Financial stewardship during uncertain times

Dear Colleagues,

Last fall in my State of the University address, I was pleased to report that KU is on stable financial footing, thanks to the thoughtful strategic initiatives and commitment of our faculty and staff. 

But in recent months, federal policy changes have created unprecedented uncertainty for higher education and indicate a fundamental transformation of the relationship between universities and the federal government. While it remains unclear if and how many of the proposed changes will ultimately be implemented, there is no question that federal funding for higher education could be substantially reduced or eliminated in many areas. And it is unlikely there will be additional state funding for higher education to address rising costs and reductions in federal support.

As a result of these external factors, I have determined it is prudent to implement financial risk mitigation efforts to position the university to manage disruptions to federal funding and position KU for higher education’s new reality. Below are initial steps we will take at our Lawrence, Edwards and KU Medical Center campuses, effective immediately, to protect our financial position and prepare for the consequences of federal policy changes. As you likely know, this dynamic is not unique to KU, and many other healthy institutions are implementing similar approaches.

Position review process

All new position requests and changes to existing positions must go through a new position review process, led by the University Cabinet. This includes requests to create new positions, backfill vacant positions, and pursue promotions and pay increases. The review (which replaces the current Strategic Hiring Process for the Lawrence campus) is designed to ensure that any hiring or role changes during this period of uncertainty are mission-critical and aligned with university strategy. Chari Young, our Chief Human Resources Officer, and our Human Resources team will share more details about this process soon.

In the coming weeks we will have more clarity on state funding and a better understanding of the risk we face from federal funding reductions. We have already received termination notices for several federally funded projects, and it seems certain that federal policy decisions will require we consider all options to protect our core missions and research priorities. As our financial position becomes clearer, we will inform you about any additional position- or pay-related actions that are necessary.

Judicious budget management at the unit level

As we close out FY25 and plan for FY26, we will be using a comprehensive budgeting approach and will expect units to begin the budget process by using unit-specific accounts (including using restricted accounts for their intended purposes) to cover their expenses as much as possible before we assign general use funds, so we can prioritize these dollars for university-wide commitments. The reality is, we should all prepare for disruptions to the programs, services and activities we manage.

Each of you who manages a budget should be very judicious in the expenditure of currently budgeted funds. Staff should scrutinize all discretionary spending and spend only the funds needed to accomplish activities that are essential to our core mission of education, service and research. And we should avoid new multi-year commitments at this time.

We are currently reviewing signature-level authority, and we will also be adding process improvements to require purchase orders for most purchases so that we may better monitor our spending. Jeff DeWitt, our Chief Financial Officer, will provide more detailed guidance to support fiscal restraint in our spending in the days ahead.

Looking ahead

The work ahead requires us to think differently about all aspects of our financial model and how it supports our mission, and this will invariably require that we make difficult decisions. That said, I am optimistic we will meet this challenge because of the commitment and ingenuity of our faculty and staff. Dedicated Jayhawks like you have consistently risen to the occasion in recent years —whether it was the pandemic, our Higher Learning Commission reaccreditation efforts, or our efforts to grow enrollment — and I am confident we will succeed in this new effort.

The good news is, many of the things we must do to manage this moment align with our ongoing initiatives: strategically allocating resources, streamlining operations and diversifying our revenue streams through in-person and online enrollment, fundraising, conference and event management, strategic partnerships and process improvement across all campuses. These efforts are even more important in this highly uncertain environment.

I know you continue to have questions, and we will continue to provide answers via our weekly town halls on the Lawrence and KUMC campuses. In the meantime, if you have questions, please submit them through our multi-campus form or contact the relevant campus leader. Your inquiries will help inform our town hall discussions and the development of institutional strategy in the days ahead.

Thank you for your commitment to KU during this unprecedented moment for higher education. I am grateful for your dedication to our students, the state of Kansas and our society. The KU community is resilient. As a community, we will meet this challenge and strengthen our university so that we can continue our mission of education, service and research.

Respectfully, 

Doug

Douglas A Girod 
Chancellor