Dive Brief:
- The University of Southern California plans to use layoffs and other budget austerity measures to tackle a $200 million operating deficit and gird against a massive blow to federal funding, Interim President Beong-Soo Kim said in a community message on Monday.
- On top of USC's growing budget shortfall, which ballooned from $158 million in fiscal year 2024, officials are now grappling with federal headwinds affecting the outlook for research support, student financial aid and international enrollment, Kim said.
- Lower federal research funding could cost the highly selective private university $300 million — or more — each year, Kim said. “To deal decisively with our financial challenges, we need to transform our operating model, and that will require layoffs,” he said.
Dive Insight:
Kim pointed out that USC isn’t alone in making painful budget decisions — but said that didn't make the news any easier to hear. Indeed, many other well-known research universities have also been tightening their budgets and signaling layoffs amid the Trump administration’s widespread federal grant terminations.
That includes Stanford University, a fellow California college, and Brown University, in Rhode Island, which have both signaled potential staff reductions as they contend with federal funding shifts. Boston University, another private nonprofit, recently cut 120 employees and eliminated an equal number of vacant positions to deal with those challenges.
Kim did not disclose how many employees the university plans to lay off, and a USC spokesperson did not provide more details in response to questions Tuesday. But Kim said in his message to faculty and staff that USC has also taken other measures to shore up its budget.
The university will forego merit raises for the 2026 fiscal year, has ended certain services from third parties, and tightened discretionary and travel spending. It’s also planning to sell unused properties, streamline operations and adjust pay for the most highly compensated employees.
Kim, however, said it wasn't feasible to bank on increased tuition revenue, drawing down more on the university’s endowment or taking out additional debt.
“Each of these ‘solutions’ would simply shift our problem onto the backs of future generations of Trojans,” Kim said, referring to the university's mascot and student body nickname.
He also noted that the university could not likely count on federal funding returning to prior norms. “While we will continue to advocate for the vital importance of research and our academic mission, we cannot rely on the hope that federal support will revert to historical levels,” he said.
Kim’s message comes just two weeks into his tenure as the college’s interim leader, making it one of his first acts.
USC depends heavily on federal research funding. In fiscal 2024, the university received $569 million for federally funded research, according to a recent FAQ posted to its website. Overall, the university brought in nearly $7.5 billion in operating revenue that year and had $7.6 billion in operating expenses.
