06-05-2025
'Hard Decisions' Loom As Michigan State University Plans Budget Cuts
cuts as it attempts to cope with the impact of federal policy changes and funding reductions. Less getty
In the face of numerous federal policy changes and large-scale cutbacks to research spending, Michigan State University is the latest major research university that's preparing to rein in its budget.
In a message titled 'University Financial Health,' which was sent to the campus community on Monday, Michigan State President Kevin M. Guskiewicz warned that 'federal changes are compounding our existing financial challenges, including our ongoing efforts to balance the university's budget.' He also pointed to increased health care costs as a contributing factor to the financial difficulties.
After stating that he had 'looked closely at our budget model and the state's appropriations formula and have examined stress points, available reserves and forecasted operating budget trends,' Guskiewicz wrote that 'after careful deliberation, we have reached the difficult conclusion that we must adjust our financial path.'
He indicated that in the coming days MSU Senior Vice President and Chief Financial Officer Lisa Frace and her team would share the steps the university would need to take to help get it 'back on a healthy financial track.'
Guskiewicz admitted that the process '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.'
Although no specific cuts were announced and Guskiewicz did not put a total dollar figure on the budgetary adjustments that are anticipated, he placed them on a three-prong timeline, where short-, medium- and long-term efficiencies and savings would be sought.
For the first horizon, university leaders are reviewing college and unit budgets, vacant positions, nonpersonnel expenses and enrollment trends/projections. For the second horizon, it's evaluating options for the size of its annual budget this June. And for the third horizon, it will consider larger, longer-term savings that might be necessary.
Michigan State University ranked 41st among all U.S. universities and colleges for total research and development expenditures in Fiscal Year 2023, according to the National Science Foundation's latest Higher Education Research and Development Survey. In FY 2023, its total extramural research funding topped $844 million.
According to its website, MSU has a total student headcount in excess of 52,000, making it one of the largest institutions in the nation. It reported $932 million in 2024 research expenditures. Its total operating budget for FY 2025 was $3.653 billion.
The university formally launched a $4 billion 'Uncommon Will, Far Better World' fundraising campaign on March 9. It's already raised more than $1 billion toward that goal, the largest in school history.
With Monday's announcement, Michigan State joins a lengthening list of peer institutions in the Big Ten Conference that have implemented hiring freezes, spending pullbacks, limits on graduate student admissions, and other budget restrictions to try to cope with the financial challenges stemming from the cutbacks and new higher education policy demands coming from the Trump administration.
In March, the University of Southern California and the University of Wisconsin-Madison both revealed plans to trim their spending, and they called upon department heads to begin planning for budget reductions going forward. The University of Washington, Northwestern University and the University of Nebraska have also taken significant steps in the past two months to control spending.
In addition to the budget woes caused by the Trump administration's spending cuts, the financial headwinds have been compounded at other Big Ten institutions such as Indiana University and the University of Maryland by reductions in state appropriations for the upcoming year.
Alarm bells are now sounding across Big Ten campuses, as calls intensify for administrators to support a movement to create a 'mutual defense compact' against what faculty believe are broad and escalating attacks by the Trump administration on higher education.
Official faculty groups at ten Big Ten universities — more than half of the 18 institutions now in that alliance — have signed on to resolutions that call for their universities to pool their legal and financial resources in order to help defend member schools that might be targeted by the federal government.
That group now includes Indiana University, Ohio State University, the University of Nebraska, Michigan State University, the University of Michigan, the University of Minnesota, the University of Maryland, the University of Washington, the University of Illinois and Rutgers University, where the idea for the compact was first introduced.
As of yet, no Big Ten institution has officially committed to the proposed compact perhaps because administrators fear that such a stance could provoke retaliation by the administration or sanctions by conservative state legislators. Nonetheless, the financial repercussions from the mounting federal pressures have become too substantial to ignore or wish away, forcing a growing number of the nation's largest universities to adopt new austerity measures.
