Tuesday, November 6, 2012

Harvard's financial report

Harvard Magazine has a clear, comprehensible translation of the recently released Harvard financial report. The Campaign is going to be important, because revenue is not going up (if you set aside now-exhausted stimulus funding, research funding is hardly growing at all, and undergraduate tuition receipts are going down, inflation-adjusted, though continuing ed and executive ed are showing healthy growth). Reading the grim news, one can't help wonder about the continuing expansion in non-educational bureaucracy (here and there).

Particularly interesting to longtime Harvard watchers is what has happened to the "strategic infrastructure fund," introduced by President Rudenstine as a 5-year, temporary tax on endowments to fund the clean-up and development of the newly acquired Allston site. I well remember the faculty meeting where this was explained; professors were extremely skeptical. Of course they had no actual say in the decision, and the president explained that it just had to be done and we would all eventually reap the benefits. So how has it turned out? President Summers extended its timeline to 25 years and expanded the uses to which it could be put. And now, like almost any tax imposed by any government, it has become permanent and has been utterly repurposed. Harvard's ambitions for Allston are vastly diminished, and what projects are left are going to be built through fundraising or private partnerships. Instead, as the Magazine summarizes,
treating the 2001 assessment mechanism as an Allston-related decapitalization item no longer makes sense; rather, it is an assessment on endowment assets that defrays central operating expenses, and so, from an accounting sense, is an operating item: a financial-reporting change that reflects, in fact, almost revolutionary upheaval in Harvard’s fiscal assumptions, operations, and position.

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