Jan. 28 (Bloomberg) -- Harvard University, hurt by investment losses, is reassessing its staffing needs, and its divinity school is already “reducing sharply” the ranks of visiting and adjunct professors.

Harvard Divinity School will reduce its annual budget by 4 percent to 8 percent and will appoint adjuncts only when “absolutely necessary to fill gaps in the curriculum,” wrote the dean, William Graham, in a letter posted today on the school’s Web site. Throughout Harvard, every job posting is being “re-evaluated,” and each school will reassess its staffing needs, said John Longbrake, a university spokesman.

Harvard’s endowment, which fell 22 percent from July to October, funds more than a third of the university’s operating expenses. The school, in Cambridge, Massachusetts, has said its financial planning is based on the assumption that the fund’s decline for the full fiscal year ending in June will be 30 percent. Savings at the Divinity School may help it maintain student financial aid, Graham said.

“Our top priority is maintaining the levels of student financial aid now being offered,” Graham wrote in the letter.

Harvard Medical School has targeted “an improvement” of $40 million in its financial position, and asked each academic and administrative department to develop fiscal 2010 budgets that assume a 10 percent reduction in non-sponsored research funding, said Daniel Ennis, the executive dean for administration.

Difficult Climate

“Academic and administrative leadership across the school are wrestling with how best to meet the challenges associated with this difficult budgetary climate,” Ennis wrote in an e-mailed statement today. “We are working incredibly hard to find expense reductions that will not in any way compromise our core research and teaching missions.”

Harvard’s largest faculty, for arts and sciences, will disclose budget cuts this week, the Harvard Crimson said yesterday.

While the Divinity School intends to maintain its current level of student aid, the school may be unable to achieve its goal of funding “at least full tuition and fees for all students with need” by the next fiscal year, Graham wrote.

The university’s dependence on its endowment has increased, Graham wrote. In 1998, the endowment provided less than 23 percent of the university’s revenue, he wrote, while that number was about 35 percent last year. At the same time, students’ contribution to revenue fell to 20 percent from 28 percent, he wrote.

1,900 Faculty

The Divinity School is one of 10 academic units that make up the university. Harvard employs about 1,900 faculty members, and teaches about 20,000 students. Harvard also has made about 10,000 academic appointments in affiliated hospitals.

Harvard, which valued its endowment at $28.8 billion on Oct. 31, has yet to disclose any decline in value of alternative investments such as buyout funds and property, which take longer to price than stocks or bonds because they aren’t traded on exchanges.

At least $105 million has to be chopped from the university’s budget for Arts and Sciences, according to a December letter to department heads from deans of the Arts and Sciences. The division had 1,096 faculty members as of October 2007.

In December, Harvard’s John F. Kennedy School of Government said it would freeze faculty and non-union staff pay, except in “unique” circumstances, and plans to reduce costs as much as 10 percent. The Faculty of Arts and Sciences also said in December it would cancel raises for professors and non-union staff.

To contact the reporters on this story: Elizabeth Lopatto in New York at elopatto@bloomberg.net; Brian K. Sullivan in Boston at bsullivan10@bloomberg.net.

Last Updated: January 28, 2009 17:51 EST