When President Kevin M. Guskiewicz started in 2024, he made it a priority to understand and address the university’s pressing challenges, one of which is a growing budget deficit. The president and other leaders have carefully considered ways to save money and get the university’s budget back on track while continuing to prioritize university excellence — from strengthening the Spartan student experience to supporting employees to advancing college affordability.
Today, Michigan State faces external pressures such as rising employee health care costs and increased operating costs due to inflation, as well as unbudgeted positions added to the general fund (i.e. the fund for general operations). MSU also expects to receive less money from the federal government due to research cuts and restrictions on international enrollments, although the magnitude of those impacts is uncertain. Additionally, the university is monitoring appropriations proposals very carefully as the state works to finalize its budget.
At the same time, MSU has worked to keep costs for students reasonable and affordable. That has included holding tuition increase rates to the lowest level of all Michigan public universities over the past 10 years while consistently increasing university-funded financial aid. While such actions have added to the university’s financial pressures, they are aligned with MSU’s core values as a proudly public and inclusive university.
MSU has operated with modest recurring deficits that it has been able to cover in prior years, but the current shortfall is unsustainable. To ensure the university has the flexibility to navigate the uncertainties, challenges and opportunities ahead, MSU is making thoughtful, proactive reductions now to help avoid more severe, reactive cuts in the future.
During this process, the university has aimed to do its best to support its people while advancing Michigan State’s long-term success. More specifically, the university has strived to focus reductions and savings on non-personnel expenses and sought to limit the number of personnel impacted by budget reductions by prioritizing all other options for savings before considering elimination of faculty and staff positions.
To get MSU back in fiscal shape, and as requested and approved by the president, colleges and units are implementing plans to cut 9% over the next two years. Overall, the total reduction goal is $85 million. Expenses such as utilities, benefits (health, retirement, social security, etc.), software contractual obligations for central systems, library collections subscription agreements and financial aid, were excluded from targeted reductions. There are also no planned reductions to benefits at this time, and units are not required to implement personnel reductions, though some leaders may have submitted workforce reductions as part of their recommended budget savings.
As the president shared on June 30th, the university unfortunately will have to eliminate some positions, the extent of which will vary by colleges and units. Although many units looked first to identify existing vacancies that could not be filled, there also will be some direct reductions in currently filled positions. Colleges and units began communicating directly with employees and implementing their plans in July.
MSU will continue working with employee unions, as well as on potential voluntary retirement incentive plans for some tenure stream faculty. The university also will provide outplacement services to impacted employees, and the Employee Assistance Program continues to be available for free, confidential counseling services to all current employees.
The university is determined that budget changes still protect the Spartan student experience, including delivery of courses and instruction. That means the university will continue to invest in students, ensuring a high-quality, high-value education; will maintain vital services such as police, food service and payroll at necessary levels to serve such a large, sophisticated organization; and will continue to prioritize health and well-being and other support services so all Spartans can flourish.
The Office for Faculty and Academic Staff Affairs and Human Resources hosted a webinar on June 25 for unit HR representatives, specifically around employee reduction actions. A copy of that presentation is available here.
Additionally, FASA and HR have developed Budget Reduction Resources, a web page of useful resources that include:
A draft comprehensive plan for faculty retirement incentive options has been created by a committee comprised of representatives from FASA, HR, the Dean’s Council, General Counsel and the Finance office. The plan is currently under review, and more details will be made available to deans in the coming weeks.
Over the past few years, MSU has faced increasing financial headwinds, in part due to rising health care costs, in addition to other operating cost increases, plus a general fund budget deficit from unbudgeted and unplanned personnel increases and generous financial aid increases. Those challenges are compounded by changes at the federal and state level that impact revenue and resources — a situation that our peer institutions are also facing.
Therefore, in May, President Guskiewicz sent a letter to faculty and staff calling for university leaders to engage in a process of thoughtful planning to ensure MSU is best positioned to navigate our uncertainties, challenges and opportunities. The university’s goal has been — and will be — to do our best to support our people while making the necessary strategic decisions for the long-term success of MSU.
University leadership has identified a need to reduce general fund expenditures by 9% over two years. This reduction applies to all Major Administrative Units across the university, including administrative units and colleges. The goal is to achieve $85 million in savings; 6% in the first year and 3% in the second year. The Office of the President will implement its 9% savings this fiscal year with additional savings planned for the following year.
There are also plans across units to not fill vacancies and to eliminate executive positions as well as to reduce administrative layers within the organization.
The submissions from Major Administrative Unit (MAU) leaders have been carefully reviewed to coordinate impacts across the full university. Units have received guidance to begin implementing the reductions starting July 1.
There are no required personnel reductions. Faculty and Academic Staff Affairs (FASA) and MSU Human Resources (HR) have provided deans and unit administrators guidance to review before considering position eliminations, such as hiring freezes with units, adjustments to appointment lengths and evaluation of positions in the hiring pipeline. It will be up to unit leaders to determine if personnel reductions are necessary to achieve savings. HR and FASA will assist faculty and staff impacted by personnel reductions.
All Major Administrative Unit (MAU) leaders have been asked to find 9% savings over two years. MAU leaders manage their respective budgets and are best positioned to determine areas for cost savings within their units. While recommendations for cost savings will differ by unit, the Finance office has provided overarching guidance regarding reductions.
The university has excluded from reduction items that, if cut, would harm the core mission of Michigan State University, pose legal or regulatory issues, or otherwise do more damage than the targeted cuts would ultimately produce. Specifically, expenses such as utilities, benefits (health, retirement, social security, etc.), software contractual obligations for central systems, library collections subscription agreements, and financial aid were excluded from targeted reductions. All collective bargaining agreements will continue as bargained.
A substantial portion of reductions should come from permanently ending programs, services or activities that are underperforming. Executive managers and deans historically follow the same raise guidelines as faculty and academic staff. This year, executive managers and deans with salaries greater than $200,000 will have a reduced merit pool compared to faculty and academic staff.
There are no planned reductions to benefits at this time.
To ensure that we carefully monitor new hires during a time of significant financial uncertainty, MSU is implementing a university-wide hiring review of all positions to be filled. Full-time mission critical positions and on-call seasonal positions needed to support operations will be given priority.
Faculty recruitments currently completing the recruitment cycle for fall 2025 start dates will continue as planned. Proposed positions with secure funding sources should be advanced for consideration, particularly if they are mission critical. The hiring review will continue through fiscal year 2026 after which time the need to continue the review will be assessed. The university is also setting aside sufficient funding to ensure that our base level of functioning as an AAU Land-Grant Public University can continue.
The annual review of the university budget and tuition rates is scheduled each year for the June meeting of the Board of Trustees. The board recently approved the university’s $3.69 billion fiscal year 2025-26 operating budget, which also includes a modest 4.5% tuition increase in average resident undergraduate rates for the upcoming academic year.
The board carefully considers tuition rates as part of its responsibility to balance access and affordability while also ensuring the resources necessary to support MSU’s mission as a world-class research institution.
The Board of Trustees is committed to ensuring Michigan State University is best positioned to deliver exceptional academic programs that equip students for success now and in the future.
The board thoroughly evaluated the administration’s proposed budget to be sure it achieves a balanced approach that thoughtfully addresses structural budget issues, makes critical investments across campus to support growth, and prioritizes an outstanding, affordable education for students.
The university can make responsible budgeting decisions to achieve savings while still following through on investments and commitments that are critical to the long-term health, growth and vitality of our institution. The university is working to reduce general fund expenditures, which are separate from capital improvements.
The next few months of financial planning will be demanding and difficult for some in our community, and we will need to make hard decisions that will impact people we care about. Our goal has been — and will be — to do our best to support our people while making the necessary strategic decisions for the long-term success of MSU.
It is important to note that cuts to higher education are part of the proposed state House budget. That proposal differs significantly from the Senate budget proposal and the executive recommendation put forth by Gov. Whitmer.
University leadership will continue to meet with state elected leaders to advocate for a reasonable and responsible state budget that reflects our shared priorities and acknowledges the valuable role MSU plays in preparing our workforce and helping to drive Michigan’s economy.