New Measures to Address Financial Challenges
Dear members of the Northwestern community,
As we have communicated since our financial update message in January, rising costs related to compliance requirements, health care expenses, litigation, labor contracts, employee benefits, and other forces have put an increasing strain on Northwestern’s finances. With the potential federal changes — including but not limited to a substantial increase in the endowment tax, constraints on our ability to enroll international students, caps on indirect cost recovery, and a likely reduction in overall federal research funding — we face serious financial impacts that must be addressed immediately.
Like a number of our peer universities, we have now reached a moment when the University must take a series of cost-cutting measures designed to ensure our institution’s fiscal stability now and into an uncertain future. These are not decisions we come to lightly. The challenges we face are many, some of which have been building for some time and some of which are new. We have discussed these challenges with a wide range of institutional stakeholder groups over the past several months, including the Faculty Senate, Faculty Assembly and NUSAC, and the actions we are taking have been informed by those discussions.
Previously, we announced several measures, including a hiring review for staff positions and a 10% cut in non-personnel expenses. Today, we are announcing several additional measures that will be implemented in the coming months. These measures include:
- A 0% merit pool with no bonuses in lieu of merit increases
- Reductions in administrative and academic unit permanent budgets, which are likely to include decreases in the total number of staff positions
- A faculty and staff hiring freeze
- Changes to our health insurance program to tame double-digit percentage increases in costs
- Modest changes to our tuition benefits program that will not affect the tuition benefit for dependents of current employees
- Additional non-personnel budget reductions, including a reduction in planned capital expenditures for buildings and systems, that will impact service levels offered by some central units
More information on each of these actions will be forthcoming in the days and weeks ahead.
We understand the impact these changes will have on our community. Our hope is that these measures will put Northwestern on a path to stability, but the ongoing federal funding freeze and other decisions emanating from Washington could require additional actions. We regret that the current period of uncertainty makes long-term planning exceedingly difficult.
We continue to fight in myriad ways to get our federal funding restored, and to minimize the impact on our community. That includes meeting with legislative leaders and government officials, collaborating with peer universities who face similar funding freezes, coordinating with organizations such as the Association of American Universities, and working with counsel to explore legal options. We hope and are reasonably optimistic that these efforts to restore our federal funding will bear fruit, but we have asked our deans and other academic leaders to work with us to plan for a variety of scenarios in case they do not.
We understand that none of this is news you want to hear — and it certainly is not news we want to deliver. Nevertheless, we feel that transparency is important so that everyone has a shared understanding of the challenges that lie ahead. As we navigate through this continually changing landscape, we will be guided by our University principles, as we messaged in March. Like each of you, we believe in the mission of higher education and commit to working with our academic leadership, our faculty, staff, and trustees to sustain and enhance Northwestern’s pathbreaking research and teaching. We owe that to our students and future generations.
We will continue to provide further updates as we learn more, and as decisions are made that impact you and our community.
Thank you for your continued commitment to Northwestern, especially in these challenging times.