Dive Brief:
- The University of Chicago cut its fiscal 2025 budget deficit by about 44% to $160 million after years of belt-tightening measures amid financial headwinds, it announced last week. The private nonprofit’s operating loss fell by over half to $86.4 million, per its latest financials.
- “We substantially outperformed our plan for the year,” said Ivan Samstein, the university's chief financial officer, in a statement Wednesday. “This is no reason for overconfidence — we still have a lot more work to do. But it is a very good start.”
- The University of Chicago unveiled a range of budget cuts earlier this year, including a plan to eliminate 100 to 150 staff jobs, reduce doctoral student numbers and scale back capital spending. The institution’s goal is to balance its budget by the end of the decade.
Dive Insight:
Samstein's note of qualified optimism comes after University of Chicago President Paul Alivisatos in August described “profound federal policy changes” as well as “multiple and significant new uncertainties and strong downward pressure on our finances” that created the need for steep budget cuts.
Well before the Trump administration attacked the federal research funding system, the university had wrestled with a budget deficit, as growing costs outpaced revenue. The university reversed that trend in fiscal 2025, which ended June 30.
Looking at its latest income statement, the operating deficit shrunk even as expenses continued to grow. That was thanks to growth in the institution’s revenue, including from tuition and fees, healthcare income from its medical center, private gifts and grants, its endowment payout, and other sources.
Those spikes helped offset shrinking government grant and contract revenue, which dipped 5.5% to $530.7 million in fiscal 2025. Federal funding uncertainty could affect the University of Chicago’s finances for years, Provost Katherine Baicker noted in a statement last week.
The overall revenue numbers reflect “strong demand from students at every level, with a broad, long-term foundation from donors who provided record-setting philanthropic support for UChicago’s academic mission,” according to the university.
The institution carries quite a bit of debt. In fiscal 2025, its notes and bonds payable amounted to $6.4 billion, up 4.8% from 2024. It made $627.9 million in principal payments on its debt, up from $92.1 million the year before — though the university noted debt as a percentage of expenditures decreased.
By comparison, for example, Washington University in St. Louis reported $3.3 billion in bonds and notes payable in fiscal 2025 while it had similar asset levels as University of Chicago..
The University of Chicago could see further easing of budget pressure as it looks to shed expenses. “We need to calibrate spending and revenue growth carefully,” Baicker said in a statement. “Our job is to ensure that we put resources where they matter most for student success and the University’s scholarly mission.”
Cuts announced in late summer run a gamut across university functions. Among other measures, the university plans to cut its contribution to its academic centers and institutes by at least 20% — putting pressure on them to seek other external sources of funding — while focusing its capital spending on its central quad area.
The institution also plans to thin its ranks of senior leaders as it also reduces staff headcount mostly through shrinking or closing programs.
The University of Chicago is holding faculty levels steady. However, it has paused Ph.D. admissions entirely for more than a dozen programs, most of them in the liberal arts and humanities, and cut the budget for doctoral students across the board. The move has brought national attention, much of it negative, to the damage these moves could bring to the university’s well-regarded humanities programs.
