Message from UW leadership on budget reductions

The following message was sent to all faculty, Academic Staff, University Staff and limited appointees from Chancellor Jennifer Mnookin, Provost Charles Isbell Jr. and Vice Chancellor for Finance and Administration Rob Cramer on June 23.

Dear UW–Madison faculty and staff,

As you know, back in March, we shared an update regarding substantial proposed changes in federal funding and resulting financial uncertainty. We asked colleagues across the university to exercise increased prudence in financial spending decisions, including instituting hiring oversight, pausing most travel and non-essential expenses, and reviewing capital projects.

We continue to face immense financial uncertainty and risks. These uncertainties and concerning headwinds include:

• Potential changes to the federal indirect reimbursement rate, which is projected to cost the university between $65 to $130 million, or more.

• The risk of additional grant terminations, freezes, and stop work orders. We have seen more than 90 awards or subawards facing a stop work order or termination since January.

• A slowdown in new awards from the federal government and significant proposed federal budget cuts for scientific agencies, indicating a worrying trend for our research enterprise.

• Ongoing questions about international students’ ability to study in the United States, which has the potential to have a significant impact on enrollment, in addition to depriving us of many talented members of our community.

• Worrisome proposed changes to federal financial aid, including potential changes to Pell Grants, impacting students who need aid the most.

• Uncertainty regarding potential tariffs, which could have cascading impacts on our construction and operations costs.

• Uncertainty in the state budget landscape.

These considerable uncertainties and risks require us to take additional steps today to help protect our long-term financial viability.

Budget reductions

At the time of our last update, we asked all units to submit draft plans for how best to navigate the possibility of a budget reduction set at the level of 5% or 10% of the unit’s fund 101 totals. Today, we are announcing cost-cutting measures toward the lower end of those requested. For FY2026, schools and colleges will be required to implement base budget reductions of 5% of their FY26 101 allocation. Administrative and all other units that receive 101 funds will reduce their fund 101 base budgets by 7% of their FY26 allocation.

We recognize that some units may choose to supplement this university-directed reduction with some additional school or unit reductions, because of local unit imperatives or to provide their school or unit with some additional fiscal cushion in a time of extraordinary financial challenge. A very limited number of units may be given a longer time horizon for implementing the campus-level reduction, or a reduced target reduction, because of the unit’s significant financial challenges.

Deans and vice chancellors will soon be meeting with us to review their budget reduction plans. As we engage in those conversations, we will prioritize safeguarding the core elements of our teaching, research, and outreach missions, now and in the future. Our expectation is that many of the necessary reductions can be borne by trimming non-personnel expenses, leaving some vacancies unfilled, and, in some instances, moving existing expenses to alternative funding sources. Still, we recognize these cuts will not be painless and that a number of units will face difficult choices.

Deans and vice chancellors will share more details about unit-level, specific budget reduction decisions later in the summer. We will also continue to share information about new developments that have an impact on the university, including federal and state budget decisions. Please refer to this FAQ page for a list of common questions and answers, understanding that the continued environment of uncertainty in which we are operating means we may not have answers to some of your questions.

Central actions

In addition to the 101 fund reductions, we are taking additional steps in central administration to improve efficiency and redirect savings toward mission-centric activities. As examples, we are launching pilot programs with units that have shown interest to test alternative administrative delivery models in human resources, finance, and IT, and we will be considering how to expand efficiencies we are finding through Workday implementation. You will hear more about these efforts in the coming weeks and months.

As we work through our continued shared challenges, including these significant fiscal risks, we want to tap into broader campus input and perspective. No single group has the full range of voices and expertise we need to proceed with strategic purpose, so we will be creating an ad hoc working group that will include perspectives from across campus. The group will be charged with the crucial task of helping us all continue to think strategically about how best to maintain our ability to pursue our mission and position us for the future in the face of significant and enduring financial challenges and uncertainties.

We understand this budget news may be disappointing and concerning, even if it is likely not entirely unexpected or surprising. Higher education is in the midst of tremendous upheaval. Like our peers, we are not insulated from the impacts.

That said, every day, the UW–Madison community comes together to offer a first-rate education, to pursue extraordinary research and creative work, and to engage in service and outreach, as we advance the Wisconsin Idea, our guiding mission to improve lives throughout Wisconsin and beyond. And even in these complex and uncertain times, we will keep doing exactly that. Thank you, a sincere and deep thank you, for your tremendous commitment to that work, even amidst the difficulties of the current moment. We believe that by implementing these reductions now, we will be significantly better positioned to navigate the challenges ahead together.

Sincerely,

Jennifer L. Mnookin, Chancellor

Rob Cramer, Vice Chancellor for Finance and Administration

Charles L. Isbell, Jr., Provost

John Zumbrunnen, Senior Vice Provost for Academic Affairs and incoming Interim Provost