Audiences: MSU faculty and staff, Board of Trustees
Dear faculty and staff members,
I’m writing to bring you up to date on some of the outcomes of the university’s budget cuts. As I shared with you in June, we have been working to mitigate the effects of broadly rising costs, including double-digit increases in employee health care and disruptions to federally funded research, on top of a general fund deficit carried forward from unbudgeted headcount and financial aid expenditures.
I realize these past few months have not been easy for our faculty and staff. The impacts of programmatic, unit and employee cuts have been felt by all. Behind every budget line in our units and colleges are people — colleagues, programs and commitments that matter deeply to our community. The decisions we’ve had to collectively make these past few months affect individuals and teams in real ways, and we do not take that lightly.
Budget influences
As we started the semester in late August, there were still a few unknown elements that we needed to finalize to help us understand the financial path we are on, such as enrollment numbers and state funding levels.
With final counts made available recently, we are happy to report another strong student body, totaling 51,838 and showcasing our strength as the top choice for Michigan students and families. This total is close to our predictions and will keep us on the budget path we have laid out. The changing mix of our student body and slow declines in international students in recent years, however, do impact our revenue even as overall enrollment remains high, and we will continue to keep our eye on these shifts.
Uncertainty about the level of state appropriations this year also influenced our budget approach. The state’s budget was finalized only this month, and we now know MSU will receive $333,766,200 in base operations funding. That’s a 2.1% increase for the year, which is welcome, but was already built into our planning assumptions — meaning it is not additional revenue available to spend. Additionally, the state is appropriating this increase on a one-time basis, making future budget planning more difficult.
Budget impacts
Based on financial projections from earlier this year, we had asked our colleges and administrative units to share budget cuts totaling 9% over the next two fiscal years, with the first 6% taking effect in the current fiscal year that began July 1. I recognize the stress and strain that financial uncertainty has placed on our community. These are not abstract numbers. They represent the daily work and dedication that make our university what it is.
I am proud of units achieving as many savings as possible through non-personnel actions and evaluating vacancies before filling open roles. Nearly two-thirds of the reductions, in fact, were proposed across supplies, services and other non-personnel expenses. It is always difficult when some actions require position changes or direct layoffs, and we have not been able to fully avoid those here.
Between budgeted reductions of MSU support staff, faculty/academic staff and executive managers, 99 positions were eliminated as of Oct. 14, including several executive roles. This number does not include changes to appointment types, such as annual (calendar) year or academic year, adjustments to employment effort or annual contracts for fixed-term faculty that were not renewed. It is hard to calculate which fixed-term positions were impacted directly from budget reductions versus other reasons, since fixed-term faculty appointments are also impacted by other factors such as enrollment and course demand. These colleagues are valuable parts of our community, and their loss, for any reason, is still felt by colleges and programs.
Further, another 83 positions across the university were lost due to federal funding cuts. Total positions impacted by budget cuts and federal actions since March 1, 2025, amount to 1.3% of MSU’s employees.
To aid career transitions, MSU Human Resources has reached out directly to eligible individuals to offer outplacement services following their separation from the university due to MSU budget or federal funding cuts. For those whose roles are changing or whose positions are being eliminated, please know that this decision reflects fiscal necessity, not a lack of value or appreciation for your contributions.
Some of these reductions are still playing out through various union and Human Resources processes. I appreciate the compassion our teams are showing one another during this period, as well as your patience in understanding that we are trying to share information transparently and in a timely manner while also balancing the various impacts around the university.
Through these reductions, we believe the ongoing savings will achieve our 6% first-year savings goal, or $50 million in annual impact. We continue to update our forecasts as information becomes available, but today we expect the overall general fund budget to be largely on target.
Federal support
Unfortunately, the federal funding picture remains murky, and additional impacts from the ongoing federal shutdown remain to be seen. As of Oct. 1, 74 federally funded projects at MSU were terminated by the federal government, with a multiyear impact estimated at $104 million. Most were funded by the National Science Foundation, the U.S. Agency for International Development, the National Endowment for the Humanities, the National Institutes of Health and the U.S. Department of Agriculture. At least 86 other projects have been impacted by actions such as stop work orders, a pause on future funding decisions and conditional terminations.
You can learn more about federal changes affecting MSU in the messages we’ve posted to our Federal Transition website. With Provost Laura Lee McIntyre and others, I’ve been visiting members of Michigan’s congressional delegation to advocate for our great university and the important work we do. Our Government Relations and university communications teams will continue to monitor developments, advocate for policies that advance our institutional priorities and provide timely updates.
Financial planning
I recently shared with our Academic Governance that Provost McIntyre and CFO Lisa Frace are launching a Budget Model Redesign project to support the university’s financial transformation. This initiative prioritizes the development of a budget model that emphasizes clear resource allocation methodologies, financial stewardship and sustainable operational practices. They will communicate regularly as the project progresses.
We’ll be able to share more information toward the end of the fiscal year as college and unit leaders finalize spending plans for fiscal 2027. The academic budget process, for example, is scheduled to start with the budget request letter in early November, with budget submissions due Jan. 23. MSU fiscal officers will be invited to MSU Finance’s 2025 Budget Summit in December for additional updates for FY 2027. You can find more budget information on the Office of Financial Planning and Budget’s website.
We have taken the first difficult and necessary steps to assure the university’s financial sustainability, and I thank you for all you have done, and will do, to continue to deliver on the mission of our university. Working together as one team, your continued support in monitoring spending and reviewing vacancies at times of natural transitions can help ensure the fewest layoff impacts possible as we head into next year’s 3% reduction cycle.
I am deeply grateful to every faculty and staff member who continues to serve our students and one another. What has been most evident through this process is the care our community shows for one another — even amid challenges. MSU’s strength has always been our people, and that remains true now and into the future.
Sincerely,
Kevin M. Guskiewicz, Ph.D.
President
Professor, Department of Kinesiology