University of Michigan Implements Proactive Measures in Response to Federal Funding Cuts

In response to potential federal funding reductions, the University of Michigan has announced a series of strategic measures aimed at protecting its financial stability. Despite the university’s strong financial standing, recent federal directives—specifically, a legal order to cease work on a multimillion-dollar project—have prompted the university to prepare for additional funding challenges that may arise in the near future.

As part of these efforts, the university is introducing new requirements related to hiring, budget management, and spending. These steps include:

1. Hiring Review Process:

   • All new hires for both regular and temporary positions (faculty and staff) will require approval from deans and executive officers, followed by a review from the president or executive vice presidents (EVPs).
   • The university will require approval for replacement, incremental, temporary, and contract positions. However, offers already extended to candidates will be honored.
   • Michigan Medicine will continue with its current hiring review process.

2. Non-Essential Expenditures:

   • Non-payroll commitments over $50K will require written approval from the president or EVPs before being processed, and this approval must accompany requisitions or contract requests to procurement services.
   • Additionally, units are encouraged to voluntarily review other non-essential expenditures, such as travel, conferences, and consultant fees, to identify potential savings.

3. Capital Spending:

   • Capital projects—including new buildings and infrastructure projects—will be closely reviewed. Projects that require regental approval will continue to be evaluated by the university's capital council, while ongoing projects will proceed as planned.

The university also noted that Michigan Medicine will receive separate, specific guidance regarding these measures.

In a joint letter, President Santa J. Ono, Executive Vice President Geoffrey S. Chatas, Provost Laurie K. McCauley, and Executive Vice President for Medical Affairs Marschall S. Runge urged faculty and staff to collaborate and engage thoughtfully in these efforts. The university’s leadership emphasized the importance of these proactive measures in ensuring continued institutional success amid uncertain federal funding.

Republican Plan for $2T in Budget Cuts, Removal of Government Guardrails, and Tax Breaks for Billiionaires (Govtrack.us)

The Republican Resolution (HCR 14) to establish $2 Trillion in budget cuts and more tax breaks for the rich is available here.  While those deep cuts are planned, the GOP is requiring an increase in the debt limit so that American billionaires are rewarded. These rewards are not just in the form of tax cuts for the rich, but in the removal of financial and environmental guardrails.  At the same time, the Resolution calls for increased oversight by the Federal Government in other areas of concern by the right wing US government. 

Austerity and Disruption

With a concerted effort now to reduce government spending, higher education leaders should expect reduced state and federal support in 2025 and beyond, with demographic and climate trends also darkening the clouds. Workers and consumers should also see it all coming. 

Austerity has already begun. In July 2024, the Pew Foundation reported that state budgets were facing cuts as Covid-era funds ended.  The most notable cuts are coming to the California State University System, which is expected to reduce its budget by hundred of millions of dollars. But several other states are feeling the pinch. 

Austerity for higher education is also likely to increase at the state level as baby boomers reach advanced age and require more medical attention and nursing home care. How this demographic cliff of old age, reduced fertility, and fluctuating populations plays out will vary greatly across the United States. 

Some Southern states, like Florida, Texas, Georgia, and North Carolina, have improved financially despite threats from climate change. Anti-tax, anti-regulation, and anti-union laws make them friendly to corporations in search of relocation and a better deal. States in the West, like Utah, Arizona, and Nevada, are are also likely to continue thriving. Besides climate change, which is profoundly disruptive but takes generations to notice, mass deportations could affect their economies quickly--if the Trump Administration's threats can be carried out. 

Alaska, New Mexico, Oregon, and several states in the Midwest and Atlantic regions will face more austerity as their populations remain stagnant or decline and folks move to states with lower housing costs and less taxes, leaving others to die. Deaths of despair among youth will continue to ravage them. What happens with these failing states in the future is anyone's guess. One would hope higher education leaders would have solutions and be courageous enough to act, or at the very least allow those with solutions to talk.