Monday, September 28, 2009

UC Establishes Budget Cuts Task Force

UC Establishes Budget Cuts Task Force
Published On Sunday, September 27, 2009 11:47 PM

In its inaugural meeting of the school year, the Undergraduate Council voted yesterday to establish a Budget Cuts Task Force, which the Council hopes will serve as a “centralized mechanism” for communication between students and the administration regarding budget cuts.

The ad hoc task force is charged with “coordinating all of the UC’s work as it relates to the budget cuts,” including advocacy for revisions to proposed cuts, recommendations for future cuts, solicitation of student feedback, and expression of student ideas and concerns, according to the legislation.

The task force is expected to work closely with the student life and College academics ad hoc working groups, which were commissioned in May by Dean of the Faculty Michael D. Smith to make recommendations on budget cuts to the administration.

“It’s really important that we have centralized mechanisms for us to communicate with the working groups,” Andrea R. Flores ’10, UC president and one of the co-sponsors of the legislation, said during the meeting.

“[Budget cut discussions] are going on in all dining rooms, all dorm rooms, in all UC committees,” said Mather representative and legislation co-sponsor Eric N. Hysen ’11. “The task force’s role is making sure all of those conversations are going towards a productive end.”

The ad hoc task force will be comprised of at least 5 UC members, who will be selected in an application process at the discretion of the UC Executive Board, though meetings will be open to all students.

Flores and Vice President Kia J. McLeod ’10 emphasized that student commitment and proper representation of all the UC committees would be important factors in selecting the members.

Although specifics of the task force’s operations have yet to be decided, Hysen said it is likely to be one of the most active divisions of the UC this semester.

“Our goal is to have [the task force] up and running very quickly,” he said.

The Council also passed legislation supporting the administration’s decision to consider reforms to the Administrative Board.

Based on the recommendations of a faculty review committee of the Ad Board, commissioned last year at the suggestion of the UC, Dean of the College Evelynn M. Hammonds announced several major Ad Board reforms at a Faculty meeting in May.

One reform reduced the size of the audience that students face in Ad Board hearings from 35 administration and faculty members to a smaller sub-committee. Students will also have greater flexibility if they wish to select an advisor other than their resident dean.

Another reform that will be considered by the Faculty this semester will broaden the range of possible sanctions for first-time academic dishonesty.

“The Ad Board hasn’t been changed in over a century,” said Hysen, who co-sponsored the legislation. “This is one of the more significant things the administration has done.”

“We should commend the administration when it does really good things for student life,” Flores said.

—Staff writer Melody Y. Hu can be reached at

Thursday, September 17, 2009

Protesters Highlight Health Concerns

Protesters Highlight Health Concerns

Students and union activists protest layoffs and hours reductions for janitors in front of the Holyoke Center yesterday. They say that sanitation standards will slip, and health and safety will suffer as a result.
See more pictures for this story.
Published On Thursday, September 17, 2009 12:38 AM

Union activists and students at yesterday’s labor rally added to their tried-and-true repertoire of bullhorn blasting and sign waving to walk to Mass. Hall to deliver a modest gift to University President Drew G. Faust: a bag labeled “Get Well Harvard,” filled with cards from protesters.

But the gesture was not a sarcastic reference to the University’s recently-announced 30 percent drop in endowment value.

Instead, the cards left space for people to write “recommendations for a healthy Harvard,” and were intended to highlight a message—that the health of Harvard’s workers is deteriorating, and that the well-being of students and staff will suffer soon as well. Protesters argued that recent layoffs and hour reductions have left janitors with more to do in less time, and that sanitation standards will inevitably suffer—hurting the rest of the Harvard community.

“The first line of defense [against disease] is sanitation, and that’s the function of janitors,” said Daniel B. Becker, a union organizer who represents Harvard’s service workers.

A Harvard police officer accepted the gift bag and brought it into Mass. Hall, but it is unclear if Faust received the offering. Harvard spokesman Kevin Galvin declined to comment on the matter, saying only that he was “confident cleaning standards are being maintained” and that no Harvard-employed janitors have been laid off this summer.

But the University did slash work hours for over 100 of its own janitors in July, and numerous janitors it employs through outside firms—a group not addressed by Galvin’s statement—have been laid off in recent months as a result of reduced custodial budgets.

Abigail S. Brown ’11, a member of the Student Labor Action Movement, said that officials need to understand that there are “all sorts of people that make up Harvard and need to be recognized as valuable.” While yesterday’s actions were not intended to be conciliatory, Brown said SLAM would be employing various new strategies this year, hopefully embodying more “positive spin” than in the past.

“SLAM is not an anti-Harvard organization,” Brown reiterated.

But other attendees of the rally were more militant. Chanting repeatedly “No justice, no peace,” and “Harvard, escucha, estamos en la lucha” (Harvard, listen, we are in a fight), roughly 50 protesters picketed outside the Holyoke Center, denouncing what they called Harvard’s greed and calling for shared sacrifice by administrators. Geoff P. Carens, a Harvard librarian and union member who frequently organizes such vocal protests, ridiculed the University for saying that it was in the midst of a fiscal crisis and had to lay off workers when the endowment still stands at $26 billion.

“These people don’t know what a tough decision really is. They’ll never know what it’s like to struggle for something worthwhile,” shouted Bryan Koulouris, a member of advocacy group Socialist Alternative, to the gathered protestors. “That’s what this struggle’s about: It’s about solidarity.”

—Staff writer Peter F. Zhu can be reached at

Monday, September 14, 2009

RALLY 9/16 4-6 p.m., 1350 Mass. Ave. Cambridge

Somewhere between 97 and 130 unionized clerical workers have been laid off in recent months at Harvard, not even counting term employees whose contracts weren't renewed. 35 Harvard custodians have lost their jobs. Hundreds of other administrative staffers and less-than-halftime employees have been let go. About 150 custodians suffered a 12.5% reduction in their already-low salaries, with no decrease in the amount of work they're expected to do! Hundreds of other workers have taken early-retirement buyouts, and their co-workers are frantically trying to pick up the slack, leading to speed-ups and overwork. Conditions for workers in dining halls are worse than ever.

HARVARD STILL HAS A $26 BILLION ENDOWMENT! The University has increased tuition, and just negotiated a lucrative merchandising deal. Harvard is snapping up millions of shares of investment funds. Let's demonstrate to put healthy pressure on Harvard not to lay off more workers, re-hire the laid-off employees, and stop the pay cuts! Please join union members, unorganized workers, students, faculty & neighborhood activists as we

Wednesday, September 16
Holyoke Center, 1350 Mass. Ave, Cambridge (next to Au Bon Pain, steps from Harvard T, flyer is attached)

Workers in SEIU local 615 will demonstrate at 4 p.m, clerical workers will appear at 5 p.m., both at 1350 Mass. Ave. We'll rally at least until 6 p.m.!

Facebook group:

Thursday, September 10, 2009

Harvard Endowment, Largest in Higher Education, Plummets by 27%

Harvard Endowment, Largest in Higher Education, Plummets by 27%
Largest ever single-year decline brings endowment's value to $26 billion
Published On 9/10/2009 4:00:12 PM
Harvard’s invested endowment assets took a 27.3 percent hit this past fiscal year, amidst an economic maelstrom that Harvard Management Company CEO and President Jane L. Mendillo called “very likely the most challenging period in modern times for the financial markets as well as for the Harvard portfolio.”

The decline brought the total value of the endowment as of June 30 down to $26 billion—on par with 2005 levels—after reaching almost $37 billion in 2008. The negative investment returns, combined with donations received and money paid out for operations, pushed the endowment’s total value down by $11 billion, or almost 30 percent.

Despite the losses—which were more than the total endowments of any other schools except Yale, Princeton, and Stanford—Harvard’s endowment remains the largest in higher education.

“[W]e saw extreme uncertainty in our economy and a level of volatility and dysfunction in many types of investments that went well beyond all previous experience,” wrote Mendillo, who took the helm at HMC only last summer. The decline—the largest ever experienced at HMC, which manages Harvard’s endowment—was not unexpected, and administrators have been planning for a 30 percent decline since December. Many peer institutions have been anticipating similar losses.

The unprecedented drop has dramatic ramifications for Harvard’s schools, some of which rely on annual payments from the endowment for more than half their income. The Faculty of Arts and Sciences, the University’s largest school and home of Harvard College, drew 52 percent of its revenues from the endowment last year. Planning for a precipitous drop in endowment size has already resulted in $77 million in budget cuts at FAS, and administrators are looking to cut another $143 million this year from a budget of just over $1 billion.

Mendillo emphasized in the endowment report released Thursday that the portfolio is “well positioned” to seize on new investment opportunities and to support University operations. But the report also supplies telling details about the brutal losses sustained by HMC since last July—losses that in many cases exceeded those of standard benchmarks. Possible investment policy missteps that exacerbated the effects of the global financial crisis on HMC, such as the maintenance of an insufficient cash reserve, are mentioned prominently as well.

Absolute return investments, which include some externally managed funds and made up 18 percent of the portfolio at the start of the last fiscal year, fell by 18.6 percent, or 5.4 percent more than the benchmark set by HMC’s board. The value of externally managed private equity holdings, representing 13 percent of the portfolio, dropped by a staggering 31.6 percent—nearly 8 percent more than the benchmark.

“With a few notable exceptions, nearly every asset class did poorly,” Mendillo wrote. “While diversification has been a mainstay and a driver of the portfolio’s return over the long-term, the benefits of diversification did not bear out [in 2009].”

The S&P 500 index fell roughly 28 percent during the period addressed by Mendillo’s letter, while peer investment groups as measured by the Trust Universe Comparison Service saw a softer median loss of 18.2 percent.

As a whole, the endowment performed 2.1 percent worse than the Policy Portfolio—a theoretical portfolio set by HMC specifying allocations and setting performance goals among a mix of asset classes. But certain individual assets have performed well. The report noted that the value of Harvard’s real asset holdings fell by 37.7 percent—slightly less than the benchmark—and that internal emerging markets and international fixed income teams outperformed their benchmarks as well.

As a result of this year’s broad underperformance, “a substantial number” of portfolio managers have had portions of their bonuses earned in past years “clawed back” by HMC, the report said, although it did not provide more specific figures. HMC, which has been criticized for its multi-million dollar compensation packages in the past, typically rewards managers for adding value and outperforming benchmarks. But it also withholds large portions of the bonuses over subsequent years in order to emphasize long-term growth and protect against excessive risk-taking. The report said that a small group of managers who outperformed markets would be receiving bonuses this year.

Mendillo partly attributed the endowment’s underperformance to “complications” within the portfolio existing before the financial crisis, including “recent over-sized commitments to illiquid asset classes; within asset classes, a larger proportion of strategies with long holding periods; [and] a lack of ready liquidity in the portfolio to meet our obligations along with the needs of the University.”

For years, Harvard has been the subject of scrutiny—and idolatry—as its endowment consistently generated double-digit yearly investment returns, largely due to its heavy exposure to alternative asset classes, which include real estate, private equity, timber, and other commodities. Such investments added long-term value to the endowment and brought sustained growth in previous years, but also reduced the portfolio’s liquidity—meaning that the University’s assets became more difficult to sell and convert to cash on short notice.

When markets plummeted across the board last fall, Harvard, along with many other investors and peer institutions, sought to reduce exposure to those illiquid, alternative assets and instead boost cash reserves for operations. Private equity holdings are especially taxing since they often require ongoing and continued capital commitments from investors.

“With perfect hindsight we and most other investors would have started this year in a more liquid position and with less exposure to some of the alternative asset categories that were hardest hit during FY 2009,” Mendillo wrote in the report.

In November, media outlets began reporting that Harvard was looking to sell billions of dollars in private equity holdings at drastically reduced prices, and in December, the University sold $2.5 billion in bonds in order to raise cash, refinance short-term debt, and terminate certain investment agreements. (Mendillo has stated in the past that HMC began exploring private equity sales even before the financial world imploded, as part of a larger policy portfolio shift that she implemented upon her arrival.) Thursday’s endowment report said that over the past year, HMC has reduced its payments owed to outside investment firms by roughly $3 billion and raised cash in order to explore “attractive investment themes that we foresee emerging from the crisis.”

Today, HMC’s Policy Portfolio aims to include a positive cash reserve of 2 percent, whereas the University had previously been borrowing a small percentage of additional money to invest—a practice that can augment gains but also magnify losses.

Mendillo said that the Company is now also considering remodeling its portfolio to encourage team collaboration, focus more on internal strengths, and reassess the endowment’s risk and the University’s needs. While overall risk management was “adequate” last year and helped avoid extreme volatility, Mendillo wrote that more is being done now to manage risk and that lessons have been learned, particularly that “the risk tolerance of the University needs to be an integral factor” when determining how the endowment is invested.

Nevertheless, HMC will likely hew to the diversified investment model that it has long championed. Mendillo pointed out that even slumping assets such as private equity have delivered high returns when annualized over the past few years. If HMC had simply invested its portfolio in a 60/40 ratio of stocks and bonds 10 years ago, the endowment today would be $18 billion smaller, she wrote.

Mendillo also emphasized that HMC has taken steps this past year to increase flexibility and control over internal and external funds. The report said that she intends to continue using a “hybrid model” of internal and external managers, but that she is not targeting any specific proportion. Instead, she noted that internal management is highly cost effective and that HMC would look to “increase the share of our internally managed assets under the right conditions.”

HMC cut its workforce by roughly 50 employees in February, citing the need to “re-balance and re-engineer” the organization. Since then, the Company has made a string of managerial hires, adding investment experts to several internal teams while appointing new heads of internal and external management from within. Mendillo said HMC has increased its “depth and breadth of talent” over the past year and will continue searching for further individuals with “unique investment insights.”

These recent hires, along with the policy adjustments made over the past year increasing HMC’s liquidity, have laid the foundation for a “solid, innovative and sustainable investment strategy” that gives “ample cause for optimism” over the next few years, Mendillo wrote. But she also called for “realistic” performance expectations over the next several years.

“For Harvard, as for almost every major investor, regaining the market value lost as a result of the recent global economic crisis will take time,” Mendillo wrote.

—Staff writer Peter F. Zhu can be reached at

Wednesday, September 9, 2009

Losing a Living Wage

Losing a Living Wage
Published On Tuesday, September 08, 2009 10:39 PM

I remember the exact moment when I opened my inbox at an Internet cafĂ© in Nairobi to see a forwarded e-mail from Marilyn Hausammann, Vice President for Human Resources at Harvard. Painstakingly slow, the page loaded with Hausammann’s announcement of the impending elimination of 275 staff positions. I had been in Kenya for only two weeks, and everything about the thickness of the air, the dirt under my fingernails, and stickiness of the keyboard reminded me of how many thousands of miles I was away from Harvard. I felt disempowered and unable to voice my opinion about the decision.

Now that I have returned, these 275 jobs are a thing of the past. I cannot go back in time, but neither can I accept Harvard’s layoffs, or the most recent hours reductions, that bring workers below a living wage. Harvard must strive to bring these members of the community back to a living wage while finding additional ways of cutting costs that do not jeopardize the jobs and lives of the people who make up this institution.

According to union representatives within Harvard, the administration’s most recent budget-cut tactic has been to implement hour reductions among staff while still expecting essentially the same amount of work to be done in less time. Although hour reductions appear to be a compromise, and perhaps a better option than layoffs, reducing hours continues to ask the lowest-paid workers at Harvard to bear an inequitable share of the financial burden. Staffers are physically strained by the work, and financially strained by the reduction in pay. Although hours reductions are preferable to layoffs because workers retain health benefits along with their continued paychecks, cutting the hours of people who already struggle to make ends meet circumvents the successes of the 2001 Living Wage Campaign. Therefore, although it is possible to see hour reductions as a win for workers, we must not accept them as a permanent solution.

Now that students have returned to campus, it is essential that we not forget the challenges facing the lowest-paid members of our community. Students must remain vigilant of the fact that the university seems to deliberately deceive us on issues involving budget cuts. It is apparent that administrators were merely waiting for students to leave campus before beginning layoffs. Although I had been warned of this, I still felt deceived by leaders of my university, who, weeks before, had shooed away concerns about layoffs by insisting that nothing had been decided and that we need not continue to pester them about layoffs because they simply had not happened. I recognize that there are, and were, many unknowns in this challenging financial crisis, but the administration’s approach demonstrated a failure of moral leadership.

How do students remain vigilant when we are often excluded from the decision-making processes surrounding Harvard’s budget? The first and most obvious way is to maintain our human and personal connections with all people who live and work at Harvard. Whether it means talking with someone who works in your dining hall or stopping to catch up with the janitor you’ve seen in the Science Center, you may learn that someone you see every day has lost an eighth of her salary and can no longer afford to pay rent. These human interactions are a key ingredient to having a respectful community, but they also contribute to the public’s understanding of how administrative decision-making affects real people.

If we know the personal stories and struggles that have emerged from this financial crisis, we may find ourselves more understanding and more dedicated to keeping the people of this university community together. Harvard workers are not a homogenous monolith with the same story, perspective, or needs, but they are individuals whom we can and should know personally and whose struggles we can and should work to alleviate. Students are not the whole answer to the challenges facing Harvard workers, but given that most of us are now back on campus, and as students we do not face the worries of being fired, we ought to be use our position to lobby for the rest of our community. Get involved with social-justice groups, write to administrators, attend rallies, and, most importantly, communicate with the people around you.

Megan A. Shutzer ’10, a Crimson editorial writer, is a social studies concentrator in Dudley House. She is a member of Student Labor Action Movement.

Tuesday, September 1, 2009

Harvard Boosts Equity Holdings

Harvard Boosts Equity Holdings

Published On 8/31/2009 11:01:26 PM

Crimson Staff Writer

The value of Harvard’s publicly traded equity portfolio has nearly doubled in recent months as the University reinvests—particularly in emerging markets and in Asia—after dramatically slashing stock holdings last fall amidst the global financial crisis.

According to a Securities and Exchange Commission disclosure report released in August, Harvard had 112 publicly traded equity holdings valued at over $1.4 billion as of June 30. The figures represent a significant increase from the 99 holdings worth $771 million reported three months earlier.

The SEC’s 13F report only discloses a small fraction of the University’s total investments—it does not list assets such as foreign stocks, private equity, bonds, and real assets—but suggests that in rebounding from recent market turmoil, Harvard Management Company has been boosting its investments in foreign markets by increasing shares in private companies and exchange-traded funds, which are traded like stocks and track major indices such as the Nasdaq and the S&P 500.

HMC is responsible for overseeing Harvard’s endowment, which was valued at nearly $37 billion before the market crash last fall. University officials have planned for a 30 percent drop in the endowment’s value for the year ending June 30. Definitive endowment returns for that period are expected to be released in the next few weeks.

In the three months leading to June 30, the University increased its holdings in the iShares MSCI Emerging Markets Index Fund—the single largest holding disclosed—from 8.3 million to 9.7 million shares, and the value of those holdings have increased from $205 million to $313 million.

Harvard also more than doubled its holdings in exchange-traded funds (ETFs) tracking South Korean and Indian indices—valued at over $200 million—and the total value of its holdings in ETFs tracking Chinese, Brazilian, South African, and Mexican indices increased from roughly $291 million to $472 million. The University reportedly bought nearly seven million shares in an ETF tracking Taiwanese indices—reversing its earlier decision to sell the two million shares it had in the fund as of last September.

Other investments of note include over $55 million in an ETF tracking Russian indices, and multi-million dollar repurchases of shares in mining giant BHP Billiton and oil and gas producer China National Offshore Oil Corporation.

While the value of Harvard’s equity investments has increased, it remains modest compared to where it stood last September, when the University had nearly $3 billion invested in 213 public equity holdings. Jane Mendillo, president and CEO of HMC, said in an interview with The Crimson in May that she had “accelerated building a cash reserve” last fall—part of a larger policy portfolio change—but that the Company was “aggressively analyzing investment opportunities” and reinvesting cash coming out of the financial crisis. University spokesman John D. Longbrake declined to comment for this article.

HMC announced in early August the appointment of two senior investment managers to the Company’s internal team—a move that seems to dovetail with the apparent emphasis on emerging markets and Asia. Emil Dabora, a senior managing director at New York firm Caxton Associates, was appointed an equity portfolio manager, while Michele Toscani, a veteran of investment groups in Japan, was added to the International Fixed Income team.

—Staff writer Peter F. Zhu can be reached at