Covid-19: Harvard, MIT announce pay cut at top; salary freeze for others

Harvard has also put hiring on hold, and cancelled/deferred discretionary spend

Prestigious US educational institutions Harvard University and Massachusetts Institute of Technology (MIT) are implementing salary and hiring freeze and their top leadership will take pay cuts as part of “hard choices” to control costs in a tough economic environment resulting from the global coronavirus pandemic, according to a report.
 

The report in The Harvard Crimson, the daily student newspaper of Harvard University, said that Harvard was “instituting an immediate university-wide salary and hiring freeze, cancelling or deferring discretionary spending, and considering deferring all capital projects.”

University President Lawrence Bacow announced in an email to Harvard affiliates on Monday that he along with Executive Vice-President Katherine Lapp and University Provost Alan Garber will each cut their salaries by 25 per cent.
 

The report added that senior school administrators, including the deans of Harvard’s 12 schools, their vice-presidents and vice provost will also be either reducing their salaries or contributing to a support fund for employees experiencing hardship. On the possibility of layoffs or furloughs, the three wrote in the email that Harvard was still working to “gain a more complete picture” before deciding whether to take such action.

“We will be scrutinising 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,” the report quoted them as saying.
 

Bacow said Harvard will tap into its endowment to address financial concerns, but its ability to do so was limited. Harvard's endowment — its largest financial asset — consists of more than 13,000 funds, according to the university's website.

In the previous fiscal year, the endowment provided $1.9 billion of funding to university operations, consisting of more than a third of Harvard's total operating revenue for the fiscal year. By the end of that fiscal year, the endowment's value stood at $40.9 billion, the report added. In a letter sent to the MIT community, President L Rafael Reif said the institute cannot know now just how serious the global financial situation will be in Fiscal Year 2021.
 

“But we should expect hard choices. So we are preparing in advance by taking the following immediate measures to control costs, in a way we hope is sensible, prudent and fair,” the president said. The top US institutions are implementing salary and hiring freeze and their top leadership to take pay cuts as part of “hard choices” to control costs in a tough economic environment resulting from the coronavirus pandemic.
 

Reif said in order to conserve resources to support existing employees, MIT was pausing hiring except for essential personnel.

Along with Vice-President for Finance Glen Shor and Acting Deputy EVP Tony Sharon, Provost Marty Schmidt will also provide detailed guidance to help all units rework their budgets to reduce expenses and reflect additional savings from the hiring pause.