Update on the 2025-26 budget

Dear faculty and staff,

This week, we have shared updated budget plans with schools and administrative units for the 2025-26 academic year. These plans call for a $140 million reduction in the allocation of university general funds to support operations. Schools and units have been preparing for this reduction and will finalize their plans over the next several weeks. This number excludes the School of Medicine, which will identify its reductions in the coming weeks.

This is difficult news to share. As Provost Martinez recently outlined to the Faculty Senate, we face significant budget consequences from federal policy changes. These changes include reductions in federal research support and an increase in the endowment tax.

We believe deeply in the value of universities, in federal support for basic research, and in the endowment model that underpins financial aid and graduate fellowships. We will continue to advocate for these things. At the same time, we need to be realistic about the current landscape and its consequences. There is significant uncertainty about how federal support for universities will evolve, but it is clear that the status quo has changed. 

The provost’s Budget Group spent several months grappling with this, and considered both larger and smaller budget reductions, as well as different approaches to timing. We believe the current plan will maintain support for the fundamental pillars of research and education, including undergraduate financial aid and PhD student funding, and position us to weather policy changes that reduce the funding of American universities.

Schools and units have been asked to formulate plans according to the following principles:

• Prioritize support for our core mission of research and education

• Preserve need-based financial aid and five-year PhD student funding

• Simplify administrative processes in ways that reduce expenses

• Position the university to be resilient as federal policy evolves

We expect schools and units to absorb general funds reductions in different ways. General funds are unrestricted and spent in a wide variety of ways. Schools and budget units also have funding from endowment payout (which will increase by 2.9% this year), sponsored research, programmatic revenue, and gifts. These are typically more restricted by purpose, and all of those details will affect decisions.

The most difficult part of these decisions is that they will require some reduction in staff positions, not all of which can be accomplished by eliminating open positions. Stanford has incredibly talented and dedicated staff, whose work is essential to every aspect of the university. The university has benefits and compensation programs to support transitions in cases where layoffs are necessary, but there is no getting around the impact of such decisions.

The budget plan includes a number of additional elements. We will focus capital and facilities spending on the most critical and/or externally funded projects. The staff hiring freeze continues. We expect faculty hiring to continue, although the pace may be somewhat slowed. We are planning a modest salary program for faculty and staff to reflect cost-of-living increases.

Though the budget reductions in the period ahead will be painful, we are confident that by acting now to put Stanford on stronger and more resilient financial footing, we will be better positioned to pursue excellence and new opportunities going forward.

Thank you for your understanding of the challenges we face, and your commitment to Stanford’s mission of research and education that is so important for our country and the world.

Sincerely,
Jon Levin, President
Jenny Martinez, Provost