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Asset Management Culture

Harvard Forecasts Big COVID-19-Related Losses and Enters Cost-Saving Mode

University projects a $750 million revenue shortfall in FY21 in light of the economic fallout of the coronavirus.
By Steffan Navedo-Perez

Harvard University is expecting big losses from the coronavirus pandemic, to the tune of a $750 million revenue shortfall for fiscal year 2021, and $415 million for the current period, Executive Vice President Katie Lapp wrote in a letter describing the state of the school’s finances.

“This figure includes, among other things, refunding room and board for the last half of the semester and providing moving, travel, and other financial assistance to students who were required to depart campus,” Lapp said in the letter. “It also includes canceling [in-person courses] and programs, and the loss of funding from federal and non-federal sources due to the closure of labs.”

As a result, the university is implementing a host of cost-saving measures to help mitigate the severity of the impact. Lapp said the school is “facing significant challenges which will require difficult decisions in the coming months.”

These steps include salary freezes for all faculty and exempt staff, a hiring freeze across all functions of the university, a review of projects requiring significant capital to prioritize them and defer less important expenditures until later, deferring or canceling any nonessential spending, and voluntary salary reductions for senior staff. Lapp also said the university is considering laying off some staff or putting them on furlough.

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The university’s $41 billion endowment, the United States’ largest, is a stalwart environmental, social, and governance (ESG)-minded collective, its staff having voted to divest its $41 billion portfolio of fossil fuel investments earlier this year. As a result, the university instructed the endowment to develop a strategy to achieve net-zero greenhouse gas emissions from its investment portfolio by 2050.

“Harvard’s endowment should be a leader in shaping pathways to a sustainable future,” Harvard University President Lawrence Bacow wrote in a letter to members of the faculty of arts and sciences.

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Home > News > Pensions > Denver Retirees Ordered to Return $11 Million in Benefits
Pensions

Denver Retirees Ordered to Return $11 Million in Benefits

A local investigation found overpayments ranging from $3,000 to $3 million to be recouped.
By Sarah Min

Dozens of retirees in the city of Denver are legally required to return a total of $11 million in benefits the public plan administrator said it has mistakenly paid for years, a local investigation found. 

About 40 retirees in the Denver Employees Retirement Plan (DERP) were notified last month that they will have to return overpayments distributed over the past 15 years, confirmed CIO Magazine. The story was first reported by CBS4 Denver. 

But the clawback on payments, ranging from $3,000 to $3 million, could be a problem for pensioners living on a fixed income in the middle of a pandemic. All but one of the retirees were employed under Denver Health. 

“We regret the impact this is having on these retirees, and we are meeting with them individually to discuss repayment options appropriate to their individual circumstances,” Heather Darlington, executive director at DERP, said Wednesday in an emailed statement.

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“We are also committed to collaborating with Denver Health to explore possible solutions for mitigating the effects on these individuals,” Darlington added. 

The city employee fund, worth roughly $2.3 billion, was about 62% funded in 2018, according to its most recent annual report. In 2018, the fund lost 2.4% for the year. 

The overpayments are the result of an administrative error more than a decade ago in applying IRS codes to pension benefits, the report said. 

DERP, which oversees 10,000 retirees and 9,500 employees, said it discovered the mistake last year during a compliance review. The pension plan said that the extra benefits went to “highly compensated” employees.

The Denver pension plan said that it has enlisted independent actuaries to review their processes and put in quality controls. 

The findings from the investigation come weeks after it was also reported by CBS4 that executives in the Denver Health Medical Center, which is under DERP, received big bonuses in April, just as their hospital workers were asked to reduce hours or take leave without pay while combating the coronavirus. 

Some critics online disparaged the oversight from DERP. “Geez. That’s a darn big mistake,” read one comment on Facebook reacting to the story. 

Others wondered how the recipient of a $3 million benefit payment, the equivalent of an approximately $200,000 annual payment for 15 years, could have overlooked the extra income. 

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