Did Harvard need to do a hiring freeze?

An image heavy post.

Did Harvard need to do a hiring freeze?

Sources from Perplexity and graphs by Claude. It’s the AI future!

https://www.npr.org/2025/03/12/nx-s1-5324496/universities-hiring-freezes-federal-funding

Was this necessary? Let’s look at the budget.

Simplified definitions:

Endowment: basically a university’s savings account. 80% can only be used for specific purposes, 20% on whatever’s needed for that year. More on that later.

Endowment distributions: transferring money from the savings account to the checking account.

Net student income: tuition.

Sponsored research: grants, mostly from the federal government. Some from corporations.

Gifts for current use: donations given directly to Harvard’s checking account.

Other revenue: mostly licensing fees from patents.

Salaries and wages: what it costs to pay everyone who works at Harvard.

Benefits: mostly health insurance and other benefits for people who work at Harvard. Combined, about 50% of the budget goes to Harvard’s people.

Space costs: rent and utilities.

Supplies and services: everything that it takes to keep Harvard running, like janitors, security, food, etc.

Other expenses: mostly lawyers, accountants, and IT people who are not directly on Harvard’s payroll.

Harvard does not need to freeze hiring with the current budget. They have a $45 million surplus! But what if the NIH cuts go through?

https://www.science.org/content/article/can-nih-overturn-court-order-blocking-it-slashing-overhead-payments-unlikely-one-expert

Harvard Budget 2024 if indirect costs had been 15%

$120 million deficit. Not a lot: can be made up for by any revenue bucket and way smaller than any cost bucket.

But what are they really worried about?

https://www.nytimes.com/2025/03/17/nyregion/columbia-trump-administration-funding-fight.html

What if Trump cancels Harvard’s federal grants?

Harvard Budget 2024 if federal grants were ended and then indirect costs were 15%

$700 million deficit! Bigger than gifts for current use and almost as big as other revenue. Cost-wise, about the same as rent.

This is what Harvard’s worried about. The worst case (but still plausible) scenario. But still, even if there’s a $700 million deficit, do they need to freeze hiring?

Let’s see if they can make up the revenue from other sources.

Can grant revenue come from other sponsored research?

Nope. You’d have to 3x non-federal grants to get back the $700 million.

Can grant revenue come from other sponsored research?

No. Harvard doesn’t break out the specific numbers, but revenue from intellectual property is out of Harvard’s control in the short term.

Can grant revenue come from increasing endowment distribution?

Yes! This $700 million gap could be comfortably covered by the endowment, and the endowment would still grow year-over-year. The endowment distribution rate would just have to increase to 5.8%, which is well below Massachusetts’s recommended 7% endowment distribution rate maximum.

Harvard chooses not to use their endowment for this, but they easily could.

Isn’t most of the endowment restricted?

Yes, it is. But the unrestricted part still accounts for $10.6 billion. Harvard would not need to do any creative accounting to get at the restricted part of their endowment to make up the $700 million deficit.

They can just take it from the unrestricted portion of the endowment. It will require them spending more money, of course, but it’s doable. They choose not to.

Can grant revenue come from cuts?

Well yes, apparently. Or freezes, which are kind of like cuts in the case where Harvard refuses to renew a contract. Salaries and benefits do make up 50% of the expenses for Harvard, so they are the biggest cost to cut.

And salaries and budgets at Harvard have grown a lot. The total cost has roughly doubled since 2014, which way outpaces inflation (roughly 30% total).

Should cuts affect everyone equally?

I don’t think so. I think it’s unfair that Harvard chose to do a universal hiring freeze.

First of all, the indirect costs cut fall mostly on the staff and administrators, not faculty, research staff, or postdocs. It’d be way more fair to fire/freeze staff first, and allow you to keep more of your people overall.

Second, as the graph above shows, not everyone at Harvard costs Harvard the same. The top people at Harvard cost the university way more than the average person.

And, frankly, I find it kind of gross for the president of Harvard to continue taking a $2m salary when he says they don’t have enough money for postdocs. He could literally cut his salary in half, keep 10 postdocs at $100k each, and still be taking home $1m a year.

Harvard’s administrators have enriched themselves at the expense of the faculty for far too long. And, for that matter, at the expense of the American public.

The rest of this post is a brief exploration into the NIH and NSF’s perspective on this. I’m a little sympathetic to them, to be honest.