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.
Over the past few years, MSU has faced increasing financial headwinds, in part due to rising health care and other operational costs, alongside a general fund budget deficit from unplanned personnel increases and generous financial aid increases. These 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.
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 continue to be — to do our best to support our people while making the necessary strategic decisions for the long-term success of MSU.
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.
University leadership has identified a need to reduce general fund expenditures by 9% over the next two fiscal years; 6% in the first year and 3% in the following year. This reduction applies to all Major Administrative Units across the university, with a goal of achieving $85 million in total savings.
The Office of the President will implement 9% savings in the first fiscal year (beginning July 1, 2025) 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.
To ensure financial health, the university excluded from the reduction items that, if cut, would harm the core mission of the university, pose legal or regulatory issues, or otherwise do more damage than the targeted cut would ultimately produce.
Expenses such as utilities, benefits (health, retirement, social security, etc.), software contractual obligations for central systems, library collections subscription agreements, debt service and financial aid, were excluded from targeted reductions.
Major Administrative Unit (MAU) leaders manage their respective budgets and, as such, are best positioned to determine areas for cost savings within their units. While recommendations for cost savings will differ by unit, Executive Leadership provided overarching guidance regarding reductions.
Appropriate supervisory units reviewed and approved MAU plans for savings to ensure that Michigan State University’s base level of functioning as an AAU Land Grant Public University will continue.
All Major Administrative Unit (MAU) leaders have been asked to find 9% savings in general fund expenditures over the next two fiscal 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, Executive Leadership 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, debt service, 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 or can be discontinued.
Historically, raises for executive managers and deans have followed the same 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 Reduction plans submitted by Major Administrative Unit (MAU) leaders have been carefully reviewed to coordinate impacts across the full university. Implementation of plans by MAUs began July 1, 2025, and will continue over the coming months. planned reductions to benefits at this time.
There are no required personnel reductions. Faculty and Academic Staff Affairs (FASA) and MSU Human Resources (HR) 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.
Ultimately, unit leaders determine if personnel reductions are necessary to achieve savings. HR and FASA will assist faculty and staff impacted by personnel reductions.
A number of positions are slated for reduction across all MAU plans, through various processes including elimination of vacant positions and layoffs. HR and FASA are working through the details, and final information will be available once they have completed those processes. In addition, several positions typically filled by student workers will go unfilled for the fiscal year beginning July 1, 2025.
Positions eliminated as part of addressing the university’s structural budget deficit are separate from the impact on faculty and/or staff as a result of funding lost through the elimination of federal research grants or other actions taken at the federal level to institute changes in policy and funding.
Unit leaders will clearly communicate areas impacted by budget reductions and provide appropriate notice should they choose to eliminate positions. Positions require anywhere from 7 to 60 days’ notice—or more—for reduction in force due to budgetary constraints.
There are no planned reductions to benefits.
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 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 review process 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.
Michigan State University’s financial pressures are primarily comprised of a structural deficit that requires responsible budgeting in order to keep the university on the path of fiscal health. Adjustments to spending are necessary to ensure Michigan State University's financial stability.
The annual review of the university budget and tuition rates is scheduled each year for the June meeting of the Board of Trustees. At its June 13, 2025, meeting, the Board approved the university’s $3.69 billion fiscal year 2025-26 operating budget, which also includes a modest $798 increase for all full-time students—a 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 thoroughly evaluated the administration’s proposed budget to ensure 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 is working to reduce general fund expenditures, which are typically separate from capital improvements. Where general funds are involved in such projects, the university is striving to balance both the amounts and the timing of the projects with the resources available. The university will 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.
University-wide spending reductions are targeted at general fund expenditures. The compensation for the athletic director comes from a different revenue source.
Athletics is a separate budget for the university. Athletic event revenue is first used to cover athletics’ expenses, including student-athlete scholarships, employee salaries, facilities, and equipment. In general, there are no excess funds to cover other university expenses.
Michigan State University’s donor-funded endowment is comprised of over 4,250 gifts, and in all cases, the university cannot freely spend the principal. The income generated from investing that principal is also legally restricted for specific purposes such as scholarships, faculty support, or research. These funds cannot be reallocated to cover general operations or replace lost appropriations.
The university’s total endowment also includes long-term assets of the university that it has deemed as funds functioning as endowments. These funds are tied to specific projects and programs that are supported by the investment income they generate. Currently, the university’s plan for spending endowment funds is limited to 4.8% of the total portfolio value. The endowment payout was increased to this percentage as of July 1, 2025, thereby increasing available funds to support the projects and programs supported by the endowment.
The National Association of College and University Business Officers (NACUBO) ranks MSU 29th in overall dollars, but 212th in dollars per student. MSU has less than $90,000 of endowment per student, providing about $5,000 of support per student. If that $5,000 were no longer available to be used in support of students, the university would have to consider options for covering that loss.
MSU’s current fundraising campaign, Uncommon Will. Far Better World, is a comprehensive effort designed to strengthen the university’s future by transforming the student experience, advancing research and faculty excellence, and supporting strategic capital and programmatic investments.
More than 98.9% of philanthropic contributions to MSU are restricted—designated by donors for specific purposes such as student scholarships, endowed faculty positions, groundbreaking research, or facilities. These gifts are legally and ethically bound by donor intent, a commitment the university honors.
While philanthropy plays an essential role in enabling MSU’s long-term impact, it is not a substitute for sustainable public funding and responsible financial stewardship of operational resources.
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.
Potential cuts to funding from the state further underscore the need to ensure the university’s financial stability and fiscal health through responsible budgeting.
Michigan State University leaders and researchers continue to meet with members of Congress to advocate for the continued partnership between the federal government and universities to fund critical research and keep America competitive. The innovations and discoveries taking place at top tier research institutions like Michigan State University improve health outcomes, treat disease, ensure safe food and drinking water, and are responsible for the development of cutting-edge technology.
The potential for additional changes to research funding and policies that impact university operations only exacerbate the need to ensure a sound fiscal plan for the future. Responsible budgeting today better positions Michigan State University to navigate uncertainties, challenges, and opportunities in the future.