Harvard University will allow schools to resume merit-based salary increases for the 2026-27 fiscal year, indicating partial recovery across parts of the institution after last year’s federal funding cuts. According to The Harvard Crimson, the Faculty of Arts and Sciences, Harvard Kennedy School, Harvard Business School, and Harvard School of Public Health will provide pay increases in the coming year. A University spokesperson said other schools have also been permitted to offer raises at their discretion. Spokespeople for several graduate schools did not confirm whether they would follow suit.

Background: Funding cuts and austerity measures

Harvard suspended merit-based raises in April last year after the federal government froze $2.2 billion in funding to the University. The move was part of broader cost-cutting measures. Since then, multiple schools have implemented layoffs, reduced spending and reviewed programmes. The University continues to operate under a hiring freeze.

Details of pay increases

At the Harvard Kennedy School, Executive Dean Josh McIntosh said eligible non-union staff will receive a three percent increase in base salary effective July 1. McIntosh said “significant financial challenges and a pause in salary increases” over the past year, according to The Harvard Crimson. At Harvard Business School, staff were informed of three percent merit increases for fiscal year 2027. The school did not specify eligibility criteria. A spokesperson for the Harvard School of Public Health confirmed that faculty, academic appointees and non-union staff will receive salary increases. The Faculty of Arts and Sciences will also resume merit-based raises, spokesperson James M. Chisholm confirmed.

Ongoing restructuring and cuts

The Faculty of Arts and Sciences is preparing for administrative restructuring that will centralize operations and eliminate positions. The division is managing a $365 million structural deficit. Over the past year, it has reduced graduate admissions, cut non-tenure-track faculty budgets and halted capital projects. Other schools have also reduced staffing. The School of Engineering and Applied Sciences cut about 40 positions in October, including a share of clerical and technical union roles. The Radcliffe Institute for Advanced Study announced additional reductions, including layoffs and the elimination of vacant roles. Dean Tomiko Brown-Nagin said the steps followed “a wide range of federal actions targeting Harvard, cost pressures, and market volatility,” The Harvard Crimson reports.

Financial outlook and legal challenges

Federal funding resumed after a court ruling in September reversed the earlier freeze. However, Harvard reported an operating loss in October, its first since the Covid-19 period. A higher federal endowment tax will take effect in July, adding further pressure. The University remains involved in legal disputes with the federal government. An appeal has been filed against the September ruling, and the Department of Justice has initiated a separate lawsuit seeking to recover research grant funding. The resumption of merit-based raises comes as different parts of the University continue to adjust to these financial and legal conditions.