Stanford University joins the growing list of universities forced to make major budget cuts, … More announcing reductions of $140 million for the upcoming year.
Stanford University announced this week that it would be laying off employees and cutting $140 million in general operating funds from its budget for the upcoming 2025-26 academic year.
The news came in a June 26 letter to the campus from Stanford President Jon Levin and Provost Jenny Martinez.
Acknowledging that the news was difficult to share, the administrators wrote that the university faces 鈥渟ignificant budget consequences from federal policy changes. These changes include reductions in federal research support and an increase in the endowment tax.鈥
鈥(W)e need to be realistic about the current landscape and its consequences. There is significant uncertainty about how federal support for universities will evolve, but it is clear that the status quo has changed,鈥 they warned.
The Stanford campus has been bracing for bad budget news for months. On February 26, Levin and Martinez announced that Stanford had placed a freeze on staff hiring, writing that uncertainty about NSF and NIH funding and the possibility of an increased federal tax on university endowments would likely affect its bottom line.
In April, Stanford deans were instructed to prepare various budget reduction models, and about three weeks ago, Martinez informed the Faculty Senate that the university “could experience policy changes that would reduce our operating budget by hundreds of millions of dollars a year.鈥
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This week that prophecy was fulfilled, and it鈥檚 likely to get worse. The $140 million reduction does not include the School of Medicine, which will identify its own budget cuts in the coming weeks.
Levin and Martinez instructed unit heads to formulate their budget plans, which should become final in the next several weeks, according to four principles:
Prioritizing support for the core missions of research and education;
Preserving need-based student financial aid and five-year PhD student funding;
Simplifying administrative processes to reduce operating expenses;
Positioning the university to be flexible as federal policies evolve.
They also wrote that they expect schools and units to handle the reductions in different ways, and that the university will increase its endowment payout by 2.9%, which will provide departments some needed support.
The administrators admitted that the budget cuts 鈥渨ill require some reduction in staff positions, not all of which can be accomplished by eliminating open positions,” before adding that the university will make benefits and other compensation available 鈥渢o support transitions in cases where layoffs are necessary.鈥
Stanford鈥檚 current budget plan includes several other elements.
Capital and facilities spending on will be focused on 鈥渢he most critical and/or externally funded projects.
The staff hiring freeze will continue.
Faculty hiring may be slowed.
Modest, cost-of-living salary increases will be given.
In 2024鈥25, Stanford operating budget was $9.7 billion, $1.8 billion, or about 20%, of which was covered by the annual payout of its more than $37 billion endowment.
鈥淭hough the budget reductions in the period ahead will be painful, we are confident that by acting now to put Stanford on stronger and more resilient financial footing, we will be better positioned to pursue excellence and new opportunities going forward,鈥 Levin and Martinez concluded.
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