Overview
Stanford University has announced $140 million in budget cuts for the 2025-26 academic year, leading to staff layoffs amid financial pressures, including proposed federal tax increases on endowments.
Announcement of Budget Cuts
- Stanford will cut $140 million from its budget for the 2025-26 academic year.
- The announcement was made by President Jon Levin and Provost Jenny Martinez in a letter to faculty and staff.
- Staff layoffs are required to meet the budget cuts.
- Not all reductions can be achieved by eliminating unfilled positions.
Key Drivers for Financial Strain
- A federal bill proposes raising the endowment tax for certain universities from 1.4% to 21%.
- If enacted, the higher tax could cost Stanford an estimated $750 million annually.
- The federal policy change is cited as a significant cause for the budget reduction.
Details on Stanford’s Financials
- Stanford’s endowment was valued at $37.6 billion in August 2024, among the highest in the U.S.
- In the last fiscal year, Stanford spent $1.8 billion from its endowment on financial aid, faculty salaries, research, libraries, and athletics.
Impact and Scope of Layoffs
- The $140 million cuts exclude the School of Medicine, which will set its own budget decisions.
- There is an existing hiring freeze that will remain in place.
- Previous layoffs include 23 creative writing lecturers in 2024 and 208 workers during the COVID-19 pandemic (2020).
Context and Institutional Response
- Stanford faces ongoing federal scrutiny related to race-based admissions, similar to other major universities.
- University leaders say the cuts are to ensure Stanford’s long-term resilience and strategic goals.
Key Terms & Definitions
- Endowment — A fund of money or assets donated to a university, the investment income from which supports ongoing costs.
- Hiring Freeze — A temporary halt to filling vacant positions as a cost-control measure.
- Endowment Tax — A federal tax on the investment income of large university endowments.
Action Items / Next Steps
- Monitor further updates regarding the federal bill and its impact on university finances.
- Await budget decisions for the School of Medicine.
- Stay informed about future communications from university leadership on job reductions and hiring policies.