January 26th, 1998

Dear Colleagues:

For the past six years, my report has begun - of necessity - with the budget. This year, I am happy to abandon that habit, and to leave the details of the fiscal state of the Faculty until the end. There are three reasons why this change of focus is possible. First, the structural imbalance in the income and expense lines of the Faculty has been eliminated, and our operations are now close to equilibrium. Second, the extraordinary rise in the stock market (coupled, of course, with the equally notable performance of the Harvard Management Company) has allowed the Corporation prudently to authorize a larger increase in the payout from the endowment than we could have expected. Third, the current FAS Campaign, which stood at nearly $796 million on December 31st and represents just over 80% of the Faculty's goal, is beginning to be felt (and seen) in several areas. We have now been able to respond to some of our greatest needs, addressing problems that have remained unresolved for lack of funds, and selectively directing some of our unrestricted income towards areas where Campaign fundraising has fallen short.

Yet as I look ahead, there are several pressures of which we had better be mindful if we are to avoid the impulsive enjoyment of a boom that will only produce a bust in future years. These are resource questions, but I raise them here not because of their budgetary impact (which we cannot confidently predict), but because they illustrate some important questions of institutional priority that the Faculty may have to confront. The first of these pressures derives from the increasing scrutiny that universities are receiving from the public, from the press, and from Congress. The cost of undergraduate education is a major focus of this new interest. Internal inflation for colleges and universities has historically outpaced the Consumer Price Index, but this index nevertheless remains a common benchmark for many commentators. Fortunately, in our own case, we have managed over the past several years steadily to lower tuition increases year by year, and we must aim to continue this effort. But we cannot escape the fact that tuition accounts for 40% of the Faculty's budget (omitting sponsored research grants), and nearly 60% of our unrestricted income. These rather high percentages make the decision about tuition increases a difficult one. On the one hand we can recognize the social desirability of reducing the rate of rise in tuition (even while we fiercely adhere to the principle of 'need-blind admission and need-based aid' that allows all admitted students to come to Harvard, whatever their families' means). Yet on the other hand, an increase in tuition that is lower than the increase in our costs (even after all our cost-containment efforts) means either that we do less, or that we find other sources of income to replace the tuition shortfall. To put this dilemma more sharply: if, annually, we were to raise tuition by 3% instead of 4%, we should need to find about $25 million of new endowment every year simply to make up for this particular shortfall in the Faculty's income.

The second significant pressure point on our resources comes from the Graduate School. Harvard continues to attract outstanding students, and our 'yield' (the fraction of those who are offered places, that accept) is the highest in the country. Yet the level of our offers and the fact that they provide only two years of guaranteed support, are becoming less competitive in many fields, and are making it more difficult for us to attract the best students in each cohort. The quality of our graduate students is critical: for the training of the scholars and professors of the next generation, for their contribution to the undergraduate experience, and for the support of the research of the faculty. We must, with some urgency, reevaluate the way that we support graduate students, so that departments can target their available funds more effectively towards the best applicants. The present graduate aid formula was devised in the early 1970s at a time when graduate support nationally had suffered a major collapse. While that formula has served us reasonably well, it embedded a number of unintended consequences and unwelcome instabilities that are not helpful today. So I am very glad that Professor Peter Ellison agreed last spring to chair a faculty committee to examine this problem, and that we shall, this year, be able to consider his group's recommendations. We can do better with the funds we have, and the Ellison Committee will, I'm sure, identify ways in which any incremental support could be most effectively used.

The third area of concern is faculty salaries. Traditionally, our senior faculty have received, on average, the highest (or close to the highest) salaries for Faculties of Arts and Sciences in the country. Indeed, the intellectual distinction of our colleagues, not to speak of their work-loads, would make anything else inappropriate. But the spread of senior faculty salaries at Harvard is comparatively small, and we are facing an environment in which increasing numbers of our peer institutions are moving towards a de facto 'star system,' where a few receive high salaries and many others are much more modestly compensated. It becomes, of course, more difficult to recruit and to retain the most sought-after colleagues, at both the junior and senior level, while maintaining our commitment to rough equity within and across disciplines. This is a challenge in every field, though it is particularly sharp where we face competition from professional schools and research institutes. The most powerful reasons for coming to Harvard, and for staying here, will continue to be the distinction of our colleagues, the talent of our students, the richness of the libraries and collections, and the quality of our research facilities. But we must not find ourselves in a circumstance where those advantages have to be set off against a significantly lower salary level, even if it remains true that we could all earn more elsewhere as the lone star in a less luminous firmament.

Fourth, the increasingly erratic flow of federal funds for scientific research puts burdens upon research universities to provide seed money, bridging research support, matching funds for major grants, and underpinning for common facilities and laboratory infrastructure. We face rising competition from universities, research institutes, and medical schools, that provide support for such essential services as homes for mice, sophisticated analytical instrumentation, and massive computing facilities. Moreover, the continued health and quality of scientific research in the Faculty requires that we be able to smooth the flow of research income to our faculty. The landscape has changed, and it is not clear that we are providing the security and the support that is increasingly available at our peer institutions.

I start with this litany of concern not to be discouraging, but rather to remind us that we shall continue to face difficult choices among competing priorities. We shall not be able simultaneously to lower tuition increases, to make the most competitive offers to graduate students, to reduce section size, to improve faculty salaries, and to add to the ranks of the faculty. This is an obvious point, but let me pursue it for a moment. Most of us agree that our graduate programs would benefit from increased funding. But is this improvement greater than we should achieve by applying the same resources elsewhere? For the cost of twenty-five full fellowships for graduate students is equivalent to the cost of four or five new faculty, or to the cost of reducing section size in all large classes from twenty to fifteen.

I am fortunate that our colleagues on the Resources Committee will continue to analyze such questions and to advise me, for the wise resolution of competing needs is essential for the Faculty's future health. Over the past year, the Resources Committee has discussed the reshaping of junior faculty compensation and support, issues surrounding faculty retirement, the instructional budget, information technology, and the financial relationship of the FAS with the Central Administration. Most of these matters have come before the Faculty Council, and thence the full Faculty. The last topic has absorbed much of the committee's time and effort, as we have come to understand the functioning of the General Operating Account (which is an important mechanism through which the Center's activities are funded), and to analyze the flows of funds, in each direction, between the Center and the FAS. The committee will continue to examine these questions, to encourage greater transparency in financial decision-making, and to move towards "formal governance structures to ensure consultation with the Faculties on major financial commitments affecting their economic health and welfare."1

Let me now turn to more specific matters.

THE COLLEGE

Admissions. The first Class of the new millennium - those who will graduate in 2001 - was chosen from another exceptional group of applicants. We admitted 2,153 of the 16,597 applicants and some comparisons remind us of the quality of this pool of talent. More than half of all the applicants scored more than 1400 on their combined SATs, more than two-thirds were in the top 10% of their high school classes, and the number of valedictorians (2,672) was considerably higher than the total number of admitted students. Our yield was 76.3%, just shy of last year's twenty-three-year high of 78%, again the highest among the nation's selective colleges by a wide margin.

I mentioned last year the concern that a number of our peer institutions have moved to 'early decision' programs (where the admitted student must accept the proffered place), while we continue to make 'early action' offers (where the admitted student is free to apply elsewhere, and not to respond to us until May). As has recently been noted in the press, students are not necessarily well served by early decision programs, which require commitment to a particular institution near to the beginning of a student's senior year. While universities and colleges may feel that they can secure by this device a core of good undergraduates, a class that is dominated by selection from among those who apply early may reduce the overall diversity and balance of the admitted group. We have ourselves already seen (in December, 1997) a record number of early applicants, and about half the Harvard Class of 2002 will derive from the early action process. This is an area where institutional competition for talent, which encourages early application and which requires an immediate commitment, may not benefit individual students. This competition, along with recently-proposed changes in the practices of some of our peer institutions, is being closely watched by the Admissions Office.

These effects notwithstanding, the unmatched strength of our entering classes has much to do with the College's need-based aid policy, which the great generosity of our alumni/ae in funding undergraduate scholarships allows us to maintain. Last year, our undergraduates received more than $80 million in financial aid. More than $41 million came in the form of scholarships, of which 93% derived from University sources. For those undergraduates who receive scholarships, the average grant exceeds $14,000, with a total aid package (including loans and jobs) approaching $21,000.

Women. For more than two decades, the representation of women in the entering class has been rising, reaching 48.5% this year. It was appropriate, then, that Dean Harry Lewis should have arranged in October 'A Celebration of Women at Harvard College,' marking the twenty-fifth anniversary of women's residence in the Yard. The new gate (the one that leads more conveniently from the Yard to Annenberg Hall and Loker Commons) commemorates Anne Bradstreet (1612-1672), the first American poet, whose connections to Harvard College were as close as they could be, granted that she could not then actually attend. The dedication was accompanied by a number of panel discussions led by faculty and alumnae, appropriately including members of the Class of 1976.

In May, Maisie Houghton ('62) and Jamie Houghton ('58) generously established an endowment to promote greater contact between women undergraduates in the College and women leaders here and outside, and to encourage the contribution of women to scholarship and society. The Houghton endowment is supporting many activities (including seminars and colloquia, informal social events to bring undergraduates together with distinguished visiting speakers, and programs of mentoring and career opportunity), all of which are improving the quality of the undergraduate experience at Harvard.

Finally, we were able to establish in November the Women's Leadership Awards, funded by the endowment of Terrie Fried Bloom ('75). These awards recognize exceptional leadership and unusual contributions to the advancement of women in the College. Fifty-four women were nominated for the student award this year.

Advising. Of all the aspects of life in the College, advising - both academic and personal - receives the most uneven comments from our graduates. Dean Lewis has revivified the Standing Committee on Advising and Counseling, and several new programs have been put in place. Resident tutors now receive more extensive information and training, new House Masters are invited to orientation sessions, and House reviews now occur quinquenially. The Standing Committee has worked to set standards for upper-class advising, and, in collaboration with the Dean for Undergraduate Education, William Todd, seeks better to coordinate the advising by House Tutors with that provided by Head Tutors and Directors of Undergraduate Studies in departments and concentrations.

Classrooms. The Faculty faces a shortage of classroom spaces, both large and small. As many of you know to your chagrin, the Registrar has the unenviable job of arranging half of the official meetings of courses and sections, while controlling only a quarter of the Faculty's instructional space. She schedules 300 lecture courses, 875 section meetings, and 2,000 extracurricular meetings, in just 100 classrooms! The few large lecture halls under the aegis of the Registrar are very heavily scheduled, and since each has a different profile of size, computer and media support, and handicap accessibility, the rearrangements needed when a faculty member requests a special service, or a mobility-impaired student enrolls in a large class, can be extremely problematic. Moreover, any reduction in average undergraduate class size or section size will further tax the Registrar's limited stock. Several inexpensive but probably unwelcome approaches could help to alleviate these pressures. We might encourage more faculty to teach at unpopular times, or we might claim for general use at certain hours some classrooms that are now controlled entirely by departments. But it is clear that we must recover, renovate, and modernize many of our existing classrooms, and - possibly - construct some new ones, so that instruction can proceed more flexibly.

Last year Dean Nancy Maull established a Committee on Classrooms to explore how we could better use our instructional spaces. The committee is generating a database that will provide more immediate information about scheduling, size, lighting, media support, and accessibility. But one of my reasons for raising the topic here is to alert the Faculty to this problem, so that we do not unnecessarily spend our resources on building new classrooms if we could instead more freely schedule those that we have.

UNDERGRADUATE EDUCATION

Core curriculum. The review of the Core Program, conducted during 1995 and 1996 by a distinguished group of colleagues led by Professor Sidney Verba, culminated last May in extensive discussion by the Faculty, and a flurry of legislation. The Review Committee's central recommendations: to preserve the basic framework of the Core, to keep the number of required courses at eight, to increase the number and range of offerings in each category, and to introduce a revised Quantitative Reasoning requirement, were all accepted. The new requirement comes at a time when quantitative methods such as surveys and statistical analyses are being used more and more to shape and to convey information. Our graduates must be able to penetrate the numbers and the claimed conclusions of data used in public discourse, and to understand the issues of a more quantitative world. The Quantitative Reasoning requirement will be analytical in focus, comprising courses across many fields, each of which will embed the elements of numerical analysis and application. The new Core sub-committee is working to recruit courses in a range of fields, such as risk analysis, demography, evolution, logic, and econometrics.

The Committee also urged the Core sub-committees to review the rubric of each Core area, to encourage a greater inclusiveness, and to examine the possibility of embracing departmental courses that meet the Core aims and guidelines. I welcomed the Faculty's desire to bring new faculty colleagues onto the sub-committees, to try to lighten the load that teaching in the Core represents, to seek incentives for colleagues to offer Core courses, to work with the sub-committees in the recruitment of new offerings, and to see if section size can be reduced. Many of these efforts have begun to bear fruit during the fall, and the number of new Core courses being planned and developed is happily at an unusually high level. In addition, as the flow of new funds from the Campaign allows me to authorize new faculty appointments, I expect that many of these increases in the faculty will further enrich the Core's menu. Nonetheless, the Faculty's target of six courses every term in every Core area remains a real challenge.

The changes to the Core will affect the whole of the undergraduate curriculum, and it is worth remembering that the Core review had its roots in a more general assessment of our undergraduate offerings. Now that the Faculty has decided on the shape and scope of the Core, two related concerns have emerged: the nature of the foreign language requirement, and the total number of undergraduate requirements (in the concentrations, in the Core, and elsewhere). The Educational Policy Committee has embarked upon a study of both these issues, on each of which Dean Todd presented a preliminary report to the Faculty in December.

Foreign languages. The last formal Faculty action on the language requirement was taken in 1968, when we reduced the expectation from two years of study to one. The intervening thirty years have seen an inexorable move towards what is commonly called 'an increasingly global society,' and a reexamination of what we expect of our students and what preparation we give them, is surely due. At the heart of the matter is the question of whether our goal is to expose all students to the study of a foreign language, or to demand some level of proficiency in it. Recognizing this, the Educational Policy Committee has put forward a spectrum of options, and will, in the coming months, evaluate the consequences: on admissions, on the shape of students' curricula, on enrollments in language courses, and on the relationship between language courses and the Foreign Cultures area of the Core. Even if the wish for more exposure to (or a higher competency in) foreign languages runs into the countervailing desire to reduce the overall curricular constraints that students face, there is surely no doubt that we can raise the level of perceived value and importance that the Faculty places on the study of a language other than one's own.

Overall requirements. Emerging from the Core discussion came the question of whether the proportion of mandated courses in the undergraduate curriculum is too high. The desire to allow students to sample new fields and freely to extend their intellectual horizons has to be balanced against the wish to define the fundamental competencies that all students should have. Under our current rules, general requirements take nine of the thirty-two courses that are required for graduation. (The actual number can vary from eight to thirteen courses, depending on the student's level of achievement at matriculation.) Concentration requirements add another twelve to fourteen (for basic tracks) or fourteen to sixteen or so (for honors tracks). Concentrations will be invited to examine the number of courses that they mandate, and the constraint on course choice that students experience as a consequence of general requirements should be somewhat ameliorated by increasing the number of courses offered in each area of the Core.

FACULTY

In all our plans, the addition of new faculty positions has had top priority. The student:faculty ratio in the FAS is higher than in our peer institutions, and as the faculty are more stretched by multiple academic and administrative commitments, the goal of balancing large lecture courses with a higher proportion of tutorials, small classes, and seminars, demands that we increase the size of the Faculty. The Academic Plan that was drawn up five years ago, before the Campaign was launched, called for new faculty positions primarily in those areas where the undergraduate teaching need is greatest; that is, for the Core, and for concentrations where students are least likely to encounter faculty in individual or small group settings.

While I still hope to secure forty new faculty positions in the Campaign, it has not always proved possible to raise funds for positions in the fields of greatest need. The only truly unconstrained faculty positions that have so far been endowed are the six Harvard College professorships from the gift of John and Frances Loeb. Yet the success of the Campaign has relieved our unrestricted budget to the extent that I am now able to add another six faculty positions to those that the Loeb gift has funded. A number of departments, therefore, have been invited to consider how an additional faculty position could alleviate their present stress and enrich the curriculum and scholarly range of the Faculty. The first of these appointments will allow some reasonably immediate relief to those departments that are bearing the greatest instructional load, and should, in time, expand our offerings in the Core. The distribution between junior and senior positions will depend (as for any position authorization) on the current tenure/non-tenure balance in the department, and the opportunity to make a stellar appointment at either level. This good news is, indeed, one of the 'first fruits' (v.i.) of the Campaign, and my hope is that I can continue in the coming years to authorize - in a measured way - new positions across the Faculty.

Junior faculty. A study of junior faculty support and compensation by the Resources Committee last year highlighted several concerns. First, the direct compensation of junior faculty in certain departments had been slipping relative to other institutions, as had the availability of paid research leaves for those in some other departments. Second, the arrangements for the support of junior faculty housing and living costs had become uneven, and a reshaping of this program was called for. Third, the annual travel allowance granted to all faculty was felt to be unhelpfully focused. After subsequent discussion of these issues by the Faculty Council and the full Faculty, several changes were made. An additional term of paid leave is now granted to junior faculty in 'alpha-scale' departments upon their promotion to the rank of associate professor, and a commensurate increase in salary has been provided for junior colleagues in 'beta-scale' departments. The old rental subsidy (which was limited to those who happened to live in accommodation owned by Harvard Real Estate) and the deferred-interest second mortgage have been replaced by an across-the-board cost-of-living allowance (of $3000 annually) for all junior faculty. Finally, the travel allowance has now been replaced - for both senior and junior faculty - by an annual subvention of $1000, which accumulates if not used, for any research-related expense.

I noted last year an increase in the proportion of tenured appointments that derived from promotion of our junior faculty. This trend continues. In the past three years, over 40% of all tenured appointments were internal promotions, compared with under 30% for the previous three-year period.

Vale. In closing this section, I must sadly record the retirement last July of Phyllis Keller, Senior Associate Dean of the Faculty, who is now working on a book on the emergence of Harvard as a major research university and on its more recent history since the 1960s. In her twenty-four years of service in University Hall, Phyllis contributed many things: wisdom, wit, tenacity, and vision. She helped to shape the formulation of the Core (and last year helped to guide its reform), and she resolved thousands of issues of a complexity that only academic institutions can generate. Above all, she made the lives of three successive Deans more focused and more fun. For her extraordinary contributions, to individuals, to departments, and to the Faculty, I am most grateful.

GRADUATE SCHOOL

Admissions. Harvard remains the destination of choice for many of the very best students in the U.S. and abroad. Last year, 56% of the 962 admitted students accepted our offer, a yield that is the highest among our peer graduate schools. The proportion of women in the entering class rose quite sharply, to 45% (from 39% in the previous year), and the percentage of international students also rose slightly, to 35%. Despite these encouraging numbers, as the opportunities for academic and scholarly careers diminish, we must be concerned that the number of talented students prepared to embark on the lengthy journey to the Ph.D. will fall. Seeming to fulfill this concern, and paralleling a nationwide decline, applications to the Graduate School fell by about 7% in 1996-97, to 6,715.

While the quality of the applicant pool remained strong, the competition from our peer institutions for the most talented students was no less keen. Indeed, the sometimes higher stipends, and the summer awards, dissertation fellowships, and multi-year offers of other schools, pose a continuing challenge. As Dean Christoph Wolff has observed, our relatively high yield disguises the fact that many departments have difficulty recruiting their top choices each year, because the offers that these students receive from elsewhere are more attractive. Our financial aid arrangements are therefore being scrutinized by the Ellison Committee mentioned above, and I hope that we shall be able to make more competitive offers to the best applicants in the future. Some improvement, at least, will come if we can guarantee the security of four years of support through some combination of fellowships and teaching appointments, and - perhaps - offer dissertation-year fellowships to the most valued applicants.

Placement. The pattern of employment of our Ph.D. students at the moment of completing their degree has remained stable for some time, though students continue to search for steady jobs for several years after receiving the Ph.D. To understand whether these extended searches were bearing fruit, Dr. Cynthia Verba of the Graduate School investigated the current employment status of those who received their Ph.D. from Harvard between 1988 and 1993. The results of this study, which is available on request from the Graduate School, provides a baseline from which our future placement performance can be tracked. There is a marked improvement in the overall employment rate, three years after graduation. In the humanities the employment rate climbed from 82% to 95%, in the social sciences from 80% to 97%, and in the natural sciences from 32% to 90%. (The dramatic rise in the natural sciences is explained by the fact that most of these graduates move first to a post-doctoral position.) Analogously encouraging rises are seen when one looks just at employment in academia: for the humanities the rate increases from 71% (at graduation) to 81% (after three years), for the social sciences from 57% to 71%, and for the natural sciences from 12% to 51%. While the report itself provides more definition and detail, these data should cheer both our graduate students and us. They indicate that most of our doctoral students are moving into promising careers - both inside and outside academia - within a few years of earning their Ph.D.s.

CONTINUING EDUCATION

In 1996-97, the Division of Continuing Education saw a rise in enrollments in all of its programs: the Summer School, the Extension School, and the Institute for Learning in Retirement. During the year, a new computing facility was opened on Church Street, web sites were expanded and refined, and the administrative computing systems were upgraded. The Extension School entered the field of distance learning, offering five mathematics courses remotely, using interactive software. These courses involve no 'live' lectures, but students and instructors are in contact by e-mail and telephone.

Overall, the Division of Continuing Education continues to be an innovative model for such schools, and it enjoys excellent financial health. I am, indeed, most grateful to Dean Shinagel for the ongoing support of capital projects in the Faculty that this fiscal well-being allows. Much of the funding for the Boylston renovation, and all of the cost of the new Language Resource Center (v.i.) on the top floor of Lamont (both of which would otherwise have had to be financed by debt) derive from the continuingly successful operation of the Division of Continuing Education under Dean Shinagel's leadership.

INFORMATION TECHNOLOGY

The extraordinary rise in the availability and use of digital technology has put serious stress on both the capital and operating budgets of the Faculty. We must encourage and support new methods of teaching and learning, and we must outfit new classrooms and renovate existing spaces so as to exploit these more interactive ways of instruction. The new tools - of e-mail, groupware, and multimedia presentation - require strong support, and access to on-line indices, databases, and journals, is becoming essential. We are impatient for HOLLIS II, and we are hungry for better access to the universe of data available elsewhere.

I am pleased that multimedia tapes and videos for interactive language learning will be more readily and comfortably available in digital form in the new Language Resource Center, and we are developing an infrastructure that will allow use of these and other materials elsewhere on campus. Appropriately, this technology will be used this spring in Professor H.T. Kung's computer networking course, where lectures and discussions will be recorded for delivery on demand, and where real-time exchanges with students and faculty elsewhere are planned. We have also outfitted several classrooms for computer use, where up-to-date projection equipment is available. Meanwhile, work on issues associated with the general distribution of digitized materials - issues that are both technical (in terms of network capacity) and legal (in terms of copyright protection) - will continue.

Strengthening and increasing server and network capacity and reliability within and beyond Harvard is one of the tasks faced by the Faculty's Computer Services staff. They continually upgrade desktop support and software standards, and provide the technological support for the needs of the 13,000 students, faculty and staff of the FAS. As one example, about 300 courses this year have web sites, and this number could reach 1,000 in the next year or two.

Our planning for improved digital systems comes at a time when the University's aging infrastructure is being brought up to date, most visibly through Project ADAPT, which will modernize the central financial and human resource computer systems (see http://www.adapt.harvard.edu). No less important is the new computer system being developed for the Registrar's Office. Our current record-keeping methods date from 1980, and are so cumbersome that a simple task, such as to record which Core requirements a particular student has satisfied, requires thirty-three discrete UNIX commands. The new system will allow us to track students' progress more easily, and to provide information on such things as enrollment trends, section sizes, faculty course responsibilities, and classroom availability. The laborious analyses that were required for the Faculty papers on foreign language requirements and on overall requirements, for example, will become much easier when this new system is in place.

LIBRARY

Last year, I highlighted the continuing importance of the Library in our budgetary and physical planning. The conservation of our collections, particularly in Widener, is of critical concern. Many of the materials - books, manuscripts, maps, and even papyri - are irreplaceable, and in many instances unique. In broad terms, we know what needs to be done: the stacks must be equipped with sprinklers and made safe against fire, and all areas of the library must be climate-controlled to slow the deterioration of our printed collections. (An average lowering of the temperature by ten centigrade degrees would roughly double the life of our collections.) Last year, three engineering consultants made preliminary reports, and one of these has now been chosen to do a more complete analysis and to present plans for the work. Once the project scope is agreed upon, we shall face a logistical challenge of extreme complexity, as major sections of Widener are taken out of commission. Planning for the depression of the Central Artery will seem trivial by comparison, if we are to avoid serious interference with the scholarly work that Widener supports.

Other developments include the creation of a new Conservation Laboratory to handle the restoration, preservation, and care of materials throughout the College library system. In a related endeavour, the Library is increasing its stock of 'electronic viewing copies,' which are scanned versions of fragile or rare items. (As a demonstration example, the interested reader might like to visit http://hbook.harvard.edu/hbook/, where the text and illustrations of the great 'Harvard Book' of 1875 have been made available.)

The growth of information in digital form continues explosively. More and more scholarly journals are coming online, and many resources (for example, numerous government documents) are now delivered to us solely in this way. Our librarians are being called upon increasingly by faculty and students for help with the manipulation of data (for example, in the merging of census information with maps to illustrate the geographical distribution of particular groups or characteristics), and as a result, new principles of operation are having to be developed to cope with these new demands. Some observers had predicted that increased use of computer-based information would to some extent replace the demand for printed materials, but the opposite is true. Scholars and students find it easy to use HOLLIS, at home or from their offices or dorm rooms, and the pleasures of electronically browsing the Library's miles of stacks is becoming more widespread. In the last academic year, more than eight million searches were performed on HOLLIS. The revolution has arrived.

One other concern will occupy us in the coming year, and relates to our departmental science libraries. Historically, most of these libraries have been supported on the budgets of departments rather than through the Library, and have in consequence received somewhat uneven attention. In concert with members of the faculty and the chairs of departments, the Harvard College Librarian, Nancy Cline, is evaluating the state of these collections, and investigating whether we can improve the range of materials and services (some of which will obviously be on-line), consolidate our operations, and develop closer coordination among the librarians that now serve these libraries. As our habits change, so must the facilities that support them.

CAPITAL PROJECTS

The reshaping of our physical environment is occurring more rapidly than I had thought possible, thanks to the generosity of our alumni/ae and friends, and the intense efforts of our Physical Resources staff. The Barker Center is complete, and reactions to its effect both on the eye and on the functioning of the departments and programs that it houses, have been overwhelmingly positive. The primary purpose was to improve the intellectual environment for both research and teaching, and that seems to be happening. As I write, the second phase of this project for the humanities, the renovation of the interior of Boylston, is under way. The building will provide new faculty and departmental offices, classrooms, seminar rooms, a completely new auditorium, and a renovated Ticknor Lounge. By the end of the summer, Romance Languages, the Classics, Literature, Comparative Literature, and Linguistics, should be resettled, with everyone able to work, open their windows, control their climate, and meet their colleagues, students, and teaching fellows.

A consequence of the Boylston renovation is the migration of what is now called the Language Resource Center, to the top floor of Lamont. There, a central file server supports sixty computer work stations, and allows simultaneous access to the same material for up to thirty users. The word 'language' is inclusive, for the new center also contains music listening stations, video viewing rooms, adaptive technology workstations for students with disabilities, and spaces for group instruction.

Planning for the new facility for computer science and electrical engineering, the Maxwell Dworkin building, is essentially complete, and construction will soon start. Made possible by the splendid gifts of Bill Gates ('77) and Steve Ballmer ('77), it will include offices for thirty faculty, along with their associated laboratories, seminar rooms and classrooms, as well as graduate student and administrative offices. Completion is expected in the summer of 1999. On a similar time-track is the Naito building for Chemistry and Chemical Biology, which will at last connect Mallinckrodt, Converse, and Gibbs, and provide research space for four major research groups. The generosity of Mr. Haruo Naito of the Esai Company has made this long-desired project a reality.

Still at the stage of intensive planning is another major Campaign priority, in Government and International Studies. The great gift of Sid Knafel ('52) has triggered intensive planning for our needs in this area: to construct a new building for the Government Department, and to link this - through the central and integrating facilities of the Knafel Center - with the regional and international centers that live in and around Coolidge Hall. We hope to construct a new building on the block that contains Gund Hall (the Graduate School of Design) and Coolidge. A joint FAS-GSD faculty planning committee, chaired by Professor Ken Shepsle, has established the scope of the project, and Professor Alex Krieger (a GSD member of the committee) has put forward several very interesting blocking schemes (see: http://www.fas.harvard.edu/~planning/cgis/). Architect interviews took place in mid-January. This project is complicated, for we must consider not only the landscape of our own academic needs, but also the concerns of the local community, the city, and the Cambridge Historic Commission. But this site can undoubtedly best meet our objectives of unifying the Government Department without draining the international centers of faculty presence. We must hope that our community neighbors will appreciate the improvements that the plan can bring to the social sciences, and to this part of Cambridge.

Three major projects will greatly improve our athletics programs. The new racquet facility, which is already under construction, will contain six indoor tennis courts, sixteen international-size squash courts, a varsity weight training room, the Hall of Fame, and offices for coaches and the Athletics Department administration. The Tennis Center will provide eighteen new outdoor tennis courts, with spectator seating and a new pavilion. Third, the new artificial turf field will be equipped with lighting for night-time use, and will allow much greater flexibility in the scheduling of events, particularly at times of the year (as is often the case on that site) when our grass fields are unplayable.

Finally, as the twenty-five year lease on Byerly Hall from Radcliffe expires this summer, we shall face the problem of finding more permanent homes for the Office of Admissions and Financial Aid, and for the Graduate School. This exercise will be challenging (and probably costly), not only because of the space required (approximately 40,000 square feet), but also because of the need for these offices to be in reasonable proximity to the Yard.

FINANCIAL STATUS

Last year, I noted that we were moving towards a consolidated presentation of the entire FAS budget by including in the statements the full activities of College Life and Student Services, Athletics, and the Graduate Dormitories. This year, we have added the Division of Engineering and Applied Sciences and the research activities of the Department of Organismic and Evolutionary Biology. With the arrival of new financial systems (Project ADAPT), we shall be able to include the remaining units of the FAS, the finances of which have historically been reported separately (namely the Harvard College Library, the Division of Continuing Education, the Harvard Forest, the Observatory, the Museum of Comparative Zoology, the Peabody Museum, and the Semitic Museum).

Revenue

The major sources of income to the Faculty are: tuition, fees, and room and lodging charges; distribution from the endowment; gifts for current use; and funding for research. The totals for FY96 and FY97 are listed in Table I, broken out by fund type (unrestricted, restricted, or sponsored).

The tuition increase for FY98 was 4.2% (leading to a 4.1% rise in the total undergraduate package), which is the lowest percentage increase in nearly thirty years, and continues the downward trend that we have maintained since 1993. I have outlined my concern about the sustainability of continued decreases in the tuition rate, near the beginning of this letter.

The market value of the FAS endowment stood at $4.7 billion on June 30th 1997. The investment return for FY97 was an impressive 25.8%,2 only just lower than the 26% of the previous year. All parts of the FAS benefit from this stellar performance, as the Corporation raised the annual distribution by 7% in FY98, and has recently announced an 8% rise for FY99. Although 85% of our endowment funds are restricted for the support of specified programs and activities (such as endowed professorships, scholarships, or book acquisition funds), these higher-than-anticipated distributions have certainly alleviated some of the pressure on our unrestricted budget, and allowed a number of the initiatives that I have described above.

Unrestricted gifts to the Harvard College Fund in FY97 were more than 5% higher than the previous year. Overall, gifts to the Faculty have again risen sharply, primarily from increased giving for particular purposes: for the programs of departments and research centers, and for identified Campaign priorities such as building projects, professorships, or financial aid. Gifts for capital projects or to endowment funds do not appear under 'Revenue' in Table I, of course, but represent major benefits to the Faculty. Indirect cost recovery on grants and contracts rose modestly, while direct costs dropped by more than 2%. While the rising number of Howard Hughes investigators in the FAS, for example, reduces the direct cost line (since the direct costs of Hughes investigators do not appear in our budgets) without implying any reduction in the success of the faculty's research programs, we do continue to experience pressure on federal support for research, as well as an erosion of the indirect cost rate. The burdens of new environmental regulation (such as hazardous waste disposal) and of narrower cost accounting rules (that limit what can be charged to the direct costs of the research), are being felt by both faculty and staff. Sales and services include such things as the revenue from the sale of items bearing Harvard insignia, income from journals, ticket sales for athletic events, and income earned from programs run by our research centers. Income from affiliates includes the transfer of $2.5 million from the operating surplus of the Division of Continuing Education. Other income comes from a variety of sources, and includes interest on fund balances, income from patents, application fees, and rental from the use of FAS facilities.

Expense

Each area of expenditure is listed in Table II, which also contains the comparable data from FY96.

Instruction is the largest category of expense, and includes the compensation of faculty (such as salary, benefits, housing subsidy, and interest on educational loans), the salaries of teaching fellows and teaching assistants, and the operating costs of all academic departments along with the salaries and wages of their administrative and support staff. The costs incurred in the recruitment of new faculty are also shown here.

Research expenditures comprise the Clark-Tozier funds and the new annual research subvention to all faculty (beginning in FY98), the start-up costs for new faculty, the budgets of all the research centers and institutes, and the direct costs of externally-sponsored research.

Under academic support fall the unrestricted subvention to the Harvard College Library (which is about half of the Library's operating budget: the rest comes mostly from its restricted endowment), instructional support services such as the Bok Center and media services, and academic computing. This last class covers the service and support of the computing needs of students and faculty, and is - unsurprisingly - growing at a rate much faster than any other part of the FAS budget.

Student services comprise all those units that provide support for student life and extracurricular activity: the offices of Admissions and Financial Aid, of the Registrar, of the Dean of Students, and of the Dean of Freshmen, the Bureau of Study Counsel, the Department of Athletics, and the programs run in the Houses.

Scholarships and fellowships lists all the grants and awards to undergraduates and to graduate students. Despite a strong economy, expenditures for undergraduate financial aid rose by 6.7% over the previous year (though the two-year rise averages to a more reasonable 4.3% per year). I might here draw attention to the disparity in the proportion of unrestricted scholarship and fellowship support of undergraduates compared with graduate students. Only about 27% of the University funds that provide scholarship support for undergraduates has to come from the Faculty's unrestricted budget, whereas 63% of the University support for graduate fellowships derives from this source. I hope in the coming years that we may, by energetic fund-raising for graduate fellowships, endow and thus more firmly underpin the support of our graduate students.

Institutional support covers the University Assessment, which is set at 6.75% of all salary costs (other than student wages, and salaries that derive from grants) and pays for the administrative services of the Central Administration. Also listed here are the activities of my office in financial operations, space and facilities planning, personnel and alumni/ae relations, and development. The FAS contribution to the cost of Project ADAPT is included under administrative computing.

The category of operations and maintenance relates to buildings used for teaching, research, and administration, and also includes maintenance projects that are funded from our operating budget. The operation and maintenance of the Houses and the undergraduate and graduate dormitories is listed under auxiliary enterprises, in accord with standard practice for university financial statements. Finally, debt service includes the interest and repayments of principal on the costs of major capital projects that have been debt-financed.

* * * * * *

In 1641, when Harvard College consisted of one building, a cow-yard, and a total endowment of £400, three local ministers (Weld, Hibbens, and Peters) set out on the first concerted drive to obtain income and endowment. To help their effort, the College produced its first fund-raising brochure, a twenty six page tract entitled "New England's First Fruits" which contained an account of Harvard College ("The Edifice is very faire and comely within and without . . .") and of the President, Master Dunster ("a learned conscionable and industrious man, who hath . . . trained up his Pupills in the tongues and Arts . . ."). This campaign was not notably successful, though Weld did secure some tablecloths, pewter, and a number of books, as well as a gift that established the first undergraduate scholarship fund. The present Campaign, in contrast, is providing a splendid opportunity for us to improve the quality of teaching and scholarship in this Faculty, and I am very pleased that we are starting to enjoy its first fruits . . .

With my best wishes,

Yours sincerely,

Jeremy R. Knowles

1 Report of the FAS Committee on Resources, September, 1997.

2 This number can be compared with the median for the performance of all endowment funds of over $1 billion, of 20.3%.

 

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Copyright 1998 President and Fellows of Harvard College