Budget shortfalls are a national trend

Global management firm McKinsey estimates that 57% of private and 77% of public institutions are facing budget shortfalls across the nation. In early February, Maryland’s governor, Wes Moore, announced a proposed reduction of $111 million to the University System of Maryland that would cut 400 jobs to its public universities. The California university systems are facing similar futures in Governor Gavin Newsom’s budget proposal. If passed, California State University and University of California would see hundreds of millions of dollars in reduced funds.  

The ratings agency Fitch recently came out with a report describing a “deteriorating outlook” for higher education, driven by uneven enrollment, rising competitive pressures, and continued margin pressures. “Sector consolidation is likely to rise in 2025 … Even public institutions, which have long been more insulated from sector pressures, may be forced to consider drastic budgetary decisions to remain sustainable.”  

Uncertainty on federal research funding

Universities across the country continue to assess the potential impact of a number of federal actions and executive orders. On February 7, the National Institutes of Health (NIH) sent a notice that it intends to cap the rate for “indirect funding” from grants—reimbursements that cover a portion of universities’ facilities and administrative costs. If this cap – or similar actions – go forward, universities across the country stand to lose billions in biomedical funding.  The University of Oregon is among those affected.