Budget Freezes Are Coming for Higher Education

Over the last month, I have thought a lot about the beginning of the coronavirus pandemic in March 2020. By the end of the first full week of March, it was clear to me that colleges would close their physical campuses for a while. I had stepped in as the department chair at Seton Hall University just a few months prior, but I immediately stepped into action by trying to prepare my faculty and staff as much as possible for a period of remote operations.

We still had two faculty searches scheduled that month, and we went ahead and brought the first set of candidates to campus even though everyone began to realize that things were shutting down shortly. It was an awkward set of interviews because I had a strong suspicion that the positions would be canceled on account of the financial losses that would come from students being sent home. And although one search was able to proceed, the other search was indeed scuttled.

While federal pandemic-relief funds prevented a wave of Covid-era college closures, there were still sizable budget cuts and reductions in employment. Even the wealthiest colleges feared for their budgets, with the Johns Hopkins University suspending retirement contributions and instituting a pay freeze in April 2020. My university at the time, Seton Hall, laid off 10 percent of its administrators and staff members in June 2020, which resulted in numerous tearful Zoom conversations. We also temporarily implemented cuts in pay and retirement contributions. These experiences were not unusual: As The Chronicle reported, “One out of every 10 employees on the payroll in February 2020 had disappeared from higher ed’s work force by Christmas of 2020.” While the work force reached pre-pandemic levels by mid-2022, a generation of employees was affected by pay cuts and job disruptions.

Fast forward to today. Our sector is facing more uncertainty now than it has since March 2020 due to the bulldozer of the Trump administration’s attempted and proposed changes. While it does not appear that student financial aid will be affected in the short term, all federal grants and contracts are up in the air (even though some of them enjoy legal protections). It’s one heck of a semester to be teaching higher-education finance, as I found out during class last week when the wrecking ball came for the legally mandated Institute of Education Sciences. (I had a sizable grant proposal under review there to study the “woke” topic of career and technical education, but I guess that isn’t happening.)

Higher education still bears scars from the pandemic, and key among them is the need for financial liquidity. Colleges are scared of making long-term financial commitments in general, as they are concerned about future enrollment and cost trends. Throw in potentially devastating cuts to research support and other federal grants, and there is a natural tendency to pull back funding.

Research universities in particular are having serious conversations about freezing unnecessary spending given their exposure to federal funding cuts. Washington State University announced last week that it is considering budget cuts and a hiring freeze, and Boston University and the Massachusetts Institute of Technology quickly made similar moves. At MIT, departments have been asked to “reduce their dependence on central funding by 5 to 10 percent,” according to the local NPR affiliate. I expect politically insulated blue-state public colleges and wealthy private institutions will continue to make public statements about cuts driven by Trump’s desired cuts to research funding. Red-state publics are also likely planning for belt-tightening, but they may not announce it out of fear of political retribution. The question is not whether there will be pauses or freezes in institutional budgets, but rather how long they will last.

Although my current university has not made any public statements about the potential financial path forward and I am not involved in the budget conversation, I am certainly nervous about the path forward given that my department has three open faculty searches. We are in outstanding financial shape over all, but there is no telling what will happen in the coming weeks and months. I’m going to do everything I can to move quickly on searches just in case.

The incredible amount of uncertainty leads me to three thoughts. First, while higher education cares deeply about its finances and fears budget or hiring freezes, this argument does not resonate with the public. Americans are increasingly politically polarized by educational attainment, and higher education has increasingly become a key part of the culture wars. Even a substantial share of Democrats is skeptical of higher education, in large part due to affordability concerns. It is hard to be sympathetic to budget cuts if you think the industry is bloated and overpriced.

Academics need to talk about how funding cuts would affect the broader public, and do a better job of convincing the public of our value. While colleges could try to replace lost revenue by increasing tuition, this is not a winning strategy: There is no support for this among the general public or lawmakers, and most colleges do not have the market power to successfully increase tuition revenue. We should be talking about the value of what would be lost that affects people who do not directly interact with higher education, such as medical or agricultural research. Red-state research universities are positioned to make these arguments behind the scenes, as well as very politely in public.

Second, we should be concerned about the uncertainty’s consequences for the academic-leadership pipeline. I often wonder why anyone would want to be a college president, but the role’s challenges are turbocharged by the near impossibility of the current situation. It’s much better for aspiring leaders to stay put in the short term and let things play out instead of jumping into positions where it may be impossible to succeed. Moving up the ladder at a time of looming budget cuts, hiring freezes, and financial stress can put one in a difficult position — good luck winning over the faculty while announcing pay freezes.

Finally, while few working in the sector want to hear it, it might be a good idea to implement a budget freeze right now. Presidents and boards are trying to balance the possibility that federal spending cuts remain in force — or even escalate over the coming years — with their desires to recruit and retain employees to implement their strategic plans. Some blue-state public colleges and wealthy private institutions may use this moment to justify long-desired budget cuts; other institutions will more subtly mention the uncertainty as a contributing factor in their own. But ultimately, the fiscal conservatism is justified: I would think twice about committing to long-term spending when everything could change at a moment’s notice. Limiting expenses will be painful, but finding your college’s finances overcommitted in a moment of significant federal funding declines would be much worse.

This essay is adapted from a post on the author’s website.