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Harvard Slows Allston Expansion

In response to the economic downturn, Harvard University is dramatically slowing down its expansion into Allston and making other changes to save money.

Following many other universities in the area that have already make cutbacks, Harvard is the latest to announce changes in response to the recession.

The announcement throws the timeline of the Allston expansion project into question and may give momentum to a measure in the state legislature to relax rules about endowment spending.

WBUR's Monica Brady-Myerov reports.

In a letter to the Harvard community, President Drew Gilpin Faust says "the economic landscape has fundamentally changed," and Harvard must respond. The $34 billion endowment lost roughly 30 percent of its value last year.

The endowment supports more than a third of Harvard's annual operating budget, so Faust says tinkering around the edges will not be enough.

DREW FAUST: None of us expected us to be in this place, I think no one in the United States expected — no one in the world expected — to be in the place we find ourselves with this economic downturn. So people are making a lot of adjustments in a lot of ways.

Harvard says it will recalibrate its Allston expansion. It will finish the foundation of the Allston Science Complex, but then evaluate ways to lessen the complex's cost before proceeding with the building. The new Stem Cell and Regenerative Biology department will instead be housed in renovated space in Cambridge. Faust says the university's expansion into Allston is a 50-year plan.

DREW FAUST: We are completely committed to this. We see it as the future of Harvard, we're just not sure of pace of developing that future is going to be. And as we think about the change in economic circumstances in which we find ourselves and the rest of the world finds itself, we need to think about that pace somewhat differently.

A representative from the Allston Civic Association says the group is considering how the slowdown will affect the community. In other cost trimming measures, Harvard will also freeze salaries and offer voluntary retirement for 1,600 employees. Faust would not comment on whether future layoffs may be necessary, but noted 50 percent of expenses come from personnel. Harvard will continue to fill more than 50 open faculty positions.

Yesterday's announcement shows even though Harvard has the largest endowment of any university, it's not immune to what Faust called "sobering financial conditions." Many other colleges have already frozen salaries, stopped hiring and halted new construction.

They've had to take these measures because of dropping returns on endowments and current restrictions that limit how much non-profits can dip into endowments. Current state law doesn't allow schools and other non-profits to spend anything other than the earnings on the endowments' original worth.

There's pending legislation on Beacon Hill that would remove these restrictions. The Massachusetts Audubon Society is leading the charge for change. Legislative director Jennifer Ryan says the society's endowment lost 28 percent of its value and it needs the state law changed so it can tap into more funds.

JENNIFER RYAN: So what it gives you a little bit of breathing room in tight economic times and it also brings our endowment laws up to date with other states.

Twenty-seven other states have changed their endowment laws. The National Association of Independent Colleges and Universities supports the change. Harvard's President Faust would not comment on whether she supports loosening restrictions on endowment spending.

This program aired on February 19, 2009. The audio for this program is not available.

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