To: Deans, Directors, CSLC Executive Officers, and Budget Officers
From: John Coleman, Provost
Send Date: February 24, 2025
Subject: Planning for Budget Challenges
Given recent actions in the federal government, it is prudent for units to take steps to prepare for a likely reduction in federal monies for research and other university activities. The open-ended nature of federal actions creates uncertainty about the eventual size of the reduction. As we have discussed previously, central campus reserves face some stress over the medium term, which has led to various actions including a budget-reduction exercise for all centrally-budgeted units for FY26 and FY27, identifying specific revenue streams to support existing commitments (e.g., Strategic Hiring Initiative), absorption of the FY25 salary plan by CBUs, being cautious about new commitments, and other steps. Within this existing context, central campus has a limited capacity to backstop the loss of federal money.
As you know, I recently appointed an ad hoc working group to assess current and near- term funding challenges and identify principles and procedures that will guide financial considerations over the next few months. The working group, chaired by Bill Bernhard, included Germán Bollero (ACES), Wojtek Chodzko-Zajko (Graduate College), Melissa Edwards (OVCRI), Sean Garrick (OVCDEI), Tessa Hile (Grainger), Paul Redman (Budget and Resource Planning), Sharee Robinson (OVCRI), and Mike Wellens (LAS). The guidance below reflects the recommendations of the working group. Much of the guidance reflects the good practices already occurring across campus during this challenging time.
General Budget
- Units should think holistically about their activities and identify threats to their operations as they plan for the challenges ahead.
- Each college and institute has the responsibility to determine its response to the reductions, based on its mission, strategic priorities, and budgetary capacity.
- Until the scope and scale of the reductions are fully understood, units are encouraged to prioritize their spending activities on core-mission activities and refrain from launching, expanding, or continuing non-mission critical activities.
- Restrictions on the use of federal funds could extend to F&A funds provided through federal grants. F&A funds, also known as Indirect Cost Recovery funds (ICR), are provided as a reimbursement to the university for the administrative and infrastructure support costs associated with sponsored research. Please review how ICR monies are currently being utilized in your unit to ensure compliance with current regulations.
- Deans and Vice Chancellors should be prepared to discuss the strategy for managing likely reductions in federal support during their upcoming budget meeting with the Office of the Provost.
Sponsored Research
- Federal monies for some funded projects have been suspended or cancelled. PIs and units are the primary responders to this loss in funding.
- PIs and units are encouraged to consider carefully the impact of ending a project. It is important to keep in mind that the federal government funds many projects in arrears, and the PI and unit may be responsible for covering some expenses that have already been incurred.
- For graduate students on soft money, the unit should maintain funding obligations to students (e.g., promise of funding for a certain period). Units may consider reassigning the student to alternative tasks and funding sources. Please consult the Graduate College for guidance about managing student appointments and Labor and Employee Relations in IHR for GEO-covered assistantships.
- For employees on soft money, units may issue a Notice of Non-Reappointment (NONR) or find alternate funding sources on an ongoing basis in lieu of issuing the NONR. Units may consider whether to reassign effort to different tasks on different funding sources. Employees have specific notice rights based on their employment category and years of service. In some cases, it may be possible to issue a truncated NONR. Please consult with HR to manage these appointments and to clarify notice rights.
- Units should consider the implications of winding down projects and programs that cannot be easily stopped or re-started (e.g., projects requiring the ongoing care of plants and animals; projects that rely on longitudinal data collection; etc.). In these cases, the unit may choose to provide limited bridge support until new funding is identified. Even if the decision is made to wind down a project, the unit will need to address costs that continue after the project is ended (e.g., the ongoing care of plants and animals).
- Colleges and MAUs should assess and report the loss of funds and costs associated with winding down research activity to the Office of Budget & Resource Planning. B&RP will track those overall costs. Further guidance on the reporting process will be forthcoming.
Graduate Students
Looking ahead to 2025-26, units are encouraged to have conversations about how they intend to use available funding for graduate students. That is, units will need to determine if they prioritize returning doctoral students or incoming students; doctoral students in years 1-5; doctoral students rather than master’s students, and so on.
Federal Funding Dashboards
These dashboards provide information that may be helpful to your decision process: