As it emerges from the worst of the global financial crisis, Harvard’s Faculty of Arts and Sciences (FAS) is renewing its focus on priorities ranging from House Renewal to innovative pedagogy. With the release of the 2010 FAS annual report, Dean Michael D. Smith, John H. Finley Jr. Professor of Engineering and Applied Sciences, spoke to the Gazette about his goals for the year and about his three-year struggle to balance the budget and to create a culture of sustainable excellence for students, faculty, and staff.Q: Harvard’s Faculty of Arts and Sciences (FAS) has been working through some extraordinary budget challenges. Can you give us an overview of where the budget stands now?A: We’re in a much more positive situation than most would have predicted a couple of years ago because we began to tackle the problem as soon as we understood that a significant change in the value of our endowment was coming. Ultimately, we expect to achieve a structurally balanced FAS budget by the end of 2012.When the financial crisis hit, we realized fairly immediately that the size of the challenge required a phased response. In the first year, we implemented a number of immediate changes, eliminating some things that are “nice to have” but that we knew we could probably do without.As a result, we managed to balance the budget that year. The second year, we implemented major changes to administrative structures and undertook a thoughtful prioritization of all our academic programs to ensure that the most important activities continued. The entire FAS community — faculty, students, and staff — participated in this effort.The changes we made in those first two years put us in a position to deal with this year, which we always knew would be the most challenging financially. After initially projecting a $220 million budget deficit for this year, we recently submitted a budget for the FAS that is only $35 million short.We made a huge amount of progress in a very short time. But we know there’s more work to do.Q: How have these budget changes affected students?A: I’m very proud to say that the changes we’ve had to make have had a relatively small impact on the student experience here. In fact, we’ve been able to push forward important priorities, particularly the implementation of the new Program in General Education, which replaced the 30-year-old Core Curriculum.Successfully implementing Gen Ed, especially during this period, is a testament to the dedication of the faculty, to the leadership of the College, and to the alumni, who stepped up with the necessary immediate-use gifts that allowed us to move ahead with this important program.Q: Has the financial crisis affected our commitment to financial aid for low- and middle-income students?A: One of the things I’m most pleased with is that, in the face of the worst financial crisis since the Great Depression, we have maintained our game-changing financial aid program. At a time when our students and their families were under great financial stress, we have not backed off from our commitment to provide excellent students access to a Harvard College education, regardless of their families’ means.Thanks to these programs, we now have a more diverse undergraduate student body than we’ve ever had in the past, however you measure it. At the same time, we’ve got a student body that is as engaged in what we’re trying to accomplish intellectually as we’ve ever had.Q: You have said that you expect the FAS budget to be structurally balanced by 2012. Once we have reached that point, will we return to pre-crisis conditions?A: Broadly speaking, our success going forward will depend on sustaining many of the changes that we made in the midst of the financial crisis.While I’m very pleased that our endowment distribution is expected to be back in positive numbers next year, increases in our revenues will not be large enough to get us back to pre-crisis spending levels. So we’re going to have to continue managing our resources carefully.But we’re back to thinking, first and foremost, about our programs. We’re working to make sure that the FAS is a place of sustainable excellence.Q: What are some of your priorities for the FAS for the coming year?A: Let me mention three. I want to continue turning up the volume on our conversations about teaching and learning on campus. We’ve made enormous progress since the Compact on Teaching and Learning was released in 2007, and I want to build on that progress. I also want to begin to share more broadly the progress of our planning efforts for the House Renewal project. And I want to involve the FAS community in planning around the upcoming capital campaign.Q: Why is the Compact on Teaching and Learning important?I’ve always known that we have outstanding teachers at Harvard, but certainly our processes for appointment and promotion did not place as much emphasis on teaching, mentoring, or advising as we do now. We are trying to be much more consistent in how we gather information about teaching. We want to truly understand not only how a person will perform with respect to scholarship, but also how he or she will engage our students, as part of our educational program.The compact included a broad set of recommendations on how to improve teaching at Harvard, everything from how we should be evaluating the teaching skills of new and existing faculty to opportunities to adopt new pedagogical methods. Through both system wide and grassroots efforts we’ve made a lot of progress toward these goals. I think it’s time to take stock, to leverage what works, and to solidify our position as the recognized leader in innovative pedagogy.Q: You mentioned House Renewal. Where does it stand?A: The residential House system is a cornerstone of the undergraduate experience at Harvard. Ask any undergraduate, and they’ll tell you: Houses at Harvard aren’t just buildings. Through the work of House masters, resident deans, tutors, and many others, the Houses are vibrant learning communities for our students.Reimaging the Harvard House system for the future will mean creating physical structures that complement and support a 21st century approach to liberal arts education and the lifestyle of the modern student. In recent years, we’ve taken a number of steps forward in the planning process. For instance, the House Program Planning Committee — which included faculty, student, and staff participation — spent time looking at the role of the Houses in the 21st century and the type of programming that will be essential as part of renewing the House system.Right now, we’re looking at those programmatic aspirations and figuring out what they mean for the physical spaces in the Houses, and how we can work within the current buildings to make spaces for today’s students. We’re also asking the important question of how to finance this project. These are critical issues we are continuing to resolve.Q: People have been talking about House Renewal for years. What’s taking so long?A: It’s an extremely complex project. If you look at our peer institutions that have implemented significant changes to their residential systems — Yale and Princeton being obvious examples — it took a long period. It was never done over a small number of years.The hard part has always been the financing model. To date, we’ve been working hard on the programmatic aspects of House Renewal. But the physical aspects of the project are quite expensive, as we look to undertake major renovations to buildings that haven’t had major updates since they were built. It will require philanthropy on a transformational scale, just like when the House system was first put in place. It’s all going to require careful planning.Q: The FAS has been criticized in the past for entering into major capital projects without the funding arranged in advance. You recently mentioned at a faculty meeting that those days are over.A: We’ve had a large number of ambitious projects in recent years, such as the Northwest Science Building, which were extremely important for the kinds of intellectual directions that we wanted to move in. But we ended up debt-financing new buildings in the belief that improvements in the endowment would enable us to pay for them over time.We’re at a different place now with our financial situation. We need to go back to the model most of our buildings were built under, which involved raising much of the capital for a project, figuring out how the remaining cost could be financed through the rest of our budget, and then, only once we have a very clear plan for how we can finance it, moving forward with the construction. That’s the mode we’re in now.Q: The faculty grew at an enormous rate earlier in the decade. Can you describe what you see as the size of the faculty in the coming years? Is it growing, holding steady, or shrinking?A: You’re right. We had tremendous faculty growth from 2000 through 2008. We have leveled off the last couple of years to around 720 faculty members.When the financial crisis hit, there was a concern that we might have to shrink the faculty. But through the hard work of the community, and because of the many difficult choices we made, we’ve managed to maintain the size of the faculty through this period of uncertainty, which is a real accomplishment.So, we’ve been very strategic. We continue to hire exciting new faculty. We’ve hired every year. But we’ve tried to be as strategic as possible, understanding where there are opportunities for new scholarship and where we have teaching needs.Q: During that period of faculty growth, the number of women on the faculty also grew. From 2001 to 2008, the number of women increased from 134 to 185. But in the past couple of years, the number of women has slipped to approximately 181. Is this an issue, and is this something you’re trying to address?A: It absolutely is. It’s not a big change in the number, but that change is still worrisome to us.We’re doing things in several different areas. Most importantly, through the help of Professor Mahzarin Banaji, we are working to ensure that we’re pulling in the largest and richest pool of applicants for faculty positions. As we conduct our searches for faculty, we want to make sure that there are opportunities for us to find outstanding candidates, whether they’re men or women or underrepresented minorities. Broadening the pool to include all the excellent candidates is key.We’re also working on questions of life/work balance. For instance, we continue to examine what we can do to assist with child care. It’s been very difficult, with the financial crisis, to expand our opportunities in child care, but we know that’s something that’s extremely important to all our faculty, regardless of gender.The newly installed tenure track system will also be a huge help. It enables us to identify and promote faculty from within.Q: How does the tenure-track system make a difference?A: The tenure-track system is a change for Harvard, and we think it’s extremely important for the future. It allows us to identify outstanding scholars, early in their careers, have them come to Harvard, do some of their best work here, and become part of our culture.We still have a high threshold for promotion to tenure at Harvard. We are looking for our faculty members to be outstanding in the classroom, as well as outstanding in their scholarship and wonderful members of our community.