The President's Perspective

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of technology in the classroom, travel ex- serve the fine progress they’re making and The President’s periences in the curriculum, about how to raise questions. We’re going to do Perspective students can work in teams. something that’s going to be very much We’re thinking about the extracurricu- valued by students and alumni alike. On an October Friday afternoon, Lawrence H. lar aspects of Harvard experience as [Of course,] Derek Bok famously ob- Summers met with Harvard Magazine in his of- well—for example, whether students who served that reforming the curriculum was fice at Massachusetts Hall to discuss the status of do public service can consider issues of like moving a cemetery, so I don’t know the priorities he outlined in his installation address, evaluating the programs they’re involved how long the process will go. I would cer- on October 12, 2001: undergraduate education, in as part of their academic work. tainly hope there’ll be some quite well- public service, science, and campus crystallized notions by the end growth. He also reviewed other is- of this academic year. sues, from the external environment and within the University, on On issues and opportunities in the which he has focused during the professional schools. first 27 months of his service as We’re thinking in funda- Harvard’s twenty-seventh presi- mental ways about education dent. Excerpts from the conversa- in almost every part of the Uni- tion follow. The Editors versity. The new deans of the divinity and education schools On the review of undergraduate are thinking about establishing education. core curricula for first-year stu- I think the curriculum re- dents in those programs. The view is o≠ to a great start new dean of the law school, with Bill Kirby’s leadership. Elena Kagan, is reviewing the People really came together nature of the basic first-year as they reflected on it in the sequence that students take, year before Bill became dean for the first time since Christo- of the Faculty of Arts and pher Columbus Langdell insti- Sciences [FAS] and came to tuted it in 1870. Dean Joseph the view that it was time for Martin is considering how the an overall review of our un- medical school’s case method dergraduate experience. [approach] needs to be modi- Certainly, we do very many fied after 15 years of experience things very well, but any with the New Pathway cur- human innovation should riculum. The business school be reviewed at least every instituted this year an ethics quarter century and there’s module in its course for the a great deal that’s changed first time. in the world since the Core There are a few common ele- curriculum was introduced. ments across our professional We are in a world that’s schools. One is the importance much more global, particu- of active learning and some larly in terms of interactions variant on the case method, and with developing countries. the new curricula all involve, in Science will be much more one way or another, thinking salient in the lives of our about actual practical prob- students along with technology. And with So I feel that this review is going in a lems—students working together and Bill’s leadership, we’ve got a really good very good way. We’ve got a long way to go talking together in preparation for their structure in place where we’re thinking and it’s never easy to generate consensus classes. The article on case-method teach- about all the important issues, from how on these things, but I think Bill Kirby and ing by business school professor David to maximize faculty-student contact to Dick Gross, who’s done a great job as the Garvin in the September-October maga- looking hard at the Core. We’re looking new dean of the College, and their col- zine had some of the excitement [see hard at questions of concentrations, par- leagues who are chairing the various com- “Making the Case,” page 56]. ticularly interdisciplinary concentrations. mittees are really doing a good job. I have a The second emerging preoccupation in There’s some terrific thinking underway chance to meet each month with the our professional schools will be leader- with respect to the way we teach, the role steering group for the review and to ob- ship. In some ways, it’s a cliché—but

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propositions become clichés because they’re true—that Harvard’s mission is to HARVARD PORTRAIT train leaders. For each of our professional schools, there are institutions to which they’re oriented: corporations, law firms, government agencies, hospitals or health organizations, denominations or non- profit organizations, schools or school dis- tricts—and sound management and good finance, the ability to establish a vision and the techniques for carrying that vision through [are fundamental to each]. So questions relating to collaboration and thinking about leadership are going to be increasingly important in the years ahead. The third important trend is an interest on our students’ part in crossing more than one profession or one institution over the course of their careers. You see it in the establishment of a joint-degree pro- gram between the law school and the public-health school. You see it in the pro- gram that the business school and the education school have jointly run for school superintendents. You see it, very generally, in the big increase in interest at the law school in various kinds of public service that Dean Kagan has emphasized and in the nearly half of our medical students who spend time abroad within the four years of their medical school to work on what have traditionally been thought of as problems in public health. So the question of collaboration across our schools is Kenneth S. Rogoff going to be a common theme as they As the american under-21 chess champion, Kenneth S. Rogo≠ decided to “miss renew their curricular experiences. most of the last two years of high school.” He left Rochester, New York, to support At the same time, there are enduring himself in Yugoslavia on prize winnings—perhaps an inkling of his international in- challenges common to the professional terests. Yale accepted his equivalency diploma; in college he played chess summers schools. How does one maintain the right only (placing no lower than seventh in three U.S. Championships), indulging instead balance in a professional school between a a new passion, economics, in which he was taught by future Nobel laureate James faculty that is connected to the world of Tobin. Thereafter, Rogo≠ dropped out of MIT to play chess until he quit (cold practice and a faculty that is at the highest turkey) to earn a Ph.D. in 1980. Professor of economics at Harvard since 1999, he has standards of intellectual rigor, given that pursued “problems at the intersection of political economy and economics,” a phe- practitioners are often looking for easier nomenon he saw firsthand during two years on leave as chief economist and research expositions and are oriented not to the director of the International Monetary Fund, ending last fall. He has documented frontier but to the useful. That’s a matter the “political budget cycle”: governments’ willingness to raise taxes, for example, rel- on which our professional-school deans ative to the electoral calendar, and “why voters fall for it.” His interpretation of inter- are exchanging ideas and information all national debt (more symptom than cause of developing countries’ weak growth) ex- the time. A lot that’s good comes in that tends to speculation on “why countries like the U.S. can borrow enough to wrap a cross-fertilization. rope around their necks several times” while others cannot secure credit. As the new One other area that is also worth think- director of Harvard’s Center for International Development, he will focus research ing about is the use of the University’s on “the big problem for the world over the next 100 years”: that two billion people convening power. One of the wonderful are poor although “our world is a cornucopia.” On the home front, filmmaker things about Harvard is its ability to draw Natasha Rogo≠ pioneered the Russian Sesame Street, but International Grandmaster leading people from every walk of life to Kenneth will teach children Gabriel, seven, and Juliana, five, the basic chess moves. come here and participate in discussions,

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Allston Planning: Working “Hypotheses”

In a 5,900-word letter to the Harvard community dated Octo- •Housing and urban life: New housing units will accommodate ber 21, written at the Corporation’s request, President Lawrence graduate and professional students, and perhaps some faculty H. Summers outlined the “especially fortunate” prospect for cam- members; amenities (shopping, parks, transportation) must be pus growth in Allston and propounded “a set of working hypothe- provided to sustain a lively urban neighborhood. ses” that might guide academic development there.While noting •Culture and community: Performing-arts space and museums that much of the 200 acres of land is “highly encumbered,” he will both enliven Allston and meet currently unfulfilled needs. forecast “limited building within the next several years” and more •Undergraduate life. A priority “more speculative than others” is development in the next decade. The task will be “uncommonly the potential for locating undergraduate Houses close to the challenging,” Summers wrote, because making the best use of the Charles River. This would entail relocating athletic fields and facil- property requires thinking “over a longer-than-usual time hori- ities, but could free the Radcliffe Quad for alternate reuse or ac- zon, a more expansive physical terrain, and a wider span of acade- commodate more College students from outside the United mic and other domains,” while considering finance, community States. relations, and “relationships among different parts of Harvard as On the basis of these “considered hypotheses, not crystallized they exist and as they might exist.” decisions,” Summers then established the framework for detailed Summers advanced five “programmatic planning assumptions,” academic and physical planning—the progression from “an open- characterizing them as “neither immutable nor merely conjec- ended discussion about multiple possible scenarios to a more fo- tural.” The elements, which closely resemble ideas leaked last cused discussion about…one possible conception that appears summer (see “In Allston Planning, the Silly Season,” November- to hold particular promise,” and about how to realize that con- December 2003, page 64), are: ception.The two principal measures are task forces, with signifi- •Science and technology: Given likely growth in scientific and en- cant faculty representation, to refine academic programs; and the gineering research, and foreseeable constraints on space in Cam- hiring of a planning firm to turn those ideas into a physical devel- bridge (soon) and the Longwood Medical Area (eventually), All- opment scheme. ston should become “home to a robust critical mass of scientific University provost Steven E. Hyman will chair a task force on activity.” science and technology. Business School dean Kim B. Clark will do •Professional schools: The Graduate School of Education (GSE) the same for the professional-schools working group. Dennis F. and the School of Public Health (SPH) would relocate to new, ex- Thompson, Whitehead professor of political philosophy and chair panded facilities in Allston, where they may collaborate with each of the University Physical Planning Committee, will direct the other and with the Business School. group examining culture, housing, and urban life. Faculty of Arts and

or conferences, or meetings, or programs. is going to serve society in the way that it are not in a great position to strengthen That’s a huge asset for the University in can, we will have to find ways of mobiliz- those schools in the way that some other terms of its ability to influence the world ing resources to ensure access and to at- alumni are. That’s why these changes that [and] to make this an exciting place for tain the absolutely highest standards of we have been able to make in our policies our students. In the two years I’ve been for crediting class gifts—to recognize here, I’ve had the privilege of welcoming support for public service—are so impor- more than 30 heads of state or former The value of an tant [see “Where Credit Is Due,” January- heads of state to speak at the University, February 2003, page 68]. That’s why the and the numbers are similarly remarkable activity or profession University financial-aid fund is so impor- for leaders in business or in other fields. tant [see “A ‘Down Payment’ on Financial How we can best take advantage of that is not measured by Aid,” March-April 2003, page 56]. That’s convening power in a world where civil, why I’m pleased that we’ve been able to thoughtful, pragmatic discourse is in all- how large a house its take a first step by ensuring universal loan too-short supply is one of the things that availability for all students coming to Har- will be very important for our profes- practitioners live in. vard. That’s why collaborations between sional-school deans to think together the di≠erent schools are so important. about in the years ahead. excellence in professional schools like Finally, where our professional schools government, education, public health, and On the agenda for the sciences. are concerned, I think we all are con- divinity, where the rewards are not pecu- The most important thing I’ve been vinced that the value of an activity or a niary, but the social contribution is great. able to do to support the life sciences was profession is not measured by how large a This is going to be an important chal- to recruit Steve Hyman as provost. With house its practitioners live in. If Harvard lenge because their alumni, in many cases, Steve’s experience in the medical school

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Sciences (FAS) dean William C. Kirby will oversee work on under- coming decades. Orlando Patterson, Cowles professor of sociol- graduate life, including residences and athletic facilities; with the ogy, wondered whether growth were inevitable and desirable. president and provost, he will also convene all the task force lead- Summers pointed to new fields of knowledge, such as computa- ers and others to set common directions. And vice president for tional biology, and observed that most professional schools ex- administration Sally Zeckhauser has been charged with identifying pect to grow by as much as a couple of percent each year, though the firm Harvard will retain to prepare the Allston master plan. FAS might not want to pursue a comparable path. In the subse- In a letter to the public-health faculty, SPH dean Barry R. quent faculty meeting, on November 18, Kirby said Allston was Bloom observed that “a new campus…offers extraordinary pos- important for “a landlocked, space-starved, ambitious” FAS. sible new roles” for the school in collaborating with Harvard’s Clearly, the discussion the president’s letter was intended to life-sciences and social-sciences programs—among possible long- focus has begun. Beyond broad philosophical issues, practical de- term advantages from relocating if “real and potential problems” tails loom, too. The letter’s penultimate paragraph raises “the can be overcome. GSE dean Ellen Condliffe Lagemann, communi- prospect of very substantial capital costs.” The “formidable fi- cating with her faculty members, embraced the prospect of a nancing challenge” carries implications both for extending “exist- new campus “first and foremost” because of the school’s current ing mechanisms”—apparently a reference to the $500-million space constraints. levy on the schools’ endowments negotiated by President Neil L. Within FAS, which would span not only the Charles River but Rudenstine in 2001—and for “broader fundraising efforts in the the business school campus, early reactions were more mixed. future.” The first of these proposals may spark debate: the half- Kirby wrote colleagues outlining “exciting opportunities,” particu- percent “tax” imposed on endowments beginning in fiscal year larly in the sciences, while acknowledging difficult issues of plan- 2002 for the Allston “infrastructure fund” met with much oppo- ning and coordination yet to come. In discussion at a formal fac- sition from within FAS, which was finally mollified by a promise ulty meeting on October 21, Daniel S. Fisher, professor of physics that the assessment would be strictly limited to five years and and of applied physics, criticized the process that had led to the $500 million. The issue is now under review in FAS’s resources preliminary decisions Summers laid out, and raised the specter of committee. (For more on the fundraising implications, see page damaged, rather than enhanced, scholarly collaboration if Allston 68.) As the opportunity presented by Allston comes into view, science facilities are distant from the current and anticipated the scope of the challenge clearly does, too. Cambridge laboratories. Summers and Kirby responded that The complete letter is available at Harvard’s general information early-stage planning was necessarily speculative, and that Cam- website for Allston, www.allston.harvard.edu. Comments may be sub- bridge simply could not accommodate anticipated growth in the mitted to [email protected].

here and in running the National Institute ence within traditional disciplines like October 2003, page 75]. We’ve launched an of Mental Health, he has been able to chemistry or biology can take place and institute for mathematical biology and bring enormous expertise, sophistication, the best interdisciplinary science that evolution led by Martin Nowak, who is and energy to our work in the life sci- cuts across fields can [also] take place. the first joint appointment between the ences. We’ve also recognized, of course, that as math and biology departments. The work It’s the beginning of wisdom in think- exciting as what’s happening in the life there is fascinating, ranging from a whole ing about the life sciences to recognize sciences is, there’s much else happening in new theory of why AIDS has such a long that there’s no one way [to proceed]. Just science, from cosmology on the largest and variable gestation period to issues re- as an ecosystem flourishes when it is var- possible scale to nanotechnology—two lating to the mathematics of language. ied, with multiple di≠erent species inter- areas in which Harvard has made substan- Just this last week, Josh Sanes accepted acting in changing ways, so, too, our task tial contributions in the last couple of our appointment as the leader of our new in the life sciences is to create an environ- years. initiative in systems neuroscience, along ment in which many di≠erent approaches We’ve launched a number of initiatives with Je≠ Lichtman, who’ll also be joining can flourish—in which scholars at Har- in the last several years. They include our us from Washington University [see page vard can do both very basic conceptual re- participation in the Broad Institute—the 60]. [They complement] Markus Meister search on the nature of an organism and largest-scale collaboration ever between [Tarr professor of molecular and cellular clinical research on specific diseases, in Harvard and MIT and perhaps between biology, in FAS] and Carla Shatz [Pusey which individual investigators can ponder two large American universities—with professor of neurobiology], who does a particular problems that fascinate them the generosity of Eli Broad, that will seek great job as chair of the neurobiology de- and large groups of collaborators can use to use the tools of technology to support partment at the medical school. We will expensive machinery to achieve stated sci- researchers in genomics and related areas have a terrific critical mass of researchers entific objectives, in which the best sci- [see “Genomic Joint Venture,” September- in this area and, in something of a depar-

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ture for Harvard, Dean Kirby has commit- selves a magnet for the most exciting peo- public service, science—including but ted 10 new professorial slots to this initia- ple, good things are going to happen. At not limited to the life sciences—and, of tive and to this aspect of interdisciplinary the Bauer Center for Genomics Research, course, thinking about Allston, are the science, rather than to particular depart- working with Andrew Murray, there are front-burner academic issues. There are ments. 10 very young scientists of all di≠erent other continuing, central priorities for With the return of Chris Murray, who backgrounds: mathematicians and physi- me that I also try to think about every directed a large research sta≠ at the cists as well as the traditional biologists day. The ﬁrst is the recruitment of fac- World Health Organization while he was [see “Phenome Fellow,” January-February ulty. The most important responsibility I on leave from the public-health school, we 2003, page 30]. I don’t know who’s going have is doing everything I can to assure will be launching an initiative in global to do what, but I have no doubt that in that the best people come here to the health [see page 62]. In many ways, if you some way that no one could predict, some University. think about Harvard’s priorities for the very important science will emerge. [For We have extended the process of re- years ahead—globalization, science, the news of a recent $15-million grant in sup- viewing all appointments to all the pro- preparation of leaders—they come to- port of the center’s work, see “A Bio- fessional schools, between the provost gether in the global-health area. It is an science Portfolio,” November-December and myself, and we are seeking to area where there is enormous undergradu- 2003, page 54.] focus in a very intense way on the ate interest. I know of no other area where question of what people will do harnessing social commitment to while they are at Harvard—to analytical ability and make sure that our focus is on hard work can have such looking at performance going large payo≠s, whether forward with respect to ap- with respect to prevent- pointments, rather than going ing AIDS and its spread, or backwards. This will mean doing something about the being prepared to take some- three million children who what more risks than we tra- die each year because of the ditionally have in some areas, lack of clean water, or ad- by appointing people earlier dressing issues relating to in their careers, before they malaria. have done their best work. [Within the life sciences,] I’m convinced it will enable it’s very important for us to de- us to focus more on teach- vise initiatives and programs ing, more on promoting that carve out a particular area the diversity of our fac- [such as] the systems biology ulty, and more on gener- department that the medical ating intellectual excite- school is starting under Marc ment with work. I’m sure there will Kirschner [see “Biomedical Mo- be some appointments that don’t work mentum,” November-December out well, but by being prepared to take 2003, page 54]. It’s very important My job is to make sure that the only some chances on some people at an earlier that we organize our work, and create the thing that constrains our faculty is their stage, we’ll recruit some people whom kind of environment we want, to have ini- ability to think of great ideas—that the Harvard otherwise never would have got- tiatives like that. environment here, the colleagues they can ten who will turn out to be the University At the same time, the history of science recruit, the technologies they can use Professors and superstars of the next gen- is overwhelmingly clear on the impor- don’t act as constraints. With these initia- eration. tance of serendipity and the reality that tives, with great leadership from Dean By taking that approach, we are already the most important discoveries come in Martin and Dean Kirby, we’re making seeing the beneﬁts in the University’s the least anticipated places. That’s why very good progress. ability to recruit the very best people as what’s most exciting to me is the people assistant professors, because now [they] like Sanes and Lichtman, like Martin On the new campus in Allston. can all see that they have a real prospect, if Nowak, like the wonderful chemists Dan [See page 52 for coverage of the president’s they truly excel, of attaining tenure. Kahne [professor of chemistry and chemi- October 21 letter to the community on All- And we’re probably working harder cal biology] and Suzanne Walker [profes- ston planning.] than ever to make sure that we land the sor of microbiology and molecular genet- faculty we most want, and I think it’s pay- ics], [and] like Eric Lander [of the Broad On other priorities that are attached to the presi- ing o≠. In the Faculty of Arts and Sci- Institute] whom we have been able to at- dent’s o∞ce and Massachusetts Hall. ences, we successfully recruited more tract to Harvard. As long as we make our- The college, professional schools and than three-quarters of those to whom we

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made o≠ers last year—the highest per- They’ve earned about 12 percent on the ulty and attract the best students. But centage of any year in the last 15. endowment over the three-year period in we’re going to have to be very tough- very di∞cult market conditions. None- minded over the next several years, partic- On managing the enterprise. theless, between inflation and endow- ularly with the challenges of Allston The second continuing priority is ment payouts, the purchasing power of looming ahead of us. with respect to the management of the our endowment is down by 11 percent University. Harvard is a more than $2-bil- from where it was three years ago [see On Harvard’s wider community. lion-a-year corporation with 12,000 em- “Rebounding Returns,” November-De- A third major theme for me is strength- ployees and 19,000 students. With all the cember 2003, page 59]. That means that ening the University’s ties with its external generosity of its alumni that has enabled we all have to think very hard about e∞- constituencies. Here, the first priority has us to reach this point, we have an obliga- ciency in the use of resources. to be the cities of Cambridge and Boston, tion to be as e∞cient as possible in the with whom we are intertwined. They de- way we use our resources. That means pend on us as a major asset. We striving for excellence just as much in pur- depend on them as the place chasing as in physics, just as much in where we live and so many mem- human resources as in history, and just as bers of our community live. Devel- much in our financial operations as in our oping a more cooperative relation- business school. ship has been an important Every time we are able to save $1 mil- priority. We’re seeing benefits with lion, that is the equivalent of an extra $20 the very good progress we’ve made million in the endowment. By managing in the Agassiz and Riverside neigh- our purchasing better, we have already borhoods of Cambridge toward an saved millions of dollars a year, and overall vision for Harvard’s building much more is on the way. We have been activity [respectively, alongside the successful in looking at funds that had law school and beyond existing FAS been inertly applied for low-priority laboratories, and along the Charles uses and reprogramming them to high River near Dunster and Mather priorities, resulting in the equivalent of Houses and Peabody Terrace—see significant increases in endowment. A page 62], and with the very good great example is the job that Dean rapport we have established with Drew Faust has done at Radcli≠e in [Boston] Mayor Menino and his peo- reorienting what had been a vestigial ple as we think about our Allston ac- college toward a set of sta∞ng quisition. arrangements for a modern institute Another important external con- of advanced study. We have been stituency is the private sector. As able to rationalize a number of sta≠ Derek Bok wisely pointed out in his re- functions and so increase the cent book, we have to be very careful to e∞ciency of the University’s re- avoid commercialization [Universities in sources, and we’re going to see more the Marketplace; see “The Purely Prag- examples as the central administra- matic University,” May-June 2003, page tion has committed itself to zero growth 28]. There have been some activities we over the next year [see “Barer-Bones Bud- What I have urged is that as we think have stopped because they have seemed to gets,” November-December 2003, page 58]. about controlling costs, we don’t do it by involve the University too much in help- This is something of a culture change, short-run belt tightening, or by deferring ing a private-sector entity promote itself but I am convinced that with all that we maintenance, but that we think funda- rather than advance an academic objec- can do at Harvard, we have an obligation mentally about what needs to be done, tive. But at the same time, I am convinced to be as e∞cient as we can in the manage- and what may be peripheral, and focus our that in ensuring application of all the ment of all of our resources. This will often mission. ideas that are developed here, in making mean much more cooperation between the Ann Berman, financial vice president, is full use of the University’s intellectual schools than has been the case in the past. bringing a very sharp pencil to bear in a property, there’s much that we can do in It can carry very substantial benefits. new way on budgets of the schools, and collaboration with private-sector and that’s leading to some important and nec- public-sector leaders. I was delighted to On changes in external economic and financial cir- essary economies. In many ways, if we convene a conference at the business cumstances since his appointment. were able to manage it right, times that school last month with 100 area leaders to Harvard management Company’s are not so easy can be a moment of oppor- think about how we could maximize eco- done a great job over the last three years. tunity for Harvard to recruit the best fac- nomic potential in Boston in the life sci-

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ences as biotechnology grows in the years have a chance to interact with. I had for- ahead [see “Biomedical Momentum,” No- gotten, in the years that I was away from Buildings and vember-December 2003, page 54]. the University, just how many truly bril- Benefits liant people are here. And it is the glory of On paying for the academic plans and campus ex- the University that it is not any kind of hi- The story of Harvard’s 2003 budget pansion. erarchy: that people seek truth wherever came down to benefits and buildings. We raised $562 million last year thanks they can find it; that it is one of the very During the 12 months ended last June 30, to the generosity of Harvard’s many few human institutions where a 25-year- the University’s revenue totaled $2.47 bil- friends. That was an 18 percent increase old who has just arrived can reject the pet lion—a 5.3 percent increase, just slightly on the previous year and the second high- idea of a revered senior figure and be con- slower growth than in the prior fiscal est year in Harvard’s history. gratulated for it. year. Expenses climbed $171 million, to In terms of a University campaign, At the same time, that very flexibility $2.43 billion—higher by 7.6 percent, but that’s something that people are starting that makes the University so great can an improvement from the nearly 11 per- to think about, but before we launch any sometimes make a job like mine a chal- cent spending growth in the prior fiscal kind of campaign, it would be very impor- lenge. One friend of mine who leads a year. “It was nice to see that expense tant for us to have a clear idea of what’s company said to me, “Let me understand. growth slowed,” said Ann E. Berman, vice going to happen in Allston, a clearly Most of the important people at your in- president for finance, discussing the an- defined set of priorities around the devel- stitution have jobs for life. You have very nual Financial Report to the Board of Overseers opments in Harvard College, a real sense little scope to change their compensation of Harvard College, published December 8 of how our professional schools are going and they, not management, choose their (and available on line at http://vpf-web.- to make a great contribution in serving successors.” I said, “That’s right—but harvard.edu/annualfinancial/). society, and a powerful vision for how anything you would gain in e∞ciency Berman characterized the two princi- Harvard can really present itself as one from being more hierarchical would be pal drivers of expense growth very di≠er- university, not a set of tubs with pipes more than lost in creativity.” ently. She called the 22 percent increase in connecting. I think we’re making good But I do think we do need to work on space and occupancy costs, to $241.2 mil- progress toward each of these objectives developing more collaborative approaches lion, or about one-tenth of Harvard’s [see page 68]. across the schools, and that in our non- budget, “expected and understood.” The academic functions, we need to set the University has been in an historic build- On Harvard’s culture, as seen from Massachusetts same kind of standards of excellence that ing boom (see graph), investing the fruits Hall, following his earlier experiences as graduate the best business organizations set for of the 1990s capital campaign and high re- student, faculty member, and then public servant in themselves. turns on the endowment in new acade- organizations such as the World Bank and United mic buildings, renovations (like the States Department of the Treasury. On the Harvard he envisions a decade hence. Widener Library overhaul), badly needed It’s a great place. I’m having the time I’m feeling good about the directions graduate-student housing (like One of my life and look forward to coming to in which the University’s moving. If we’re Western Avenue), and acquisitions (more the o∞ce every morning because of the able to keep going—and it depends on land in Allston, the Blackstone steam ability and commitment of the people I good luck, and on a lot of people—the plant in Cambridge). As facilities open Harvard of 2013 will have and are financed, operating and interest a dynamic, new curricu- costs rise; during the year, debt outstand- lar experience for its stu- ing increased about $400 million, to $2.25 dents, terrific new spaces billion, with further borrowing in for student activities, a prospect as the Medical School’s new re- thriving set of science search building, the Center for Govern- programs that will have ment and International Studies in the attracted an even larger Faculty of Arts and Sciences (FAS), and fraction of the best young other major projects come on line. scientists in the world On the other hand, the explosion in than we have today, pro- employee-benefit costs is “a concern,” fessional schools that are Berman said. Compensation costs, $1.26 at the forefront of na- billion, account for more than half of Har- tional and international vard’s expenses. While salaries and activities in their profes- wages increased 6 percent, pension and sion, and ground broken healthcare costs surged an extraordinary and foundations laid and 36 percent, to $274.2 million, reflecting an Allston campus start- the convergence of adverse factors. One ing to rise. was adoption of a new, more generous

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pension plan for salaried and 800 Facility Expenditures unionized employees during the A bull market in bricks and mortar, as Harvard’s annual investments in 700 building projects and acquisitions exceed a half-billion dollars during past two years, to achieve compa- the past three fiscal years (figures in millions of dollars) rability with the faculty pension plan. Another was the adverse 600 e≠ects of low interest rates on the prior plan, which had previously 500 generated net income for the Uni- Capital expenditures versity. Pension costs doubled as 400 In 2003 dollars a result. More conservative assumptions about future rates of Five-year average 300 return on plan assets almost guarantee higher pension costs in the current fiscal year, Berman 200 said, and for the future as well if interest rates remain low. Health- 100 benefit costs continued to surge, having risen nearly 90 percent 0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 during the past five years, and updated assumptions about future costs drove the expense for post- ministrative spending, if possible, in the den—but projects only 3 percent increas- retirement benefits up some 60 percent. near future (see “Barer-Bones Budgets,” es for fiscal 2006 and beyond. So in FAS’s Given these adverse factors, the rein- November-December 2003, page 58). next budget, for example, benefit costs ing-in of expenses elsewhere in the Uni- Within the schools, the process may be alone will rise by twice as much as its in- versity’s books can be taken as something subtler, but the pressures are the same. vestment income (the source of half its of a victory. Similarly, the growth in rev- The University’s fringe-benefit rates ap- revenue). With very large buildings in enues appears relatively favorable. During plied to wage and salary costs will rise by construction (see page 71) and more than fiscal year 2002, distributions from the about 8 percentage points (some $89 mil- half a million square feet of FAS labora- endowment to support operations were lion) for fiscal year 2005, beginning July 1. tory space proceeding through design and increased by $134 million (21 percent), to The Corporation decided on December 8 permitting—and a commitment to hire $749 million (plus $85.2 million for All- that the endowment payout will increase more professors to populate them—larger ston costs). But then austerity set in: in by 4 percent for fiscal 2005—twice the fixed costs, and uncomfortably tight fi- fiscal year 2003, endowment funds dis- 2004 boost, to help with the benefits bur- nances, loom in the relatively near future. tributed rose just 2 percent, to $770.7 million (plus the Allston assessment, another $80 million). Taking up some of the slack were faster growth in tuition in- films,” he says. “We lend it out sparingly.” come than in the prior year, and a 15 per- Film Archive That is but one of nearly 9,000 films in cent rise in gifts for current use, to $151.9 Goes Silver the Harvard Film Archive. This fall the million: “Not the disaster that one might archive, founded in 1979, began a year- have expected, given the economy,” Recently, a caller from the Austrian long celebration of its twenty-fifth an- Berman said. The rate of growth in spon- Film Museum in Vienna had two ques- niversary with a benefit screening of Mys- sored-research support also doubled, to 6 tions for Bruce Jenkins, Cavell curator of tic River, the new, highly regarded picture percent, bringing in $548.9 million in the Harvard Film Archive: Do you have a from director Clint Eastwood. (Before the such funds. copy of Sherlock Jr., the 1924 silent-film clas- film rolled in Sanders Theatre, Eastwood, The net result was that Harvard’s bud- sic starring Buster Keaton? And if so, is it on videotape, saluted the Film Archive’s get surplus narrowed to $40 million: a full-picture width—not cropped, as many milestone.) A few weeks later, director surplus of nearly $70 million in operations silent pictures were, in a later release, to Errol Morris showed his new documen- supported by restricted funds, partly make room for a sound track? Happily, the tary, The Fog of War, based on interviews o≠set by a deficit of nearly $30 million in answer to both questions was yes, and the with former U.S. Secretary of Defense operations dependent on unrestricted archive sent the film to Austria. “Some- Robert McNamara, M.B.A. ’39, LL.D. ’62. funds—the latter a “disheartening” out- times we have the best existing print of In November, the first film ever screened come, Berman said. That makes her priori- a film—or even the only print,” Jenkins at the archive, Ernst Lubitsch’s Lady Win- ties for the future simple: “We’re focusing explains. There is, for example, “a deli- dermere’s Fan (1925), was projected with on expense growth,” pursuing savings ciously rare film noir—Detour, made in live piano accompaniment. A spring event wherever attainable to achieve level ad- 1945 by Edgar G. Ulmer, the king of the B- will feature actor Tommy Lee Jones ’69, a

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