A Financial Update
Dear faculty and staff,
As I enter my final weeks as interim president, I want to revisit the commitment we made in January, and which I have reiterated in many other forums, to prioritize an increase in faculty and staff salaries for Fiscal Year 2027.
After a thoughtful analysis of our financial position and budgeting, as well as intensive discussions with institutional leaders, I can now report that the pool for salary increases will be 2.7%. Schools and units will make local decisions regarding how those increases are distributed. Overall, the University’s spending on compensation and benefits is budgeted to increase by $50 million over the FY 2026 budget.
I recognize that the FY 2027 salary pool is smaller than some were hoping for, particularly after a fiscal year without raises, so I want to provide some important context on the financial situation at Northwestern and more broadly across the higher education landscape.
Northwestern’s finances have stabilized following the resolution agreement with the federal government, but we continue to manage challenges to our budget that are playing out at institutions across the country, and likely will continue in the years to come.
For research institutions like ours, the largest streams of annual revenue are tuition net of financial aid, endowment payout and federal research grants. Philanthropic gifts also play a factor, though they usually are designated for specific uses such as capital projects or the endowment and thus do not impact our annual revenues immediately or in the same way as unrestricted funds. While last year’s freeze on federal research grants has ended, and although we have seen growth in our endowment due to market gains, growth across our streams of revenue is constrained. At the same time, the expense pressures we have identified in past financial updates to the community continue to consume available resources. Among them are costs associated with information security, campus safety, rising energy costs and compliance requirements.
I have been a part of this community for more than three decades, so I know how much each member of this community cares about Northwestern and contributes to our shared success. While I once again prepare to step away from the presidency, I am confident that current and future leaders understand and appreciate the passion and commitment of our faculty and staff, that we will continue to demonstrate our essential role in society, and that all of us will be a part of the continued ascent of the University we love.