Earlier this month, we presented a livestreamed town hall to discuss the University’s budget and our approach to addressing the crisis we are facing. If you weren’t able to watch in person, a recording has been posted uw.edu/president/uw-budget-town-hall/. Your engagement in these discussions is crucial to our future.
The University of Washington is facing a budget crisis due to the convergence of reductions to our state funding and federal changes, including proposed cuts to research funding. Together, these pressures create an urgent need to reduce our operating budgets and ensure that our expenses do not continue to exceed our revenues.
Impact of state budget cuts
Due to Washington’s budget crisis, all state universities, including the UW, will receive less state funding and be expected to increase their share of expenses. First, the state will implement a 1.5% reduction in core funding for higher education. Second, the legislature is also reducing the state’s share of the UW’s “fund split” for employee compensation, requiring us to cover 81 cents of every new dollar spent on compensation. Third, the state is increasing the costs the UW must pay for employee benefits. In total, these actions result in an effective 6.5% cut to our state operating budget.
Although Gov. Bob Ferguson has not signed the budget yet, we do not expect significant changes and are planning to implement the legislature’s final budget.
Additional information
Together We Thrive – Program announced in January to outline financial challenges and collaborative approach to solutions.
Finance, Planning & Budgeting briefs – Summaries of higher education policy, state budget and statutory obligations, UW policy, and national higher education trends.
Office of the Provost’s federal policy updates
Office of Research updates on federal administrative actions
UW budgets and processes explained in detail
Unstable and chaotic federal policy and funding landscape
Frequent changes to grant management, such as allowable costs, award terminations, reimbursement protocol modifications, and attestation requirements, have unilaterally impacted approved research grants and contracts to the UW and the infrastructure that supports them. Our University, like all universities across the country, faces ever-evolving regulations and the risk of significant losses in indirect cost reimbursements for federally funded work. These challenges and delays in payment for work already completed have impacted our faculty, staff, and students, even before the U.S. Congress determines overall federal agency spending later this fall.
UW budget reductions and layoffs
As the state and federal landscape evolved over this academic year, UW schools, colleges, and campuses were progressively tasked with reducing current spending and planning for potential future cuts, all with the goal of mitigating impacts. This work was important preparation to meet the cuts the University now faces. Friday, May 9, UW schools, colleges, administrative support units, and campuses were directed to reduce their core budgets by an average of 4.7% starting in FY26, which begins July 1. This still allows for a modest compensation plan necessary to address the cost-of-living pressures in our region.
It is almost impossible to imagine a scenario in which layoffs will not be necessary. These difficult decisions will be made with the least harm to the fewest employees. Budget planning is being done at the unit level, and in the case of colleges and schools, in collaboration with elected faculty councils. As a result, budget impacts, including layoffs, will vary by the unit. Each unit, as well as executive leadership, will continue to update with details as plans are finalized.
Limits on endowment and reserves
Because our endowment is more than 99% restricted, those funds cannot be allocated to purposes not specified by the donors. Nonetheless, these resources will continue to provide important support for activities that are essential for our mission, including scholarships, fellowships, professorships, programs, and other beneficiaries of those endowments.
The University does maintain reserves to protect our mission. Our approach has been more measured relative to our peers, however, because our funds are more limited in comparison. If these reserves are depleted much beyond current levels, the University will incur higher borrowing costs which could result in deeper cuts in the future. As stewards of public resources, it is unsustainable to continue using one-time funds to address ongoing imbalances in our expenses and revenues.
Looking forward
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. 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.
We thank you for the excellent and important work that you are contributing to this university-wide effort. We will continue to provide updates, as will unit leaders, as the situation changes. And while the landscape continues to shift – and the plans and decisions we are making in response are extraordinarily difficult – our future will be stronger by working together to find the best path forward.
Sincerely,
President Ana Mari Cauce
Provost Tricia R. Serio
Chief Financial Officer Sarah Norris Hall