What’s New
The University of Oregon, the University of Washington, and Michigan State University are among the latest institutions to announce belt-tightening measures amid uncertainty about the potential scope of the federal government’s efforts targeting some of higher education’s major revenue sources. Those efforts include a proposal to increase the endowment tax, caps on indirect costs for research grants, and the cancellation of grants related to diversity, equity, and inclusion, although some of these measures have been challenged in the courts. For some colleges, these attacks have been coupled with cuts in state funding and enrollment challenges.
The Details
The president and provost of the University of Oregon sent an email to faculty and staff this week, warning broadly of potential budget cuts in light of “a level of financial difficulty the university has not experienced in many years.” They cited factors including federal research funding cuts “at a scale that the university cannot replace,” limited state aid, a shortfall in the targeted number of out-of-state students, who pay higher tuition than state residents, and potential threats to international-student enrollment. More details will be available next week, the email said, and a town hall will be held sometime before the end of the term to answer questions.
At the University of Washington, where state budget cuts have collided with what administrators described as an “unstable and chaotic federal policy and funding landscape,” college leaders called for a reduction in core budgets by an average of 4.7 percent in the fiscal year starting July 1. “It is almost impossible to imagine a scenario in which layoffs will not be necessary,” college leaders wrote in a message to the university community.
“In order to meet the urgent needs of this very difficult moment, we will need to reimagine our approach to teaching, research, scholarship, patient care, and community engagement to protect the foundation of our mission,” the statement said. “To competitively position ourselves for the future, we must intentionally decide where to invest our resources, expertise, and talent so we can make the greatest difference.”
Meanwhile, Michigan State University plans to lower general-fund spending by 9 percent over the next two years, according to The State News, citing a memo by President Kevin Guskiewicz. In a note to the Michigan State community on May 5, Guskiewicz alluded to the fiscal measures to come, saying, “The next few months of financial planning will be demanding and difficult for some in our community, and we will need to make hard decisions that will impact people we care about.”
Other institutions that have announced potential or actual budget cuts in recent weeks include Oregon State University, which set a universitywide target of reducing spending by 5.2 percent, effective July 1, pending approval by the Board of Trustees. The Board of Regents of the University System of Maryland voted to authorize the system’s 12 universities to implement furloughs and temporary salary reductions after the state legislature approved a budget that includes a 7-percent drop in funding to the university system. Last month, Duke University announced a staff hiring freeze, the elimination of vacant positions, and a voluntary buyout program.
The Backdrop
The latest round of budget measures won’t be the last. Early steps colleges have taken include hiring and travel restrictions, freezes on raises, reviews on capital spending, and reductions of graduate-school-admissions offers.
Robert Kelchen, a professor and head of the department of educational leadership and policy studies at the University of Tennessee at Knoxville, expects tougher cuts ahead, including more mass layoffs. “I think we’re rapidly getting to that point,” he said. Universities’ revenues from research funding, international students, state funding, and donations — whether because of expectations of a weak economy or a higher endowment tax — are all under threat. “Basically,” Kelchen said, “every revenue source is at risk.”
Kelchen said that while universities in blue states have been most vocal about the need to slash budgets, those in red states are likely planning behind the scenes to reduce spending, but staying quiet for fear of potential retribution by trustees or state policymakers. And while the latest cuts are affecting the most prestigious colleges, including Ivy League and state flagships, the types of budget cuts they’re making now “have been pretty typical among regional comprehensives or small private colleges for years,” he said.
Matt Owens, president of COGR (formerly the Council on Governmental Relations), which advocates on research policy, said the budget cuts to date have already had an impact. “The uncertainty unquestionably is slowing the pace at which research is performed,” Owens said. And the threat of a brain drain is significant. “For prospective grad students and early-career scientists, this is an inflection moment for them about their future,” he said.
What to Watch For
As some of the questions around federal funding are settled, colleges will need to continue to adjust their budgets accordingly. Campuses whose fiscal years begin over the summer are currently in the process of setting those budgets, so expect more announcements in the coming weeks.
