu. For
example, the Priorities Committee reviewed and encouraged the FAS to accept a
proposal to change the set points for heating and cooling of our buildings to
match those recommended by the American Society of Heating, Refrigeration, and
Air-Conditioning Engineers. You will soon hear about the details of this
two-degree change (to 68 degrees at this time of year) from your local building
managers. We expect a savings of more than $600,000 a year from this change, and
it will also help us to achieve nearly 30% of the FAS Greenhouse Gas Reduction
goal for next year.

Although the change in temperature set points will affect all of us equally, the
final set of coherent recommendations we accept from unit-level plans being
developed today will not result in equal cuts in all areas. Not all units have
the same capacity to absorb cuts, nor is it wise for us to reduce everyone
equally if continued excellence is our goal. Furthermore, we remain committed
to certain priorities, such as the official launch of our new Program in
General Education that is scheduled for the upcoming fall semester. Other
timelines, such as the pace of development in Allston, are being assessed and
adapted to our new financial situation.

Significant and undoubtedly equally painful work remains in front of us, but the
first step is in many ways the most difficult. Through this important step, we
have demonstrated and strengthened a trust in each other and in the
organization. We started building this trust and a new transparency in the
organization before this financial crisis, and the dividends of those early
efforts are abundantly evident today. Through a continuous focus on our
foremost priorities - excellence in teaching, excellence in research, and
excellence in training future generations of academic and world leaders - and
an ever-growing trust in each other, we will emerge from this unprecedented
crisis more transparent, with clearer priorities, with more collaboration
between units and departments. We will then be ready to seize opportunities
that present themselves even in these difficult times.

As we rise to meet the financial challenge before us, I am encouraged to
remember, as I hope you do, how very fortunate we are at Harvard to be
surrounded by colleagues who shape the nation's and the world's intellectual
landscape today and by the students who will shape it tomorrow. We are
fortunate that the Faculty of Arts and Sciences and the larger Harvard
community are rich in the intellectual capital and cross-disciplinary
cooperation being described in Washington as critical to the future of our
country and the world. Members of the Harvard community can and will bring
enormous energy to these discussions and will no doubt offer exciting solutions
to pressing problems facing our nation and our world. Our ideas are our strength
and will collectively take us through this difficult time to a brighter future.

Sincerely yours,

Michael D. Smith