Financial Challenges Forcing More Budget Cuts At Brown University

Brown University has announced that “deep financial challenges” will require it to take additional steps to rein in its spending.

In doing so, it becomes the second premier university in just the past few days to indicate the need for substantial budget reductions. Late last week, Stanford University revealed plans to cut $140 million in general operating funds for the upcoming 2025-26 academic year.

Citing a “rapid pace of funding losses as Brown navigates federal headwinds,” Brown University President Christina Paxson, Provost Francis Doyle and Executive Vice President for Finance and Administration Sarah Latham warned the campus of the “difficult decisions we may have to make in the coming weeks and months” in their Monday announcement.

Those decisions will involve new measures in addition to several steps Brown has already taken to bring its expenses in line with available revenue.

In a communication to the campus community last December, Doyle and Latham identified several initial actions the university would take to address a structural budget deficit of $46 million, writing that “without changes to the way Brown operates, the structural deficit is expected to continue to deepen significantly, including a deficit next year that would grow to more than $90 million, with steady increases in subsequent years.”

As part of its new belt-tightening plan, the university will extend the staff hiring freeze it began in March “at least through the end of the summer.” It will continue a freeze on non-essential travel into September. And a salary freeze for members of the president’s cabinet, will remain in effect for FY26 (plus, Paxton, Doyle and Latham will take a 10% salary cut).

But Brown’s leaders acknowledged it was now necessary for the institution to do more to cope with the financial woes it’s facing. They indicated they would announce more campus-wide actions in several areas over the course of the summer, including:

• Changes to faculty and staff hiring and staff levels;
• Reductions in spending for services and support, including in benefits and other areas of operations;
• Further changes to graduate student admissions;
• Scaling back plans for capital investments.

The administrators pointed to several federal actions that were contributing to what they described as Brown’s “deep financial losses,” including the termination of research grants, threatened reductions in indirect cost recovery rates, the likelihood of a significantly increased tax on university endowment income, substantial reductions to federal research budgets, decreases in Pell Grant awards, and cuts to federal financial aid for graduate and medical students.

The Trump administration’s freeze on federal research funding has cost Brown $45 million as of June 30, and that figure grows by about $3.5 million per week, according to the announcement. In addition, NIH has stopped making new grant awards to Brown and has not issued any routine annual grant renewals. The university is providing bridge funds to help investigators affected by those delays and cancellations, but how much longer it can continue to do so is uncertain.

In addition, Brown officials cited these losses:

• The tax Brown pays on investment income could result in a loss of tens of millions of dollars per year, if the proposal to increase the tax of endowment earnings becomes law.
• Changes to Pell grants, the Federal Work-Study Program and Student Educational Opportunity Grants would cause losses of about $8.8 million annually.
• A drop in international student enrollment could result in reductions of tens of millions of dollars for the University’s budget.
• If federal rates for reimbursing universities’ indirect costs were to be reduced by one half, that would cost Brown about $31 million per year.

In addition to formally appealing the termination of research grants and pursuing various litigation strategies to stop the federal research cuts, Brown officials have already taken out a $300 million term loan and they “are currently assessing other debt options to increase our liquidity even further.” They are also trying to raise more private funds to support the university’s research programs.

Recognizing the intense federal scrutiny that major universities are undergoing, the administrators concluded by writing that Brown was committed “to meeting its legal obligations, as well as our willingness to understand any valid concerns the government may have about the way the University effectively fulfills them.”

At the same time, they attempted to reassure the campus that “we have continued to stand by our core values of advancing knowledge and understanding and protecting academic freedom in a diverse, thriving community.”