Campus & Community

KSG erases $5.9 million deficit, ends with surplus:

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School’s austerity plan bears fruit in one year

A year after posting a $5.9 million budget deficit, the Kennedy School of Government (KSG) finished the 2003 fiscal year in the black, with a modest $84,495 surplus after a year of belt-tightening, personnel reductions, and space consolidation.

Kennedy School Dean Joseph S. Nye Jr. announced the news in an e-mailed communiqué to members of the Kennedy School’s faculty and staff Aug. 4. In the message, Nye thanked members of the entire community for cooperation in executing the plan and warned that the tough times aren’t over.

“This considerable achievement was realized through the hard work and cooperative effort of our entire community,” Nye said. “I would like personally to extend my gratitude to each of you for the contributions and sacrifices you have made in an effort to improve financial management at the Kennedy School.”

Kennedy School Executive Dean Bonnie Newman echoed Nye’s comments, saying the savings were achieved across the School through a host of smaller cutbacks, austerity measures, and by almost doubling fundraising for dollars available to be used in the 2003 budget.

“Unfortunately, there was no single silver bullet. If there were, it would have made it easier,” Newman said. “Every single administrative and academic unit in the School came in either on budget or under budget. It really is extraordinary and a tribute to people’s willingness to pull together.”

Despite the good fiscal news, Newman said the austerity will have to continue, as the School continues to seek balanced budgets and small surpluses to build a rainy day fund.

“We’re going to have to continue to manage carefully going forward,” Newman said. “Our goal is to have modest surpluses over the next few years to build a cushion.”

The surplus comes a year after the School committed to the Harvard Corporation to cut its 2003 deficit to about half of its 2002 level, to about $2.5 million. The overall 2003 budget was $115 million. Newman said School officials knew the plan represented a conservative goal, but one they thought prudent in the wake of years of deficits as the School was growing and making what it felt were strategic investments.

Given the current fiscal climate, however, the KSG’s management is taking a much more cost-conscious approach. Though the past year’s cuts were broad-based, Newman said several areas provided significant savings.

Included were personnel reductions that eliminated 76 positions through a combination of attrition, layoffs, and schedule reductions. The School also cut back on its physical space, giving up leases or subletting some rented office space and downsizing its Washington, D.C., office.

An increase in fundraising was also a significant factor, Newman said. The School increased the amount of unrestricted funds available for current use by 92 percent, outstripping the 88 percent goal set for the year.

Salary increases were also reduced, Newman said, to an average 2 percent from an average of 4 percent in previous years.