Dive Brief:
- A recent audit of Duke University’s financial statements found ample fiscal resources and a lack of justification for institutional cuts despite disruptions to federal research funding and a looming endowment tax hike.
- The audit, conducted for Duke’s American Association of University Professors chapter and released last week, highlighted Duke’s strong credit ratings and cash flows, rising net assets and more than $14 billion in unrestricted reserves.
- Pointing to the audit, the Duke AAUP in a press release last week slammed the administration for employee reductions and budget cuts and plans to rally with university employee unions and campus groups on Friday.
Dive Insight:
Howard Bunsis, an accounting professor at Eastern Michigan University who conducted the audit, has reached similar conclusions about other universities over the years, including recently the University of North Carolina, Wayne State University and University of Southern California.
With Duke, Bunsis concluded that the private North Carolina institution was in “very strong financial condition.”
“Any claims of budget ‘holes’ or ‘deficits’ or needs for budget cuts are not supported, as there are significant totally discretionary reserves and annual excess cash flows that are the result of Duke taking in more cash than it spends,” Bunsis wrote in a Jan. 27 presentation for Duke faculty.
Bunsis based his analysis on Duke’s audited financial statements, the most recent of which was for fiscal 2025, which ended in June.
Among other things, Bunsis found Duke’s total assets, including those of its health system, have grown from $19 billion in fiscal 2017 to over $32 billion in 2025. The university consistently takes in more cash than it spends and invests the surpluses to earn positive returns, and it ended fiscal 2025 with $21.8 billion in total investments, he pointed out.
Excluding its health center, Duke’s unrestricted reserves stood at $8 billion in fiscal 2025, well above its $3.9 billion in expenses.
“Reserves are not a pot of cash sitting in the president’s office,” Bunsis wrote. “However, it does represent funds that the admin has access to, and most importantly, it gives the administration financial freedom and flexibility.”
Despite those resources, Duke offered voluntary buyouts to employees, resulting in nearly 600 separations, and signaled that it would conduct layoffs as well. By late September, it had laid off 45 employees, according to The Chronicle, the university’s student newspaper.
Those moves came after senior leaders announced in April a cost reduction program they described as “proactive” to support the university’s mission. According to reports from the time, leaders were looking to slash $350 million from the university’s budget.
“We believe it is critical to take appropriate actions sooner rather than later to lower costs and strategically realign our operations against lower federal funding levels going forward,” Executive Vice President Daniel Ennis said in a statement at the time.
The Duke AAUP called the university’s cuts into question following the audit. “Bunsis’s presentation demonstrated that these cuts and layoffs are not driven by financial necessity but represent an effort to use the current moment to transform the university through a new round of austerity measures,” the faculty group said.
Even with endowment tax increases looming this summer under Republicans’ new federal tax and spending law, Bunsis’ audit questioned Duke’s financial pressures.
He estimated that the university would have to pay either $15 million or $44 million on endowment income, depending on whether it would be subject to a 1.4% or 4% rate under the new law. Even that amount was likely overstated, Bunsis noted, as the tax would apply to income made from asset sales, dividends and other streams.
Bunsis also found no change to Duke’s revenue in fiscal 2025 from federal grants compared to the prior year, despite the Trump administration’s disruption to the research funding system.
In addition to looking at Duke’s financial resources, Bunsis analyzed changes to its employee mix. He found that the ranks of the university’s administrative managers grew by 37% between 2017 and 2025 while its total full-time faculty grew 10.4%.
