Harvard University reported a $10 million operating deficit in its Thursday financial report — the first deficit reported since 2013, according to the Boston Globe.
The deficit represents a sharp transition from the $308 million operating surplus reported in 2019 and the $196 million surplus in 2018. Harvard said that most of the deficit was due to revenue losses resulting from coronavirus-related restrictions, the Globe reported. Students were sent home in March when the pandemic began and the university refunded their room and board charges. It also reportedly closed research labs, cancelled executive education programs and most events. The university also offered an early voluntary retirement package to 1,600 staff members, of which 700 accepted, per the Globe.
Harvard reports $10 million deficit as costs of COVID-19 add up https://t.co/RQBmGm6DyS
— The Boston Globe (@BostonGlobe) October 22, 2020
Harvard’s total operating budget is reportedly $5.4 billion, and the university also enjoys a substantial endowment worth $41.9 billion. As one of the wealthiest universities in the world, Harvard was still able to continue making investments into virtual learning and financial aid. (RELATED: School Reopenings Haven’t Led To COVID-19 Outbreaks Yet, According To Early Evidence)
Still, Harvard has been reporting a 3-4% revenue growth during recent years, according to the Boston Globe. During the 2020 fiscal year, which ended in June, the school’s revenues dropped by $138 million.
“The financial effects on Harvard from the onset of the pandemic in March of this year were significant and sudden,” Harvard vice president for finance Thomas J. Hollister said in a Thursday statement, according to the report. “Sound financial management allowed the university to be in a position to cover sudden losses from operations, while also investing in the mission.”
Harvard is expected to lose revenue again during this fiscal year as the school continues to offer only online classes in the fall and restricts dormitories to first-year students and students facing hardships. The university has not seen a 2-year decline in revenue since the Great Depression in the 1930s, the Boston Globe reported.
“How we manage declining revenue and rising need for investment in excellence amid new and necessary health protocols will, in part, determine our successors’ ability to endure and thrive,” Harvard President Lawrence Bacow said in a message.
“We expect difficulty for this sector, with existential issues for some institutions,” Hollister said. “This looms as one of the many challenges facing our nation due to the pandemic and its consequences.”