In two months, Leslie Brunelli will take next year’s budget to the Washington State University Board of Regents for approval. As in recent years, the document will reflect dropping enrollment — but it will also most likely include a decrease in state aid.
That’s enough to pose real concerns about what cuts might be needed to balance the budget. But the prospect of sudden funding cuts by the Trump administration raises the stakes for officials like Brunelli, executive vice president for finance and administration at Washington State, who are now facing a nearly unprecedented budget season. (Some campuses have already frozen hiring, among other steps to cut expenses.)
What happens if deep cuts to federal funding of research grants are made permanent? What if Pell Grants get chopped? How do you make a budget on a campus that could lose huge inflows of cash?
“It is just so unknown,” Brunelli said. “This is my 29th year in higher ed. This is the most challenging budget year that I’ll have experienced, because there are so many unknowns.” The “biggest one,” she added, is ripple effects from the recent staff cuts at the Department of Education.
“What happens if our students’ FAFSAs are not processed in the way we expect them to and they lose their access either to Pell or to direct student loans? I mean, that’s a game changer. I mean, that’s almost game over. I can’t even wrap my head around what that might mean.”
The budgeting process doesn’t have a definitive start, but it began to ramp up in intensity at Washington State in December, Brunelli said. All of the university’s 44 units worked their way to the finance office for a mid-year check-in.
Top of mind was a projected shortfall in state tax revenues, which, despite the state’s historically warm embrace of higher education, could lead to cuts for higher education.
The state caps public-college tuition increases by law, so the university adopted a 3.3-percent increase for in-state undergraduates, the top end of what is allowed. That helped the financial planners to begin to build their revenue and expense projections.
Then, after Trump took office, work really kicked into high gear. Administrators began to picture worst-case scenarios: What if the White House succeeds in capping overhead expenses on the National Institutes of Health grants at 15 percent, and the State Legislature cuts the university’s appropriations by as much as 10 percent?
With scenarios like that in mind, Washington State University has asked each of its units to model reductions for one, three, five, and 10 percent in their individual budgets. Brunelli said there will be no across-the-board cuts, and some units, like enrollment management, will likely not face any reductions.
The 44 units are scheduled half-hour time slots over the course of several days before a committee made up of Elizabeth Cantwell, who takes over as president on April 1; T. Chris Riley-Tillman, executive vice president and provost; Brunelli; Daryll B. DeWald, executive vice president for health sciences and chancellor of the Spokane campus; and a representative from the Faculty Senate. With a new president joining, the expectation is that those meetings will stretch longer than the scheduled 30 minutes.
Each unit gets a template from the budget office that includes a review of the past three years, along with actual spending from this year and projections for the coming year. The units can also make new funding requests that match up with increasing revenue and meeting the university’s strategic goals.
Then, the committee will get together and balance the overall budget. The goal is to take that budget to the board on May 21, but only if state legislators have finalized their budget.
This is my 29th year in higher ed. This is the most challenging budget year that I’ll have experienced, because there are so many unknowns.
“Budget work is an art,” Brunelli said. “At the end of the day, the notion of running a structural budget deficit, which means certain financial doom, is irresponsible. And you know, I’m not going to be a CFO at an institution that advocates for not knowing that sources will ultimately equal uses. We are not going to spend ourselves into a deficit situation.”
Brunelli added that expenses like the university’s utility bill “will most certainly go up,” and that administrators “have to invite the opportunity for investment where there can be future growth or an outcome that is desirable by either the institution or the state.” She added: “Our units will have that opportunity to tell us what those things are.”
Whatever the cuts are or whenever they come, Brunelli is aware of the impact they will have. “Even at a one-percent reduction, you’re quickly, quickly into people,” she said, noting that more than 82 percent of the university’s budget is people.
Washington State University isn’t alone in trying to figure out how to budget amid unprecedented uncertainty, which is placing stress on finances across the sector, Moody’s said in a recently released report. The agency switched its outlook for higher education to “negative” from “stable,” citing “cuts to research funding, enforcement actions against diversity programs, staff reductions at the U.S. Department of Education, uncertainty over federal student aid, and possible expanded taxes on endowments.”
More than 2,000 miles southeast of Washington State University, Mike Duncan is looking at the upcoming budget process for the University of Houston’s Downtown campus, where he has worked for 15 years. Duncan, a tenured English professor, is worried about what is to come at the public regional university, where about half of the undergraduates use Pell Grants. The university is considered both a Hispanic- and minority-serving institution.
“I’m not convinced our current [university] administration fully appreciates the threat posed by the decimation of the Department of Education and the in-print Project 2025 plan to either privatize federal loans or revamp them into a less accessible form,” he said. “My worse fear is that our [university] administration would overreact with drastic cuts if there were such a summer surprise — and I anticipate such a surprise that primarily aims to sow chaos. The loans would eventually be reclaimed, I’d think, but the university would take massive damage in the meantime, much self-inflicted in the panic.
“In short, unless there is a massive pivot in strategy in university leadership — we’re far from the only university whose leadership has decided the best play is to lay low and hope nothing bad happens — I don’t think the fall is going to go well, save for those who want to destroy higher education.”
The chaos and uncertainty have taken a toll on faculty and the campus, he said.
“It’s difficult to commit to anything long term — research, student recruitment, plan conferences — when the fall semester is an unknown. It’s a black hole. Even in Covid there was little question we’d still have the next semester,” he said. “This time, there’s no technological solution to a political problem. You can’t vaccinate against a lack of funding. The administration by and large is not suited to political confrontations and taking hard stances on values.”
Chief financial officers across the country are working hard to look at the various levers they do control, said Ruth A. Johnston, vice president at consulting services at the National Association of College and University Business Officers. Those include looking at the cost of instruction versus how many students are taking a course, the best use of space on campus, and even what flexibility exists in the spending of endowment funds. In worst-case scenarios there’s also hiring freezes or layoffs or shuttering of programs.
“This feels an awful lot like the start of Covid,” Johnston said.
Brunelli was at the University of Denver, a private institution, during the pandemic. While Covid was “cataclysmic,” she said, federal funds saved the day for many private institutions. Those don’t exist now.
“This is not that unlike the Great Recession,” Brunelli said. “I was at the University of South Carolina during that, and we were cut, in the space of three years, more than half of our state appropriation. So it was cuts every couple of months coming at you, and you just could not make a cut without another one coming at you immediately. This feels like that in a lot of ways, except that you didn’t have the federal-government issues populating on the side either.”
