Harvard University announced this week that it is placing a freeze on salaries and hiring in response to the Chinese virus pandemic. Some have criticized the decision and encouraged the university to use its $40.9 billion endowment to support itself during this period.
According to a report by the Crimson, Harvard University has announced that they will be placing a freeze on salaries and hiring to combat decreased cash flow that has occurred as a result of the Chinese virus pandemic. Additionally, Harvard University President Lawrence Bacow announced on Monday that he and other officials will take a 25 percent pay cut for the foreseeable future.
Despite the university’s vast wealth, Bacow claims that Harvard will face “economic consequences” if it does not act soon to mitigate the impacts of the Chinese virus pandemic. “If we are to preserve our core mission of teaching and scholarship, we face difficult, even painful, decisions in the days ahead,” Bacow wrote.
Bacow addressed critics that have told Harvard to dip into their endowment to make ends meet during the pandemic. However, Bacow claims that the university cannot legally use endowment funds for this purpose.
“Some of you may be wondering why we can’t just dip into the endowment to support us through these difficult times. We do intend to distribute as much from the endowment as we responsibly can, but there are limitations to the endowment’s capacity,” Bacow wrote. “Because of the recent declines in the markets, the endowment, while still large, is not as large as it was previously. As it shrinks, it has less capacity to support our existing operations, especially as other shortfalls in revenue sources loom.”
Bacow told the community that layoffs or furloughs are possible as the university moves forward with an analysis of their budget for the upcoming academic year.
“We suspect that many of you are concerned about further cost reductions that might be needed in the coming months, including layoffs or furloughs,” Bacow wrote. “We are still working to gain a more complete picture of the financial conditions of the University, and we will be scrutinizing the FY21 budget to determine what other steps are necessary to respond to the financial impact of the pandemic on our operations. We will communicate with you when more information is available.”
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